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  • FIRST POST
    • sourcrates
    • By sourcrates 21st Jul 19, 2:51 PM
    • 18,762Posts
    • 17,674Thanks
    sourcrates
    Struggling with debt? Ask a stepchange debt adviser a question
    • #1
    • 21st Jul 19, 2:51 PM
    Struggling with debt? Ask a stepchange debt adviser a question 21st Jul 19 at 2:51 PM
    If you need help with your debts, this is the thread for you.

    This is a new thread, as the old one was getting a tad long.


    Trained advisers from StepChange Debt Charity are here and waiting to answer your debt questions. They're a friendly bunch so please don't be shy!

    There are three ways to get in touch:

    1 - Simply post your question below and the team will reply. If your question is about bankruptcy, then pop over to the Bankruptcy board.

    2 - If you would prefer to ask a question in private, feel free to send a message to StepChange Private Messages.

    3 - StepChange Debt Remedy is a free and confidential online debt advice tool. You can put a budget together at your pace, and you can also talk it over with an adviser through online chat.

    If you're a StepChange Debt Charity client already, please contact its Aftercare team rather than posting in this thread (their contact details are in your Welcome Pack).

    If you're self employed and need debt help please get in touch with Business Debtline.

    This is discussion thread part five, see parts one, two three and four: https://forums.moneysavingexpert.com/showthread.php?t=5559140.


    If you haven't already, join the forum to reply!
    Last edited by sourcrates; 22-07-2019 at 12:47 PM.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File and Ratings, Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to:
    forumteam@moneysavingexpert.com.
    Any views expressed are mine and not the official line of MoneySavingExpert.com.
    For free debt advice, contact either : Stepchange, National Debtline, CitizensAdviceBureaux.
Page 3
  • StepChange_Allen
    Hi Iím in debt. Iíve just been passed to a collection agency called NCO. they say were sending me a letter and Iím worried about two things. 1) is it going to have there logo on it and everyone will know Iím in debt?

    2) is it an a4 size or just a standard letter size...?
    Originally posted by xmasfriend1

    Hi there

    Welcome to the forum and thanks for posting.

    Envelopes containing debt collection letters shouldn't be made obvious as to what they are, as far as I know, though I'm not sure of the precise rules around them. However, they will likely have a company name/logo on and a return address, at the very least.

    Different companies may send letters out in different envelopes, though I'd imagine most use an A5 size or similar.

    If you need any help and advice regarding your debt, you can register with us free of charge. Our contact details to get started can be found here: www.stepchange.org/contact-us

    I hope this helps.

    Allen
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
  • StepChange_Allen
    .
    .
    Hi all

    Thank you for taking the time to read my post. I am in 40k debt with two credit cards + a personal loan. I have been working over 50 - 70 hours a week to pay everyone out but in the end of the day I always have to use what I pay back on my credit cards. I getting very tired and emotionally drained out as this has been going on for 4-5 years now. I can feel that this put a huge risk on my health now.I can feel that I can't do too much over time now.


    SO I came to the conclusion I have to file for bankruptcy. Just want to know what is the process, what step it will take place? I have to complete an online form. upon submitting the for I have to pay the fee or after, before? what happens next? would people come to my rented property to take away my stuff? Don't have too much stuff. Also my Grandmother is very old and recently become more sick. She still manages OK but I think very soon she would need even more help from me. She lives abroad and just worried that they would take my passport away from me, I wouldn't be able to see her. Also my wife has a nice car what is in her name but she worries that they might take it away from us. (all my debt is in my name and I don't even drive). Also my wife is sceptical about me applying for bankruptcy as she say it has hidden issues. can you explain to me the possible negative impact on me please?

    Thank you for your answers
    Originally posted by pendramoon

    Hi Pendramoon

    Welcome to the forum and thanks for posting.

    Before taking a step as big as bankruptcy, I'd highly recommend seeking debt advice from an organisation like ourselves. If you put a budget together with us, we can see whether bankruptcy is a good option for you. If it is, we can then discuss all the benefits, risks and consequences with you, as well the process to actually do it.

    If you don't wish to register with us, we have a lot of information about bankruptcy on our website: www.stepchange.org/debt-info/personal-bankruptcy

    I hope this is helpful.

    Allen
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
  • StepChange_Kirsty
    Hi Thomas,

    Iím afraid I cannot answer your question. As Debt Advisorís we specialise in dealing with problem debt once it is no longer affordable, but we do not have knowledge on other financial products.

    I hope the response from ZX81 has been helpful or you could speak to a financial advisor. The Money Advice Service may be able to point you in the right direction to find a financial advisor.

    Many thanks,

    Kirsty




    Hi Everyone,

    I've currently got a £10,500 loan with Tesco at 9.9% paying £205.88 per Month over 5 Years. I used this to buy and insure a van 9 months ago for a load of work i had in. Since then the work has dried up and I have sold the van for £6,500 and my Tesco Loan settlement figure is £8,770.96.

    What i would like to do is use a 0% balance transfer card to shift the remaining £2,270.96 (Or more) to either a 12 month (£189.25 /Month) or a 24 Month (£94.62/Month) payment so i can save myself almost £1800 compared to paying the full £12,352.80 over the remaining 4 Years 3 Months.

    However I have never used a 0% balance transfer card before, and I've heard its tricky to do this with loans. What I need to understand is if this is possible or if it is exclusive to only credit card balance transfers.

    Just as a disclaimer, I can afford the monthly repayments on the tesco loan, I just want to clear this debt and have more monthly spending money rather than having a big load of cash sitting around.

    Let me know if anyone can help!

    Thanks
    Originally posted by Thomas.Brawn
    Hi zx81,

    thanks for the quick reply, So just to be clear it wouldn't be a balance transfer card it would just be a spending card? I just want to get the definitions correct.
    Originally posted by Thomas.Brawn
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
    • brownmike
    • By brownmike 7th Sep 19, 12:57 AM
    • 1 Posts
    • 1 Thanks
    brownmike
    Is national debt relief legit?
    I'm deeply in debt, most accounts in collection. I don't want to declare bankruptcy if possible and have been looking at debt settlement options. Is National Debt Relief worth it? Thanks.
    • Jaffa pig
    • By Jaffa pig 7th Sep 19, 12:57 PM
    • 183 Posts
    • 1,575 Thanks
    Jaffa pig
    Hi,

    I have been getting deeper and deeper in to debt the last few years. I have health issues and can’t get a regular job, as sometimes I am unable to work for long periods. I lost my PIP a few years ago, so we took the decision to downsize our house to pay off our debts. It went badly though and we lost two houses at the last minute and had to rent for a while before moving into our new home. It ended up costing us money, rather than paying off anything. I have since started a small part time business from home, which is doing well and even though I am not making much, it is increasing every year. I owe £22,000 on 3 credit cards. I moved the money owed around every time I got an offer of an interest free balance transfer. The interest free period is now up on all of them and I haven’t been offered another interest free one. I am now paying over £300 a month in interest and all my minimum payments have gone up a lot. So far I have managed to pay the minimum payment on time for all of them, but it is becoming increasingly difficult to do so. My car's MOT is due next week and if it fails, I won’t have the money to get it repaired and I need my car for my business. My husband works full time, but on a low wage and he has debts of his own, he doesn’t want to contact the credit card companies, as he doesn’t want his credit rating affected. I started to fill in the step change form, but as soon as I said I was self employed it wanted me to go to a business debt website. I don’t feel I need to do that, as my business has no debts and is doing well. I would appreciate any advice on what I should do. Thanks
    Last edited by Jaffa pig; 09-09-2019 at 10:33 AM. Reason: Typo
  • StepChange_Kirsty
    Hello there,

    Thanks for your post and welcome to the forum.

    Iím not very familiar with National Debt Relief but having looked at their website I can see they do charge fees for debt management plans (DMPís). I would always recommend seeking free debt advice from an organisation which also provide free DMPís.

    At StepChange we provide free and impartial debt advice and you can find our official website here. https://www.stepchange.org/

    There are other organisations also providing free and impartial advice as follows:

    National Debtline

    Citizens Advice

    Payplan

    I hope this helps,

    Kirsty





    I'm deeply in debt, most accounts in collection. I don't want to declare bankruptcy if possible and have been looking at debt settlement options. Is National Debt Relief worth it? Thanks.
    Originally posted by brownmike
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
  • StepChange_Kirsty
    Hi Jaffa pig,

    Thanks for your post.

    In your situation I would still recommend you speak to Business Debtline for advice. I appreciate your business is doing well, which is great news, but you still need specialist advice because of the nature of your income. It would also be beneficial for you to speak to a debt advisor who can give advice on the impact of different debt solutions on your business. Business Debtline can give you this advice whereas StepChange cannot.

    Like StepChange, Business Debtline provide free, confidential and impartial debt advice even if you donít have any business debts. You can find their contact details here.

    You mentioned your husband is also on a low income and has debts of his own. Whilst I understand he doesnít want to impact his credit rating sometimes having that hit is best all round for dealing with the debts once and for all. Business Debtline would be able to do a joint budget for you even if he is not self-employed.

    All the best,

    Kirsty




    Hi,

    I have been getting deeper and deeper in to debt the last few years. I have health issues and canít get a regular job, as sometimes I am unable to work for long periods. I lost my PIP a few years ago, so we took the decision to downsize our house to pay off our debts. It went badly though and we lost two houses at the last minute and had to rent for a while before moving into our new home. It ended up costing us money, rather than paying off anything. I have since started a small part time business from home, which is doing well and even though I am not making much, it is increasing every year. I owe £22,000 on 3 credit cards. I moved the money owed around every time I got an offer of an interest free balance transfer. The interest free period is now up on all of them and I havenít been offered another interest free one. I am now paying over £300 a month in interest and all my minimum payments have gone up a lot. So far I have managed to pay the minimum payment on time for all of them, but it is becoming increasingly difficult to do so. My car's MOT is due next week and if it fails, I wonít have the money to get it repaired and I need my car for my business. My husband works full time, but on a low wage and he has debts of his own, he doesnít want to contact the credit card companies, as he doesnít want his credit rating affected. I started to fill in the step change form, but as soon as I said I was self employed it wanted me to go to a business debt website. I donít feel I need to do that, as my business has no debts and is doing well. I would appreciate any advice on what I should do. Thanks
    Originally posted by Jaffa pig
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
    • Jaffa pig
    • By Jaffa pig 9th Sep 19, 1:18 PM
    • 183 Posts
    • 1,575 Thanks
    Jaffa pig
    Thanks Kirsty, I will do as you suggest and contact business debt line.
    • ChefKev
    • By ChefKev 10th Sep 19, 4:04 PM
    • 19 Posts
    • 2 Thanks
    ChefKev
    Hi, I've got £15k spread over 3 credit cards all up to their limits, I have another 2 with nothing on but currently don't have any 0% transfer offers with them. I am paying my minimum amount without any issues but one of the cards the 0% is about to expire and interest will start being added which I'm afraid I won't be able to pay, I've always had 0% offers to hand and was able to transfer and keep paying but now I really don't know what to do? Thanks for any advice.
  • StepChange_Rachael
    Hi

    Thanks for your post.

    Itís always beneficial to pay as little interest as possible and when you can find low interest rates it can really help. Budgeting and paying as much as possible towards the credit cards to pay the capital is the best way to clear the debt as soon as possible and reduce the amount of interest youíll have to pay back overall. If the minimum payments are affordable then this is the best route.

    If minimum payments arenít affordable and cutting back on living costs is causing further financial problems, then Iíd recommend looking into alternative options. There are debt solutions available to people struggling with problem debt but should only be taken up when the minimum payments are no longer maintainable. By making reduced payments this will mean creditors have the option to follow the collections process and default the debts which will also impact your credit file.

    If you do feel that the minimum payments are becoming difficult, or by making these minimum payments youíre having to use further credit to keep up with living costs, then Iíd recommend seeking free debt advice. This can be done through us at StepChange and you can find our contact details here.

    Thanks
    Rachael














    Hi, I've got £15k spread over 3 credit cards all up to their limits, I have another 2 with nothing on but currently don't have any 0% transfer offers with them. I am paying my minimum amount without any issues but one of the cards the 0% is about to expire and interest will start being added which I'm afraid I won't be able to pay, I've always had 0% offers to hand and was able to transfer and keep paying but now I really don't know what to do? Thanks for any advice.
    Originally posted by ChefKev
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
    • Diva0804
    • By Diva0804 24th Sep 19, 9:48 AM
    • 24 Posts
    • 9 Thanks
    Diva0804
    Hi
    I have a query about partial settlement of a credit card debt of around 8K.

    My creditor has agreed to freeze charges and interest at the beginning of the year when the balance was 10k, and Iíve been keeping up with the minimum repayment which amounts to 200£+ every month.

    However, itís been extremely difficult, and Iíve had to sacrifice almost everything. Daycare cost for two small kids, rent and utility bills is what is making my financial situation difficult, and I donít see how we can go on like that. For instance, I need to buy a new car seat for my little one next month, and donít see how this is feasible without paying less than the minimum amountÖwhich means my account will fall in arrears.

    Iíve had the time to think over it this, and now feel like I want to go down the route of partial settlement to clear my credit card debt once and for all.

    My question is:
    If I start making small token payments for 5 months straight (letís say 50£ instead of the 200£ minimum Iím currently paying), and then propose a partial lump sum settlement BEFORE they send me a default notice (which usually occurs after 150 days of arrears), will they accept it? Basically, Iím assuming that falling into arrears will make them more likely to accept a partial settlement of maybe 25% of the full amount (which Iím hoping I can secure with help from family)

    If they do accept, will my credit report show a default, a partial settlement, or both ?

    And if my credit reports shows a partial settlement only (but not a default), for 6 years, does that mean I will find it hard to secure a mortgage the next 6 years?

    I know for a fact that Iím absolutely done with credit cards so I donít really care about a low credit score (I donít ever want to apply for one),...but Iím 37 , with 2 small kids and never had a mortgageÖ. and Iím worried about becoming a home owner only 6 years from now.

    Iím hoping that a partial settlement before default and debt collectors getting involved will mean my credit score is not too tarnished, if that makes sense?
    Thank you for your help.
  • StepChange_Kirsty
    Hello,

    Thanks for your post.

    If the creditor agrees to the partial settlement you can request your credit file is updated to show the account is ďsettledĒ which would have a lower impact, however, this would be at the discretion of the creditor and they may show this as ďpartially settledĒ. Either way the mark will be on your credit file for the six years from the date the account was closed.

    Itís possible the creditor will default the account before they would be even willing to consider a partial settlement. In this case the default will show on the credit file for six years from the date of the default even if the debt is paid in full or partially settled in that time.

    The presence of this debt on the credit file during these six years could make it more difficult to get a mortgage and you may not be able to get the best deals, but this is always up to the individual lender. However, by the time youíve saved for a deposit for a house you might find that your credit file is repairing itself anyway.

    I couldnít tell you how likely you are to be successful in what youíre trying to do but if youíre struggling with your debts, I would highly recommend you get debt ddvice as soon as possible to work out the best way forward.

    We can provide you with free and impartial advice and you can find our contact details here.

    I hope this answers your main questions.

    Kirsty



    Hi
    I have a query about partial settlement of a credit card debt of around 8K.

    My creditor has agreed to freeze charges and interest at the beginning of the year when the balance was 10k, and Iíve been keeping up with the minimum repayment which amounts to 200£+ every month.

    However, itís been extremely difficult, and Iíve had to sacrifice almost everything. Daycare cost for two small kids, rent and utility bills is what is making my financial situation difficult, and I donít see how we can go on like that. For instance, I need to buy a new car seat for my little one next month, and donít see how this is feasible without paying less than the minimum amountÖwhich means my account will fall in arrears.

    Iíve had the time to think over it this, and now feel like I want to go down the route of partial settlement to clear my credit card debt once and for all.

    My question is:
    If I start making small token payments for 5 months straight (letís say 50£ instead of the 200£ minimum Iím currently paying), and then propose a partial lump sum settlement BEFORE they send me a default notice (which usually occurs after 150 days of arrears), will they accept it? Basically, Iím assuming that falling into arrears will make them more likely to accept a partial settlement of maybe 25% of the full amount (which Iím hoping I can secure with help from family)

    If they do accept, will my credit report show a default, a partial settlement, or both ?

    And if my credit reports shows a partial settlement only (but not a default), for 6 years, does that mean I will find it hard to secure a mortgage the next 6 years?

    I know for a fact that Iím absolutely done with credit cards so I donít really care about a low credit score (I donít ever want to apply for one),...but Iím 37 , with 2 small kids and never had a mortgageÖ. and Iím worried about becoming a home owner only 6 years from now.

    Iím hoping that a partial settlement before default and debt collectors getting involved will mean my credit score is not too tarnished, if that makes sense?
    Thank you for your help.
    Originally posted by Diva0804
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
    • recurringdream
    • By recurringdream 25th Sep 19, 9:15 PM
    • 1 Posts
    • 0 Thanks
    recurringdream
    Rock and a hard place
    Dear stepchange,
    I feel as if I am between a rock and hard place. Over the past 6 years I have accumulated approximately £6800 in debt. This consists of a £3000 overdraft from my student days that is constantly maxed out, for which I also now pay roughly £50 a month in charges (the overdraft was initially 0% but hey, that's how they get you). The other £3800 of debt comes from a credit card that spiralled out of control due to unnecessary spending and interest build up. Now usually I would just work as much as possible to pay it all off and clear it. However I have a lovely 1 year old daughter that I look after alongside my partner which causes a fall in my working hours and therefore my income. I feel I should add I have done some research and due to being in what I call the "middle ground" we are not entitled to anything except child benefit. we are not well off, we are just not on rock bottom which is where all the support is these days. I do not feel my situations extreme enough to warrant bankruptcy/IVA and essentially burn my credit score to a cinder. The main concern is the credit card due to the interest, and yes I have looked at 0% balance transfer credit cards which sounds ideal but they just don't have a high enough credit limit to cover my debt.

    I would appreciate some advice although I feel the only option for me is to just pay what I can.
    Thank you for your time,
    George :S
  • StepChange_Allen
    Dear stepchange,
    I feel as if I am between a rock and hard place. Over the past 6 years I have accumulated approximately £6800 in debt. This consists of a £3000 overdraft from my student days that is constantly maxed out, for which I also now pay roughly £50 a month in charges (the overdraft was initially 0% but hey, that's how they get you). The other £3800 of debt comes from a credit card that spiralled out of control due to unnecessary spending and interest build up. Now usually I would just work as much as possible to pay it all off and clear it. However I have a lovely 1 year old daughter that I look after alongside my partner which causes a fall in my working hours and therefore my income. I feel I should add I have done some research and due to being in what I call the "middle ground" we are not entitled to anything except child benefit. we are not well off, we are just not on rock bottom which is where all the support is these days. I do not feel my situations extreme enough to warrant bankruptcy/IVA and essentially burn my credit score to a cinder. The main concern is the credit card due to the interest, and yes I have looked at 0% balance transfer credit cards which sounds ideal but they just don't have a high enough credit limit to cover my debt.

    I would appreciate some advice although I feel the only option for me is to just pay what I can.
    Thank you for your time,
    George :S
    Originally posted by recurringdream

    Hi George

    Welcome to the forum and thanks for posting.

    I appreciate that it can be hard to see a way out when you're struggling to get balances down due to interest and charges. I can see that you've already looked at a number of possible options and they haven't worked out.

    I can't advise you what's best to do without seeing a full breakdown of your finances and debts. You can register with us free of charge, either online or on the phone. We'd then be able to assess things and make recommendations of steps you can take. Details of how to get started can be found on our website: www.stepchange.org/contact-us

    I hope this is helpful.

    Allen
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
    • NM87
    • By NM87 30th Sep 19, 2:41 PM
    • 2 Posts
    • 13 Thanks
    NM87
    To consolidate or not...
    Hi,
    I'm new to the site and forum so if I'm posting in the wrong please let me know.

    I've struggled with debt and generally adulting for most of my life. In the last few years I've managed to pull myself together and am now in a stable relationship and a job.

    I currently have approximately £10k of debt split between £6k on a credit card and a £5k overdraft that I'm consistently scraping the bottom of. My overdraft charges are about £50/month.

    My credit card debt is split over two 'deals' and the remainder. The two deal are the bulk of the £6k but expire next year. Then APR is 24.3%
    My overdraft is 17.90% EAR variable

    (in all honesty I don't really know that that means!)

    I'm currently paying £150/month

    I have just had a default drop of my credit rating after a long 6 years and my Experian rating jumped from 739 to 999.

    I'm considering applying for a personal loan from my bank HSBC for £10k over 5 years to consolidate my debt into one monthly payment at approx 3% about £181/month

    I am living with my partner and child (one more on the way) in a house worth £450k. We are joint owners having both contributed £50k each to the deposit and we split the monthly repayments. However I'm not named on the mortgage.

    We are looking to buy a new house early next year before the baby arrives. I want to be added to the mortgage so we can upsize. My current income is £45k and we're looking at properties around £625k

    My question is whether I should consolidate and how a personal loan with affect my credit rating and mortgage application in a few months time.



    I intend to keep the CC but only use it for household bills and pay it off completely each month.

    Hope that all makes sense and that there's a sensible question in there somewhere!
  • StepChange_Allen
    Hi,
    I'm new to the site and forum so if I'm posting in the wrong please let me know.

    I've struggled with debt and generally adulting for most of my life. In the last few years I've managed to pull myself together and am now in a stable relationship and a job.

    I currently have approximately £10k of debt split between £6k on a credit card and a £5k overdraft that I'm consistently scraping the bottom of. My overdraft charges are about £50/month.

    My credit card debt is split over two 'deals' and the remainder. The two deal are the bulk of the £6k but expire next year. Then APR is 24.3%
    My overdraft is 17.90% EAR variable

    (in all honesty I don't really know that that means!)

    I'm currently paying £150/month

    I have just had a default drop of my credit rating after a long 6 years and my Experian rating jumped from 739 to 999.

    I'm considering applying for a personal loan from my bank HSBC for £10k over 5 years to consolidate my debt into one monthly payment at approx 3% about £181/month

    I am living with my partner and child (one more on the way) in a house worth £450k. We are joint owners having both contributed £50k each to the deposit and we split the monthly repayments. However I'm not named on the mortgage.

    We are looking to buy a new house early next year before the baby arrives. I want to be added to the mortgage so we can upsize. My current income is £45k and we're looking at properties around £625k

    My question is whether I should consolidate and how a personal loan with affect my credit rating and mortgage application in a few months time.



    I intend to keep the CC but only use it for household bills and pay it off completely each month.

    Hope that all makes sense and that there's a sensible question in there somewhere!
    Originally posted by NM87

    Hi there

    Welcome to the forum and thanks for posting.

    Before I tackle some of the points you've raised, I just want to say that I can't give specific advice as such on this. In order to do that, I'd need a full income and expenditure plus more information, and even then, at StepChange, we never recommend taking out further credit. However, that doesn't mean it's always a bad idea.

    I will make a few points though and hopefully it will prove to be some help. First of all, it is useful to understand what APR means. There's a good explanation on our website here: www.stepchange.org/debt-info/debt-collection/charges-and-interest-on-debt

    I've never heard of EAR so I'm not sure what that means. You could call the bank and ask them perhaps?

    Basically, the interest rates on both will be high when in effect. If you're trying to clear the debt as fast as you can, at an affordable a rate as possible, a low rate consolidation loan is certainly worth considering. You could also consider a balance transfer to a 0% credit card, but a problem could be getting a large enough credit limit to do this.

    If you go for a loan, you just need to be sure that you can afford it and to try and get the best rate. It's also important to make sure you'll get what you're applying for, as multiple applications can have an adverse effect on your credit rating. You can check loan eligibility on the MSE site here: www.moneysavingexpert.com/eligibility/loans-calculator/search

    One of the considerations lenders make when assessing a mortgage application, the interest rate, amount they'll lend etc is your disposable income. Monthly debt commitments mean you have less money to pay the mortgage. So the lower your monthly payments the better, and possibly the less debt you have.

    So, as I said, I can't advise you what to do, but there are options there, and as long as affordable and financially sensible, there are no obvious issues. I suppose I'd just add to be careful with the credit card if you keep using that, as I regularly speak to people that consolidate only to then keep borrowing more and ending up in a worse situation.

    I hope this is helpful.

    Allen
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
    • whatsername
    • By whatsername 1st Oct 19, 9:59 PM
    • 223 Posts
    • 155 Thanks
    whatsername
    I am in around £15,000 of debt. I have been plodding along trying to pay it off as best I can but it's becoming a really big source of stress. It is particularly troubling at the moment I am suffering from health issues and afraid that I might need to cut my hours at work or possibly lose my job if things don't improve (my condition is exacerbated by stress so it's a bit of a lose-lose situation at the moment).

    A few months back I did an assessment with you where the Token repayment plan was your suggested solution. At the time I ended up being able to borrow from a family member instead.

    I am now in this place again where I feel like I need to tackle things more urgently, but I am really concerned about the potential impact on my credit score. Despite my level of debt, my credit score is pretty good as I have always managed at least minimum payments. I am worried that if I wreck my credit score I will never be able to achieve my dream of buying my own home (something that I would like to be able to do in the not too distant future).

    I am aware this is a bit of a 'how long is a piece of string' type question, but how badly is taking a token payment plan likely to hit my credit score and how easy (and fast) is it to rebuild credit once that has happened? I am desperate to be free of this debt, but I don't want to cost myself any chance of home ownership.

    Thanks so much.
    April £10 a day challenge £321.85/£300 May £10 a day challenge £136.93/£310 July £20 a day challenge £530.57/£620
  • StepChange_Kirsty
    Hello,

    Thanks for your post.

    When youíre no longer able to pay your contractual payments to your creditors you will find they will start to issue default notices. The default notice will show on your credit file for 6 years which will impact your rating. This is likely to happen in a token payment plan as youíll stop paying the contractual payments to your creditors.

    Iím sure one day youíll still be able to own a home of your own. By the time you have paid off your debts and started saving for a house deposit, your credit file should have improved or at least be improving.

    If you would like further advice following any changes in your situation, please do not hesitate to get back in touch.

    All the best,

    Kirsty



    I am in around £15,000 of debt. I have been plodding along trying to pay it off as best I can but it's becoming a really big source of stress. It is particularly troubling at the moment I am suffering from health issues and afraid that I might need to cut my hours at work or possibly lose my job if things don't improve (my condition is exacerbated by stress so it's a bit of a lose-lose situation at the moment).

    A few months back I did an assessment with you where the Token repayment plan was your suggested solution. At the time I ended up being able to borrow from a family member instead.

    I am now in this place again where I feel like I need to tackle things more urgently, but I am really concerned about the potential impact on my credit score. Despite my level of debt, my credit score is pretty good as I have always managed at least minimum payments. I am worried that if I wreck my credit score I will never be able to achieve my dream of buying my own home (something that I would like to be able to do in the not too distant future).

    I am aware this is a bit of a 'how long is a piece of string' type question, but how badly is taking a token payment plan likely to hit my credit score and how easy (and fast) is it to rebuild credit once that has happened? I am desperate to be free of this debt, but I don't want to cost myself any chance of home ownership.

    Thanks so much.
    Originally posted by whatsername
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
    • K2409
    • By K2409 9th Oct 19, 1:37 PM
    • 1 Posts
    • 0 Thanks
    K2409
    Debt Help
    Hi,

    I have unfortunately become burdened with debt and looking for some advice in order to clear it.

    I have the following debts:
    [*]Loan £5000 currently - pay £200 per month [*]Credit Card £2050 - pay £100 per month[*]Credit card £6150 - pay £175 per month [*]Credit card £400 - pay off bits and pieces


    All credit cards except the small one are all 0% cards but should I switch them to paying the minimum monthly in order to pay more off one of the others. Ie focus on clearing one rather than feeling like Iím getting nowhere with any of them?

    I realistically can afford to pay off £500 per month total or otherwise I end up using the little card for top ups and end up in a vicious circle.

    How do I prioritise the debt?

    Thank you in advance!
  • StepChange_Kirsty
    Hello there,

    Thanks for your post and welcome to the forum.

    It sounds like youíre able to keep up with your debts each month, but I can appreciate it can sometimes feel like itís not reducing.

    With your loan, at the moment I would suggest you continue to pay the loan as normal and concentrate paying any extra money to the credit cards.

    Ideally it would good for you to stop using the smaller credit card and get this paid off as it's charging you interest. Bear in mind that the 0% rate on the other credit cards will run out so check how long you have left to repay the other credit cards and try to make a plan which will enable you to pay them off before the interest rate increases, if possible. This may help you to decide how much to pay towards each card.

    There are quite a few factors which come into play here such as when the 0% ends, what the interest rate will be, and the remaining term on your loan depending on interest. I would be recommending trying to pay as much as you can when you can before the charges begin.

    You might find it useful to make a post in the credit card forum as you may get other contributions on how best handle these debts. If you start to experience problem debt where youíre struggling to maintain minimum payments, please get straight back in touch with StepChange.

    I hope this helps.

    Kirsty





    Hi,

    I have unfortunately become burdened with debt and looking for some advice in order to clear it.

    I have the following debts:[*]Loan £5000 currently - pay £200 per month [*]Credit Card £2050 - pay £100 per month[*]Credit card £6150 - pay £175 per month [*]Credit card £400 - pay off bits and pieces


    All credit cards except the small one are all 0% cards but should I switch them to paying the minimum monthly in order to pay more off one of the others. Ie focus on clearing one rather than feeling like Iím getting nowhere with any of them?

    I realistically can afford to pay off £500 per month total or otherwise I end up using the little card for top ups and end up in a vicious circle.

    How do I prioritise the debt?

    Thank you in advance!
    Originally posted by K2409
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
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