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| The independent answer to your debt problems | login join |
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schnitzel
| 11-11-2007 03:35 PM |
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Joined: 11 Nov 2007 Posts: 9 | Hi, I really need some advice! I have debts of £56K! Although I am paying off 2 loans and 3 credit cards I am slowly drowning. I really don't know what to do...I haven't missed any payments yet, but I am struggling with day-to-day expenses; like food, travel to work etc. I keep reading all these reports about credit cards and how long it will take to pay them back and I am panicking. I have probably at least six years left at work and then no salary only my pension, and I would really want to be debt free before I retire! Can anyone advise me please? |
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| helpmenow | 11-11-2007 06:15 PM |
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Joined: 15 May 2007 Posts: 30 My Profile | Hi schnitzel I can sympathise with your predicament as I have had to deal with my debt problem and recently signed an IVA. I would recommend filling in the Statement of Affairs on this site and making it visible for other users to comment on. My experience is that having a plan on how to handle your debt is the key to improving your situation. After ignoring my debts for many years, the moment I decided to attack my problem I felt a load was lifted off my shoulders. Good luck HMN |
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schnitzel
| 11-11-2007 06:20 PM |
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Joined: 11 Nov 2007 Posts: 9 | Hi HMN, Thanks for the reply. I already keep a budget in an excel spreadsheet. I do my books nearly every other day, so I know where all the money is going. I will fill out the form as requested, you never know there could be some savings somewhere!. Thanks |
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| DW George | 11-11-2007 10:00 PM |
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Joined: 01 May 2007 Posts: 148 My Profile | I have had a look at your SOA and need to confirm a few things. 1. I take it your car insurance yearly. 2. Same for road tax How long do you have left on your personal loan? You have not made any allowances for clothing. George |
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schnitzel
| 11-11-2007 10:13 PM |
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Joined: 11 Nov 2007 Posts: 9 | Hi George, Yes the car insurance is yearly around £450.00 and the tax is £180. The two personal loans were taken out at different times; the one which is £483 per month finishes in August 2009 and the other in 2011! Ideally it would be great if I could combine all the debts together and pay one lump sum every month, (not sure if this is possible). I probably could afford a considerable amount if I knew that the debt was being paid off and I could see some light at the end of the tunnel. It's the credit cards that worry me, the interest is alarmingly high and at the moment I can only afford the minimum payment. I will probably be dead before these are paid off! Although like I said I haven't defaulted yet on any payments, everyday is becoming more and more of a struggle, robbing Peter to pay Paul, I really need a plan to combat this and I am not sure of the right way to proceed. Consolidation, IVA, DM or even bankruptcy? By biggest concern is that I want to live abroad when I retire, if I am declared bankupt, would any country consider me on my pension alone? Also I don't buy clothes anymore as that was probably part of the problem! Hope this gives a better picture and any advice would be truely welcomed. Thanks |
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| paladin | 12-11-2007 10:58 AM |
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Joined: 06 Jun 2007 Posts: 55 My Profile | Paladin Hi schnitzel, welcome to the DW forum. I have had a look at your SOA and have a few questions. The key to your debt management strategy is to get your spending under control. Many people have said to me that a few pounds saved here and there won't help them much as their debts are so enormous. They are wrong, because attacking your debt problems requires a change in mindset. After all for some people it was their carefree attitude towards spending that got them into trouble in the first place.
Think carefully about these question and remember that controlling your spending frees up more money to address your debt problem. Paladin |
| DW George | 12-11-2007 11:33 AM |
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Joined: 01 May 2007 Posts: 148 My Profile | Schnitzel Just to add to what paladin has said. There are several options available to you. Debt management will have a detrimental affect on your credit score. There are no guarantees that interest will be frozen. It's not a bad solution for those with short term difficulties as it get the creditors off their backs IVA is suitable for those who have assets to protect eg a house. Some people prefer this as a solution as they believe it is demonstrating to the creditors a responsibility to paying back a proportion of their debts. Bankruptcy is suitable for those who have truly unmanageable debts. Nowadays the bankruptcy process is easier and you can get discharged in 6 months, normally a year. Debt consolidation – can protect your assets and credit score, by consolidating all your debts into one manageable payment. The key to this solution is not to get you into further debt with the extra cash it frees up. The loan you have at 7.9% is a good rate and being paid off in 2011 fits in with our plan on being debt free in 5 years. The loan at 13.9% may or may not be worth considering consolidating. You need to get an early settlement figure from the loan company to work out if it's worth consolidating. Your credit cards definitely need to be consolidated. From a quick search on the internet you could consolidate your cc debts over 5 years and pay around £490 a month 6.9% APR this could be lowered if taken over a longer period. (Hopefully you have a good credit score). So to some up you if you consolidate the cc's over 5 years your payments would be 2008 £1468 2009 £1468 2010 £1022.69 2011 £1022.69 2012 £498.96 2013 £0 Looking at your SOA you are spending £1521.04 but you only afford to pay £1160.46. You must be really feeling the pressure. Hopefully you can find a bit more leeway in your budget to address your debt problem. Post back if you need any more help. George |
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schnitzel
| 12-11-2007 12:05 PM |
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Joined: 11 Nov 2007 Posts: 9 | Hi George and Paladin, Thanks for all the advice I am definately going to look into cutting down where I can. I have spoken to a Debt Management agency and I think this is the route I am going to take. I have tried getting loans to consolidate but no one will touch me because of the size of the debt, and obviously there is always the danger of getting into even more debt! I know my credit rating will be destored going down the DMP route but maybe for me this isn't such a bad thing. I look back and just wonder where has all the money gone! I need to be debt free by the time I retire and this seems to be the best route to take, unless anyone can advise me differently. I will keep you informed as to how I am getting on and if the DMP works! Thanks for your help. |
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| DW George | 12-11-2007 12:55 PM |
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Joined: 01 May 2007 Posts: 148 My Profile | Schnitzel I don't think that DM is way forward for you. The chances of getting all your interest frozen is remote. Before going down the DM route call your CC companies and state your are going move your debt elsewhere. They may want to keep you and give you a cheaper interest rate. Ask for a rate which will be for life of the balance. If you are single and have no assets you should consider bankruptcy or at least an IVA. This will mean that in your 6 six year time-scale you will be definitely debt free. DM can't give you that guarantee. You should do some research about residency in your desired country. I don't think that being bankrupt will impact on residency in EU countries. George |
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schnitzel
| 12-11-2007 01:17 PM |
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Joined: 11 Nov 2007 Posts: 9 | Hi George, The advisor I spoke with this morning said that if I were to take the Debt Management plan, and going on all the information I gave him he said I would be debt free in 5/6 years. They take 15% of the payment being made each month which is considerably less than the interest I am being charged at present on all the loans and credit cards. I rang Egg at the beginning of the year and told them I was having problems, they said they couldn't help me and that if I defaulted on the payments they would pass it to a debt collection agency. I have been struggling for the last 5 months and I can't take this pressure anymore. I have been off sick so many times this year at work that I now have to see Occupational Health regarding my sickness! Also, I asked about the IVA and he said that I probably wouldn't qualify because I would be able to pay a large proportion back each month. I don't really understand how all this works, all I do know is that it is stressing me out and my health is suffering. The advisor has sent me the documents to fill in, he has asked me to cancel all the dd's and standing orders to the loan and credit card companies, and I am to pay them the money to pay my debts! I am putting a lot of trust in these people and I am very very nervous! Is this what normally happens? Schnit. |
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| DW George | 12-11-2007 01:58 PM |
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Joined: 01 May 2007 Posts: 148 My Profile | Schnitz I hear what you are saying. You need an extra £410 each month to maintain your debt repayments. How many months have you left on your £22k loan? You said you spoke to EGG and said you were struggling. Have you spoken to them about what rates they can offer to keep you as a customer? I did and was offered a fixed rate for the duration of balance. I would definitely try again to shop-about for a good loan rate. If your credit score is good there is no reason why you shouldn't get another loan. CC companies when considering to give you a loan, look at your exposure to debt and not your actual balance. I imagine that your stress levels are so high because you feel you are not in control. There is an answer to your debt problem and you are addressing your problem and so taking control back. Once you have set yourself a course to debt freedom you'll feel better. The key is having a plan. Speak to your CC companies and see if they will give you a reduced rate, it is certainly worth the price of a call. Whilst your on the phone call about for a consolidation loan. George |
| paladin | 12-11-2007 02:10 PM |
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Joined: 06 Jun 2007 Posts: 55 My Profile | Schnitz I'm sorry to hear that your debts have impacted on your health. Have you tried to increase your income? You said that you had nothing to show for your debts but said that your weakness was clothes. Have you tried selling bits n bobs lying around your house on eBAy? Again it may seem small but every little helps. In respect of an IVA you won't get one, judging by your disposable income. Paladin |
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schnitzel
| 12-11-2007 02:17 PM |
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Joined: 11 Nov 2007 Posts: 9 | Hi George, The Egg loan finishes in May 2011, and the Barclayloan in August 2009 which will free up £483 a month. I have tried consolidating already. Barclays wouldn't consider me even though I have a credit card and a loan because I was always in my overdraft facility, which is complete madness! I tried to combine the Egg loan with the Egg credit card and they said no! I recently tried to get a loan to pay off all the credit card, but again it was refused. It has nothing to do with my credit rating as I have checked this out it is all to do with affordability. I have also checked out more information about the DMP and you are absolutely right. They were going to charge me £1000 set up fee, then a monthly charge of 15% of my payment and then there are no guarantees that the interest would be frozen. I asked about an IVA and he said I wouldn't qualify!! I have no idea why I wouldn't qualify especially if I am willing to a pay each month to get rid of these debts. Do you have any idea what he is talking about? Just to say I am so grateful to you all for the advice you have given me so far, its a complete eye opener. Schnitz. |
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insider
| 14-11-2007 10:10 AM |
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Joined: 14 Nov 2007 Posts: 2 | Schnitzel Hi, I come to this a bit late. You said that you credit score was good but had problems consolidating your credit card debts due to affordability. This may be due to credit cards you have which don't have any balance. If this is is the case call the companies and cancel the cards. CC companies don't share your balance details with other companies but they do share your debt exposure. You could have zero balance on 4 cards but have a debt exposure of £20k just because of the card limits. I know you have spoken to EGG but did you actually say to them you were transferring your debts to another company? I would be very surprised if they didn't want to keep you you're a bit of a cash cow :) insider |
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schnitzel
| 14-11-2007 12:20 PM |
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Joined: 11 Nov 2007 Posts: 9 | Hi Insider, Thanks for the advice. Since I was last on things have moved at such a fast pace. After doing the SOA and checking my own records I have been living well over my means. I had more money going out than coming in to the extent of around £400! I have tried to sell items on Ebay, pawned jewellery, sold anything to raise a pound or two! For the past 4 months I have been lending money from family members just to get by, I have really come to the end of my tether. I have decided to go for a DMP with CCCS. They are a charity and don't charge any fee or want up front monies for administrating my debts. I had my debt counsellor go through all my transactions, and she has worked out that I could be debt free within 4 years! I know my credit rating will be null and void but at the end of the day I can't go on like this anymore. If I can take the temptation out of my life and live within my means then this surely must be the best way forward. I value all the advice that has been given and I am truely grateful.. Without this forum I wouldn't have got this far. Thanks very much. Schnitz. |
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| DW George | 14-11-2007 12:42 PM |
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Joined: 01 May 2007 Posts: 148 My Profile | Good to see you're doing something positive about your debts. Good luck |
