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Help - Drowning in debt. Advice needed please


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I hope somewhere out there can help me.:(

I originally came on this site for information about reclaiming bank charges and have already started the ball rolling.

Since then I've sat down and taken the frightening step of adding up my various debts and income and realise that my debts are really out of control. I was forced into taking a long, cold look at my debts when Abbey Credit Card increased my interest rate from 14.9 percent to 26.9 percent overnight. When I called them to ask why, they said it was a 'business decision' and refused to say any more. They subsequently reduced this to 19.9% (still loads more than I was paying before). The upshot of this is that my minimum payments on that card alone have gone up from £103 to £146 a month leaving me even worse off than I was. Of this, only about £12 per month is paying off the debt - the rest is just interest. I've worked out that over the course of a year I will give them around £1400 and only about £90 of my debt will be cleared. I just can't go on like this anymore.

 

I have a limited income and if I add up my credit card debts plus a loan I have, plus my bank overdraft I'm around £26,000 in debt. My annual income is only £12,000 and I get tax credits of around £350 a month. I also have a lodger who gives me £60 per week.

 

Because I'm paying all my credit cards and loans I have nothing left to live on so I then have to buy food, etc., on credit card. Vicious circle. I am currently paying around £500/month to credit cards/loans and apart from the loan don't see my debts reducing because I'm only paying the minimum amount. My take home pay is around £800 a month (plus lodger plus tax credits = around £1,350) and my mortgage is £550. Council Tax is £100/month. I'm really feeling defeated by all this.

 

I really need to sort this out and get into a position where I have money to live on while continuing to pay my debts. I'm taking a day off on Friday to ring the CCCS for advice, but I'm worried they'll suggest I should sell my house. I know that I couldn't rent anything for less than I pay for my mortgage so it seems like a stupid solution, but I am scared that because I have some equity in my house they will insist that I use it. My house is worth about £180,000 and the equity is about £45,000. Seven years ago I was homeless and living with my daughter in a hostel so my home is very important for my own and my child's security, but I do realise I've probably bitten off more than I can chew.

 

I have a regular income from my employment, but it's not very much, and I'm just keeping my fingers crossed that the lodger stays a while because in the past my income from renting out a room has been very erratic and I don't feel I can count on the arrangement continuing indefinitely (although obviously I would try to find another lodger if my current one left).

 

I do various other bits of part time work when I can get it but it's only occasional (maybe about £400 a year's worth) and I can't really increase my working hours or go to work at nights as my daughter is only 11.

 

Can anyone offer me any advice? Would an IVA be an answer or would that put my house in jeopardy? I have been reading about Debt Management Plans but they seem to be for smaller debts than mine.

 

I really don't know what to do. Has anyone been in a similar situation and found some light at the end of the tunnel?

 

Help!

southcoastgirl

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Hello southcoastgirl,firstly let me say welcome to CAG,you have come to the right place in that people will try to help you and that hopefully no one will judge you.

 

I`m no expert but talking to CCCS is a great move as you have realised that you cannot go on as you are,

 

If i was in your position i would take some time to prioritise your debts,obviously things like the mortgage,council tax,utilities must be paid first.

 

You have started the ball rolling on that score,by adding up your liabilities compared to income.

 

With regards to bank charges have you got any info of the amounts involved ? as that could help pay off or go towards your committments

 

Good luck regards S

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Hi southcoastgirl, you could also go to your local citizens advice bureau, they will sit down with you and go through your finances and give you template letters where you can write to the lenders and ask them to freeze the interest on your accounts, and set up a payment plan with them, you will therefore quickly pay off your debts. As long as you follow their advice it is highly unlikely that they will not agree to your plan for repayment (trust me I have been down this route - with far far larger debts than you have with a similar income at the time)

 

Please feel free to PM me if you want any more advice/details

REFUNDED

Hubbys - HSBC £4,165 paid 18/8 after MCOL issued :)

HSBC - £651 paid 18/8 after MCOL issued :)

HSBC - £147 Prel 7/8, LBA 21/8, MCOL 6/9 £241

Hubby Halifax - Prel 29/7 £215, LBA 21/8, Offer rec. £110 22/8, MCOL 6/9 £298

Abbey - £2758 - Prel 26/6, LBA 10/7 - MCOL 26/7 £3,391, offer 25/8 £1,755.94, paid £3567.32 after Case manag hearing

Barclays - £675 Prel7/8, LBA 21/8, offer received £300 MCOL 6/9 £998 - Paid £1,012 before going to Court

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You can also speak to National Debtline on 0808 808 4000 for free confidential advice. The important thing to remember is that unsecured creditors like cards loans etc are actually quite limited in what they can do if you don't pay the full amount. You should start by doing a budget sheet but under your outgoings just list your essentials for a decent standard of living - NO MINIMUM AMOUNTS TO CARDS OR LOANS!!

 

If you do the budget this way you will get a realistic 'surplus' figure when you deduct your essentials from what you have coming in. This surplus figure is all that you will have to offer between the ' non priorities' like credit cards. Depending how much you have you will then have 3 or 4 options to deal with the debts.

 

If you have an overdraft with your current account bank ( or any other debt with them ) you will need to look at moving bankS AS THEY COULD TAKE THEIR PAYMENTS REGARDLESS. Any overdraft you leave behind is just another debt like a credit card.

 

Do phone someone to get proper detailed advice though - a budget sheet is just the starting point. Good luck :)

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increased my interest rate from 14.9 percent to 26.9 percent overnight. When I called them to ask why, they said it was a 'business decision' and refused to say any more

 

Did they inform you in writing about this increase,have you got statements to prove this increase ?? if so report them to OFT and TS....also if you signed a CCA take a look at the interest rate on it.

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Did they inform you in writing about this increase,have you got statements to prove this increase ?? if so report them to OFT and TS....also if you signed a CCA take a look at the interest rate on it.

 

They will not have to prove customer received the interest rate rise notification just that it was sent ( Hmmm would they admit it if they didn't!! ). Also you will find with most standard credit card agreements the interest rate is variable ( not including special deals etc )

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I stand corrected or sit as the case maybe,

basically the financial instituation is now a law amongst itself,making the rich richer and the poor poorer.

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I stand corrected or sit as the case maybe,

basically the financial instituation is now a law amongst itself,making the rich richer and the poor poorer.

 

Hope I didn't give the impression I agree with this - just playing devil's advocate! One of my friends had her Sky card interest shoot up & she hadn't received anything. She was lucky enough to have OK credit rating so voted with her feet but not everyone has this luxury...:(

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No i agree with you Powell,we now live in a world of deceit ,DCA'S,BAILIFF'S and even council's all bend the rules to collect their debts regardless of a person's status.

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Dear Everybody,

Thank you so much for all your support and I will certainly take your advice. Thanks for telling me about the national debtline - have just looked at their website and it looks brilliant.

Tiggs I will definitely PM you tomorrow. I desperately need to 'talk' to someone who has been in a similar situation as I'm so worried.

I am really in a position now where I just can't trust any financial institutions - I think all they do is kick you when you're down. They really are a law unto themselves aren't they?

I am really grateful for all your help.

By the way, think the bank charges I'm reclaiming will be around £800 so - though it seems like a drop in the ocean - it will really help.

Can anyone suggest a good alternative bank (this is not a joke!)?

Thanks again,

southcoastgirl

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You need a basic bank account as you won't usually need to be credit checked with these ( as they don't offer overdraft facility ). If you need or prefer a debit card you are limited to 2 - The Co Op Cashminder & Natwest Step accounts.

 

Best of luck with everything :)

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HI

 

Ive been in the same situation as you. I rented my house out before it was taken off me and contacted CAB, the advised me to have my debt managed, they have two companies who are charity registered and do not charge for there help. They helped me fill in all the forms ie expenses etc, I have just had my first month of having spare money for food etc with out borrowing. and the phone calls have almost stoped. I have never been told to sell me house. I have been advised that my credit rating will be pants after but it is anyway. The peace of mind and help to get things back on trach is priceless.

:)

Keep strong. email me if you want to chat x

 

p.s. I opening a Yorkshire bank account. Told them exactly the situation and I only wanted a basic cash account. There card also has maestro so you can still pay for goods in shops. No cheque book or overdraft. and it works fine.

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