Cannot afford to pay Debts

[May07]

Just looking for some advice please.

Due to a relationship breakdown over a year ago, I have found myself going from Peter to Paul to try to keep my head above water, resulting in a lot of personal loans (30k) together with an overdraft of 5k and a Creditcard debt of 8k.

I have gone to MABS but unfortunately the lady whom I met with said she could not see any way out for me unless I was to sell my home, which of course I don't want to do.

I have contacted the bank to ask them to refrain from charging interest on the Creditcard to allow me to try clear the debt as opposed to just interest each month but again they said that on my creditcard application form I signed up to pay 18% so they have to charge it.

I was considering trying to negotiate with the again but just wondering if it would be worth my while, or as a really last resort what would be the consequences of me not paying the debt, apart from the obvious of bad credit rating. Just to say this is not a route I want to go but can see no other way out.

My brother has offered me a loan of 10k with no rush on repayment but I am weary of just adding more debt on top of debt, if I were to take it would it make sense to just pay the creditcard outright and the balance off the overdraft. thanks.

 

[purplealien]

If you own house would you consider bringing a lodger in?? Can you downsize your car?? Can you give more information on exactly how much debt you are in etc

 

[asdfg]

Take the loan from your brother and pay off the credit card and reduce your overdraft.
You say you own a house. Is there any way you could let out a room and use this to repay the remainder of the overdraft personal loans etc .

 

[Celtwytch]

18% is a very high credit card interest rate. Have you considered switching to a card with a lower rate? Many banks offer introductory periods too where you have 0% interest on either balance transfers or purchases (I would go with the balance transfer one). Check out this site to compare credit cards: http://www.itsyourmoney.ie/cs_tab.jsp. If you are paying a mortgage, see if your bank will allow you to take a break from repayments (I know this ultimately adds more time to the mortgage period, but at least it would give you a breather when you really need it). It's good to know that your brother has offered to help out too. I know you don't want to add to your debt, but at least his loan would be interest-free, with no demands for repayment. This loan would be best used to repay the debt with the highest rate of interest. If you do switch to a lower rate credit card, then the overdraft rate might be higher, so it would be wise to clear that first. Best of luck with whatever action you choose to take.

 

[Bob_tg]

What about rent out the whole house and rent a room in a location somewhere cheaper for a while?

 

[mooney76]

Although not wise to convert short term debt to long term repayments, credit card debts will mount very quickly as im sure you're all too aware. Would you consider getting a top up on your mortgage assuming you are paying one, to cover your debt loans and credit card for the moment or in the case of having a mortgage pushing it out to 30/35 years?

 

[nesbitt]

All advice given so far is excellent, if you follow you should get out of this money pit. However for future financial health you need to look and your income and necessary spending and work out your fun money and stick within your limit. I'm not saying your debt is due to this but you could end up in debt again unless you curb habits. Take care, no judgement intended.

 

[Bronte]

I was considering trying to negotiate with the again but just wondering if it would be worth my while, or as a really last resort what would be the consequences of me not paying the debt, apart from the obvious of bad credit rating.

If you do this you'll also lose your house. What did you spend the money on? 43K is a lot of debt, especially if it all occurred in one year you also forget to add your mortgage to your debt as you also owe this. I recommend that you do the money makeover and you will get better advice.

 

[rmelly]

Have you missed any repayments yet for any of the debt?