Debt Issue

[INdebted]

Hi,

I've read through (and I'm in the process of reading the rest) most of the posts in the first few threads here, a lot of great advice.

What I'm wondering about is whether or not there is a debt consolidation service available in Ireland. I don't particularly want to go to MABS yet as I'm not behind in my payments, I just have a long way to go with them.

Basically my situation is this, through bad management and some unforeseen circumstances I've managed to rack up a huge debt. Between 2 credit cards, a bank loan, overdraft and credit union loan I'm in debt to the tune of approx. €26K. In an average month I'm paying back around €800-€1000 off this but because of interest rates etc I'm not really making as much of a dent in it as I would like, and as soon as something comes up unexpectedly or out of the norm such as birthdays, xmas etc then I undo the work of the previous few months.

I'm going to try and get a new credit card with a 0% interest rate and transfer my balance attempting to clear it within the free period, but before I do I was wondering if there is a consolodation provider in ireland or if there is a better way of going about this?

Thanks for any help you can provide.

 

[ClubMan]

What I'm wondering about is whether or not there is a debt consolidation service available in Ireland. I don't particularly want to go to MABS yet as

MABS is not really a debt consolidation service - simply an advisory service. There are commercial operations who will "advise" you and carry out debt consolidation (usually onto a mortgage) but you really want to make sure that you get independent, professional advice and not a sales pitch.

I'm not behind in my payments, I just have a long way to go with them.

Can you explain this a bit more please?

Basically my situation is this, through bad management and some unforeseen circumstances I've managed to rack up a huge debt. Between 2 credit cards, a bank loan, overdraft and credit union loan I'm in debt to the tune of approx. €26K. In an average month I'm paying back around €800-€1000 off this but because of interest rates etc I'm not really making as much of a dent in it as I would like, and as soon as something comes up unexpectedly or out of the norm such as birthdays, xmas etc then I undo the work of the previous few months.

Having read some of the other threads/links mentioned above have you identified remedial strategies (e.g. doing a spending diary, instituting a strict budget, foregoing non essential purchase, dealing with the most expensive debts first etc.) that apply to your situation and that you plan to put in place?

 

[INdebted]

Can you explain this a bit more please?

Sure, what I meant to say was that I've never missed a payment on any of my loans but when I look at the progress that I'm making I get disheartened because it doesn't seem to be going anywhere.

Either the majority of the payment is taken up with interest or I'm forced to use one of my credit cards again mid-month in order to meet some payment or simply for spending money to get through the month. So while I don't have any issues with companies mailing me looking for payments, I think that because of the number of different payments and interest rates applicable I'm not clearing the debt as quickly as I would like to. Hence the consolidation question, if I can get everything into one repayment with one interest rate then I believe I can clear it faster.

Having read some of the other threads/links mentioned above have you identified remedial strategies (e.g. doing a spending diary, instituting a strict budget, foregoing non essential purchase, dealing with the most expensive debts first etc.) that apply to your situation and that you plan to put in place?

Some of the things that stick out in terms of what I can do are as follows,

1. Replace current cards with low introductary rate cards and destroy the cards when I get them. Setting up a direct debit for monthly payments for the duration of the reduced rate.

2. Remove the payment protection on my loans and Cc to reduce the monthly payments required

3. create a budget spreadsheet (this will be first on my list) to analyse where I can make savings on things today and reduce my outgoings.

4. concentrating on paying off the worst card first. So instead of lumping money off two cards at once I'm going to make the minimum payment on one and throw as much as I can at the other one.

The main problem I have is that I'm handing out close to €1000 a month on 4 different loans when really I would like to have one loan that I could pay €700-€800 on and make sure that mid-way through the month I don't have to resort to using the credit card again just for cost of living expenses.

 

[ClubMan]

You sound like you're making progress anyway - especially if you put your 4 point plan into action ASAP. A spending diary might be a good precursor to point 3 but if you have historical information from which you can work then that's as good as anything (it's just that sometimes sporadic unplanned purchases can add up and people don't realise this so a diary makes sure that these are caught too). You should still consider contacting MABS as you don't need to be behind on payments for them to assist. At least look at their online debt management guide. EBS's InsideTrack guide also contains some useful advice on dealing with (credit card) debt. Of course much of this stuff is already covered here on AAM in the key topics threads etc. but no harm in getting different slants on the same issue. Do you have a mortgage and, if so, could you consolidate your debts onto that preferable with the top-up scheduled for repayment over a few years and not over the full remaining term as this would probably leave you spending more on interest than if you just kept the existing debts! Even if you don't have a mortgage could you substitute lower cost credit (e.g. a personal loan) for more expensive credit (e.g. credit card balances)?

 

[demoivre]

I am assuming you can't go the mortgage top up route that Clubman mentions. A 26k term loan over 5 years will cost you around €520 per month. If you have a good payment history ( you say you are paying around 1k per month and haven't missed payments ) then why not approach the bank where you have the term loan , tell them you want to consolidate with a 26k loan and show them that you can easily meet the repayments as you are already paying around 1k per month on a few different loans. If they don't entertain you try the credit union though they may not be the cheapest option.