FOAK Debt Consolidation

Even the quieter UKRM comes up with good advice so I'll try here. It
isn't really my field of expertise, being rather debt adverse.

So a mate ran up 20g of CC debt trying to keep a legal case going.
So even now the interest is pretty scary.
Because of said debt they can't see to get a normal retail interest rate
loan to consolidate it. Or new cards with 0%.
Some of said cards are from banking institutions who could make a loan
but refuse, preferring to take a gazillion% APR.

WTF do you do?

I seem to recall new legislation governing this kind of thing but not
sure.

They are a homeowner with a some positive equity. And employed/earning.

I have already suggested a trip to CAB.

 

Go to your bank & get a personal loan for £20k, tell them it's for home
improvements or whatever, just dont tell them it's for debt consol or
they bump you through the roof.

Or, do an IVA to get rid of it, or go bankrupt.

 

Doesn't ring a bell.

Not a good idea IMHO. So far the debt is not secured even though the
lenders might try to do that. Turning into secured debt is generally
not a smart idea.

Good starting point.

First question, can they afford to pay more than the minimum payment?
If they're stuck with minimum payments they're probably stuffed,
gutted and filleted and more drastic measures might be called for.

If they can, snowball the debt - throw all the surplus cash at the
most expensive card, get that paid off, then subsequently work your
way down to the cheaper cards. This will take time and there is no
quick fix, but it's pretty much the only way they can salvage it
without throwing their credit rating into the bin.

If they decide on more drastic action, keep them away from paid-for
debt management companies. There are several charities out there that
will do the same thing but not take a cut from the payments. And there
seem to be an awful lot of fly by night DMCs out there.

 

That's the one!

Thanks. I knew there was something.

 

IVA is a credit rating <-> drain interface though. Might be an issue
when remortgage time comes around.

 

Sounds utterly fucking hideous. My ex knows I'd slot her and serve the
time.

Hmm IVA not applicable because she can afford to repay a decent loan.

They don't want to move because of schools and such.

It only needs a consolidated loan at retail bank interest rates.

 

I managed to get one for £10,000 twenty years ago (divorce time) from
the good old Midland at the usual rates at the time despite saying it
was for debt consolidation. Mind you they had written to me offering it
in the first place. These are hard times indeed when the ability to
repay seems to cut no ice.


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Sounds like it's a case of diverting every spare penny of disposable
income towards paying off the highest interest cards first, then.

 

Secured debt only loses out to unsecured debt in case of default.
Depending on the proportion of positive equity it might be worth doing
the sums to see what some extra mortgage would cost and what it would
solve.

 

*snort*

I wouldn't even suggest them lowering their standard of living ;o)

 

Indeed.
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| Pete Fisher at Home: |
| Voxan Roadster [ SPACE ! ] Yamaha WR250Z |
| Gilera GFR * 2 Moto Morini 2C/375 Morini 350 "Forgotten Error" |
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Nice bloke!

 

**** them, then.

 

Not a valid reason, if they are serious about sorting it.

Which you said they can't get, so forget that idea, entirely.

Sacrifices need to be made. Better to sell up and move of their own
choice than to be forced to do so. Better to change from Waitrose to
Aldi, rather than end up eating out of skips, or at soup kitchens.
Better to sell the flash motor and buy a used base model.

If they won't consider any of that, then remove yourself from the
situation, tell them to go to the CAB, then refuse to discuss it
further.

 

Aren't credit card balances effectively unsecured debts.
Just tell the card co to **** off.

 

Defaulting on something you can afford to pay off is no better than theft in
my book.

 

I used to regularly have this discussion with a friend of mine and she never
took ANY advice. She wouldn't move, wouldn't curb her spending and buried
her head in the sand.

Then a woman she knew popped her cloggs and left her 75 grand. I doubt she's
got a penny left now.


--
Beav

VN 750
Zed 1000
OMF# 19

 

You know my mother in law

 

When I was in a similar position (20k on cards & 15k loan) I moved into
the garage & rented the two bedrooms out, which covered the mortgage &
bills, & lived on beans & baked spuds. Every non-essential spare penny
went on the debts, & they were cleared in two years. I wouldn't say
it's fun, but it is do-able.

If they'd rather take the easy way out, then as others have said,
CAB-recommended IVA.

 

Gosh you too are a garage pixie!