Author Topic: solution to cc debt needed  (Read 1465 times)

crb121283

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solution to cc debt needed
« on: Oct 04, 2009, 08:35:27 PM »
I'm 25 with an income of £1k pcm after tax.
Credit card repayments are currrently £400 on £13k debt across 8 cards.
I cannot negotiate balnce transfers as have missed a couple of payments.
I wanted to go for a loan to pay capital debt off - for £300 a month I could clear debt within 5 years.  So far been unsuccessful.
I am now considering a DMP but really don't want to totally ruin my rating.
I have a mortgage but no equity.
Any body have any ideas.

bankruptcy.co.uk

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Re: solution to cc debt needed
« Reply #1 on: Oct 05, 2009, 11:33:12 AM »
Hello there.

I empathise with your situation but all I can do is offer you best advice. You currently have 4 options in front of you.

1) Do nothing, keep paying the monthly repayments and eventually you will get debt free. This however will mean that with no interest charges at all, 13,000 divided by 400 = 2.7 years. Obviously with interest this figure will be a lot higher. 
2) Enter a debt management plan. Your monthly payments will be reduced to approximately £250 - £300 a month. Interest 'can' be frozen in most instances which means that you are in effect able to pay off your debts at a slower rate. What I would warn you, is that some banks refuse to freeze interest and this can mean that although you believe you are paying off your debts, in fact you are just parking them as the interest - the payment keeps the balance at the same level. Be very wary of false promises from debt management companies guaranteeing youo that the interest will be frozen (no guarantees can ever be made). You are correct in stating that debt management effectively ruins your credit rating.
3) DRO - If you have less than £15,000 of debt, Less than £50 of disposable income per month, Less than £300 of assets, either no car, or a car of less than £1000 in value and have been a UK resident for the last 5 years you can apply for a debt relief order ( a baby bankruptcy ). This effectively elminates your debts for just £90. Your credit rating is affected however, but not to the same extent as a bankruptcy/IVA. What I would state is that you are able to start rebuilding your credit rating after 12 months, which would mean that within 4-5 years you would be debt free and have your life fully restarted.
4) If you have more than £50 of disposable income, then you do not quallify for a DRO and therefore bankruptcy would be the best option.
5) IVA - Since you have no assets, entering an IVA would be lunacy. As you are paying a premium every month simply to insure the assets that you do not have from your creditors.
Raphael Gilbert
Head of Insolvency Divison www.ban

bankruptcy.co.uk

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Re: solution to cc debt needed
« Reply #2 on: Oct 05, 2009, 11:36:18 AM »
Sorry I just read that you have a mortgage in 0 equity.

Unfortunately this means you would not be able to enter a debt relief order.

However, If you have no equity in your property, your property would be able to survive a bankruptcy order. (As the official receiver would have no interest in your property as selling it would simply just repay the mortgage provider and not your creditors).

Since your property would survive a bankruptcy, I see no sensible reason for even mentioning IVA's to you further.
Raphael Gilbert
Head of Insolvency Divison www.ban