need help with serious debt problem

kylie81

Hi guys,

Just wondering if any of ye have any experience dealing with debt management agencies here. I've got myself into serious financial difficulty and have found a couple of agencies on the net (better not name names) that claim they will contact your creditors on your behalf and try to come to arrangements with them on reducing repayments. It sounds too good to be true though. The stress of what i owe is weighing me down considerably and i don't think I can deal with it by myself. Any advice would be much appreciated.

browner85

i would be interested to see some replys here too!!

drunkmonkey

The best option is talk to your bank and see can you work out something, maybe put your loans over a long period until you get a handle on it. Loan for your credit cards etc and then cut them up. The banks are pretty reasonable, they would rather get some money over a longer period than have you default on them.
I don't know anything about these agencies you refer to so couldn't advise.

How serious is the problem? are we talking credit cards and car loans or property?

fuelinjection

Much as I hate Eddie Hobbs - his advice is to get rid of credit cards debt and credit union loans and just have the one bank loan so you pay fewer companies. I would be nervous going to a new company that promises to solve all your money worries when you are in a bad situation - they might be just trying to make money off your troubles.

[Edit ] By the way MABS is the government run advice people and I heard good things about them.

Victor

There are debt collection agencies that will try to get money out of your debtors for a fee (often a %). Others will buy the debt from you, but will take a huge commission.

Its probably much more economical at the first stage to get your solicitor to write to your debtors. Probably under €100 per letter. The solicitor might do a deal with you if there are a few.

Sorry, picked that up wrong.

kylie81

Thanks drunkmonkey,

The bulk of what i owe is 50000 in personal loans from 2 credit unions, credit card is 1200 and bank overdraft 650. Working in bar trade but only on part time hours at the mo cause things are so quiet and can't afford to make the repayments as they are now. I've been burying my head in the sand about it and i know the credit unions would probably be pretty reasonable. At the end of the day, i suppose it could be worse, there are people out there losing their homes every day. I just need to bite the bullet and make those phone calls.

Victor

Talk to your credit union manager in person. If you want bring someone with you. Pay off the high interest rate / charge loans first. Do you have assets that you can sell or some other means of gaining income / reducing your outgoings?

Do not go to any of these companies. MABS will do the same work for you for free, althoguh they are busy these days. www.mabs.ie

drunkmonkey

kylie81 wrote: »

Thanks drunkmonkey,

The bulk of what i owe is 50000 in personal loans from 2 credit unions, credit card is 1200 and bank overdraft 650. Working in bar trade but only on part time hours at the mo cause things are so quiet and can't afford to make the repayments as they are now. I've been burying my head in the sand about it and i know the credit unions would probably be pretty reasonable. At the end of the day, i suppose it could be worse, there are people out there losing their homes every day. I just need to bite the bullet and make those phone calls.

You need a 15yr loan of about 55k, it'll bring your total repayments down to around the 500pm mark, considering your age / job status etc you'll probably need a guarantor. Maybe your mum or dad?
It's a lot of money and it'll take you a while to clear it but you could be worse off.
I don't mean to sound any way bad but you'r going to have to work more, maybe another part time jobs. You need to clear down that debt as quick as possible. But if your half way through it with no missed payments in a few years the bank may be willing to give you money for a car, roll it up into a house loan etc but you need to prove to everyone you can pay it back on time.

Sort out the gurantor first, then talk to the bank with your parents, they will probably give you a better rate than the credit union.

I hope you had a good time with the 50k:)

heavyballs

MABS sorted me out good and proper but i was only talking circa 12k,
some people are in such trouble now i think there's a big waiting list with them

TestTransmission

drunkmonkey wrote: »

I hope you had a good time with the 50k:)

Me too,how could you end up owing 50k?

Toots

MABS is your best bet OP, there's a bit of a waiting list, so in the meantime I'd open the lines of communication with your bank, credit union and credit card provider to let them know you're in trouble. I'd be very reluctant to use debt management agencies that are going to charge you a fee. Read small print very carefully, MABS are the only ones I've heard of who offer this service for free.

OP, was that a typo or do you actually owe €50k to the credit union? I'd be skeptical as to whether or not the credit union would sanction a loan over 15 years. A loan of that size and that amount is equivalent to a small mortgage. As drunk monkey said, see if there's any other part time work you can pick up to supplement your income, although I know jobs are difficult to come by these days. Are you living at home or on your own?

drunkmonkey

jackncoke wrote: »

Me too,how could you end up owing 50k?

I've 2 credit cards both with a 12.5k limit, thrown in a 25k car loan and there's your 50k. It's a lot easier than you think to run it up.

I don't owe 12k on both my cards just have a big limit, just had this theory when I was younger that if I ever needed to leave the country in a hurry i'd have a lot of cash available without asking for a loan and by the time the credit card companys figured out i'd reached my limit i'd be on a desert island somewhere well away from their reach and harms way with a big wad of cash.

I had those limits at 22 I just kept asking the bank to up the limits every few months, you got to love the boom years, Kaiser Soze hasn't a patch on me:)

kylie81

I'm living away from home and renting at the minute and i'm afraid it's not typo, i do owe that much. Had a pretty good job up until last year so getting a loan wasn't a problem back then and i basically lived it up for a couple of years but i'm paying for my foolishness now! Have been fearful about it and that's been stopping me taking any kind of proactive measures to deal with it. But as you said i have to open the lines of communication and i will do that first thing tomorrow. Thanks for all the advice

kylie81

And that desert island sounds pretty good right now drunkmonkey!

Toots

I know it might be difficult, but is moving back home an option? That way you'd be saving on rent and would be able to start clearing the debt quicker.

drunkmonkey

no worries and welcome to Boards!! Loads of free entertainment here if you're saving the pennys;)

peanuthead

drunkmonkey wrote: »

I've 2 credit cards both with a 12.5k limit, thrown in a 25k car loan and there's your 50k. It's a lot easier than you think to run it up.

I don't owe 12k on both my cards just have a big limit, just had this theory when I was younger that if I ever needed to leave the country in a hurry i'd have a lot of cash available without asking for a loan and by the time the credit card companys figured out i'd reached my limit i'd be on a desert island somewhere well away from their reach and harms way with a big wad of cash.

I had those limits at 22 I just kept asking the bank to up the limits every few months, you got to love the boom years, Kaiser Soze hasn't a patch on me:)

LOL

Sorry to hear of your problems OP

Someone mentioned something about age - did you tell us your age and I missed it?

You should aim to pay off as much as you can each month - I know it will seem crappy, but paying off a little more than the minumum amounts can take a lot off your repayments.

I was paying the minumim off my CC for a while - 180. Was 180 for ages, I kept paying, then I started paying 200 and after a while the payments dropped down to 120!! I keep paying 200 - will check the minumum amount next time and hopefully will be soon down to 100 or less.

fuelinjection

About those credit card limits, i had 12,000 euro on mine... without asking them, never made a phone call to them in my life.

Then 3 years ago I called and said it was stupid that my credit card was at this level and dropped it a lot. They sounded shocked, I have to say, when I asked to drop it. Probably thought i was a spanner, but thats part of the problem the banks made here. People are 50% to blame but so are the "professionals" in the banking system. Never trust a lender again.

peanuthead

fuelinjection wrote: »

About those credit card limit, i had 12,000 euro on mine... without asking them, never made a phone call to them in my life.

Then 3 years ago I called and said it was stupid that my credit card was at this level and droped it a lot. They sounded shocked, I have to say, when I asked to drop it. Propably thought i was a spanner, but thats part of the problem the banks made here. People are 50% to blame but so are the "professionals" in the banking system. Never trust a lender again.

And you see this business of them being able to authorise an overdraft on your account without asking you - I don't like that one bit.

fuelinjection

peanuthead wrote: »

And you see this business of them being able to authorise an overdraft on your account without asking you - I don't like that one bit.

Amen. Bit like being back in school again being told whats good for you. :mad:

blahblah06

Ehh sell the car you can't afford a 25 k car.

LauranceB

I just want to state that I have no affiliation to any debt management company!
In defense of the above companies; a family member get into a lot of debt similar to that of the OP and they had no choice but to get a management company onto the case as their banks and providers wouldn’t listen to them and offered little to know help. The phone calls came on the hour; at harassment levels. The relative in question couldn’t handle the consistent phone calls and threats of landing on the hall door, so had no choice but to involve an intermediate.
Yes MABS offer an excellent service but they are run off their feet hence taking a long time to deal with individual cases.

OP, if you go the route of a management company do some research on them first.

Toots

peanuthead wrote: »

And you see this business of them being able to authorise an overdraft on your account without asking you - I don't like that one bit.

They can't do that. You can be preapproved for an overdraft, but it can't be put up on your account without you signing a credit agreement.

chris85

As said previously do some serious research on the debt management companies if you go down that route.

I may sound not helpful and apologise now but seriously you just thought you could keep spending and you would be ages away before they looked for the money.

Can i ask has your income dropped or have you lost your job recently?

I would get a budget done up. Cut unnecessary spending and make an offer to the creditors. Make a resonable offer based on your budget and back your budget up with proof of earnings and so forth. Make an offer you can afford and will stick to. Remember they are under no obligation to accept any offer you make but will generally accept a realistic offer if you back up your case.

stepbar

peanuthead wrote: »

And you see this business of them being able to authorise an overdraft on your account without asking you - I don't like that one bit.

It's not "authorised" per se. However "someone" may authorise it based on the profile of your account (i.e Turnover, Credit days, average lodgements, etc). Therefore someone maybe able to authorise a payment based on an "implied limit" (i.e. the ideal overdraft level were it authorised). You're given the benefit of the doubt and allowed time to either - make a lodgement to rectify the account or apply for an "authorised" overdraft. What would you rather? The embarrassment of having a chq bounce or the opportunity to rectify a chq you've wrote over the course of a few days?

SoulTrader

Sorry to hear the difficulty you're in OP. Here's some suggestions:

Above all else, make sure that on a weekly / monthly basis going forward you're actually making a profit. If you're income is X and you're living expenses exceed that, you're only going to wind up deeper in debt. That may mean moving back in with family, or finding a cheaper place to live, but I'm afraid you have to face the issue (which to your credit you seem to be doing now).

Were any of the personal loans you took out used to purchase significant assets? If so, can you sell those assets (car perhaps)? Or even, car example again, downgrade to a smaller car?

I know it's tough at the moment but if you're only working part-time then yes, you will need to up your hours. Besides, the more you work the less free time you have to spend / waste money. I know myself - I'm terrible for spending when I'm bored.

Check with your local social welfare office to see if you are entitled to any benefits which you are not already claiming. I don't live in Ireland anymore but you may be entitled to some social welfare if you are only working part-time?

Also, are your earnings such that you are paying tax? If you are paying tax, make sure that you have obtained all your tax credits - if you are renting you may be entitled to a rent credit. This could be worth 400euro a year. You would need your landlord's PPS number and proof of payments but again, this is assuming that your earnings at least put you in the lower tax bracket. If you don't pay tax then you can't claim a deduction, sorry.

Save! As much as you can, scrimp and save everywhere. It's not fun I know, but every 1euro you save is 1euro you keep (or use to pay off your debts). Of every extra 1euro you earn, maybe only 50% or 75% makes it way into your pocket, again based on how much tax you pay.

Do you have any savings at all? If you have any money in a savings account, it would be put better use paying off a credit card or personal loan. I can guarantee that any savings you may have are earning interest at a much smaller rate than you're being charged it by the banks!

Anyway, best of luck. Hope you manage to sort it all out.

pog it

fuelinjection wrote: »

Much as I hate Eddie Hobbs - his advice is to get rid of credit cards debt and credit union loans and just have the one bank loan so you pay fewer companies. I would be nervous going to a new company that promises to solve all your money worries when you are in a bad situation - they might be just trying to make money off your troubles.

[Edit ] By the way MABS is the government run advice people and I heard good things about them.

Eddie Hobbs actually favours credit unions over banks. One piece of general advice he has for 2010 is that you open a credit union account as they are more helpful than banks (obviously he is assuming that you are borrowing responsibly and paying back the debts you owe). He always advises that you get ready to move to the likes of Rabo at any sign of Irish banks going under (yes this is 2010 advice).

I'd myself get a loan with your credit union any day over the banks here. I've always made repayments and they are flexible so if you were to be a couple of weeks late for example on a one-off they don't write letters to you every day about it. They are just far easier to deal with and once you build a name with them for repaying as per the terms you agree, getting your next loan will be easier.

No competition.

Pablo Sanchez

SoulTrader wrote: »

Sorry to hear the difficulty you're in OP. Here's some suggestions:

Above all else, make sure that on a weekly / monthly basis going forward you're actually making a profit. If you're income is X and you're living expenses exceed that, you're only going to wind up deeper in debt. That may mean moving back in with family, or finding a cheaper place to live, but I'm afraid you have to face the issue (which to your credit you seem to be doing now).

Were any of the personal loans you took out used to purchase significant assets? If so, can you sell those assets (car perhaps)? Or even, car example again, downgrade to a smaller car?

I know it's tough at the moment but if you're only working part-time then yes, you will need to up your hours. Besides, the more you work the less free time you have to spend / waste money. I know myself - I'm terrible for spending when I'm bored.

Check with your local social welfare office to see if you are entitled to any benefits which you are not already claiming. I don't live in Ireland anymore but you may be entitled to some social welfare if you are only working part-time?

Also, are your earnings such that you are paying tax? If you are paying tax, make sure that you have obtained all your tax credits - if you are renting you may be entitled to a rent credit. This could be worth 400euro a year. You would need your landlord's PPS number and proof of payments but again, this is assuming that your earnings at least put you in the lower tax bracket. If you don't pay tax then you can't claim a deduction, sorry.

Save! As much as you can, scrimp and save everywhere. It's not fun I know, but every 1euro you save is 1euro you keep (or use to pay off your debts). Of every extra 1euro you earn, maybe only 50% or 75% makes it way into your pocket, again based on how much tax you pay.

Do you have any savings at all? If you have any money in a savings account, it would be put better use paying off a credit card or personal loan. I can guarantee that any savings you may have are earning interest at a much smaller rate than you're being charged it by the banks!

Anyway, best of luck. Hope you manage to sort it all out.

Excellent advice, did the same for the last 24 months and it was PAINFULL but in the end im just after paying off the last of my debt, 24k in 24 months, now i know any money i have left after bills is all my own and thats a better feeling then having a nice car etc.

peanuthead

Pablo Sanchez wrote: »

Excellent advice, did the same for the last 24 months and it was PAINFULL but in the end im just after paying off the last of my debt, 24k in 24 months, now i know any money i have left after bills is all my own and thats a better feeling then having a nice car etc.

Well done!!

Toots

peanuthead wrote: »

Well done!!

+1, fair play PabloSanchez, I'd say it was difficult enough.

Pablo Sanchez

Toots* wrote: »

+1, fair play PabloSanchez, I'd say it was difficult enough.

Yeah not easy but worth it. Started by selling the car and trading down to a junker. You need to look at every bit of expenditure to see where you can cut back, weather its a cheaper phone/broadband contract or the 101 things that you may be throwing your money away on every month, ie cut out take aways, cancel your gym membership if you dont use it and sadly to say, reduce pints. Make sure to try and get the most competitive renewal quote for your car/home/life/health insurance.

Try and get what you can in Lidl, the difference that can make to your pocket is immense.

Secondly look at the rate you are paying for your loans, can you refinance to a cheaper rate? Some credit card companies (MBNA does anyway) allow you to put a 'cash advance' on your card and then give you 6 months at 0% interest.....if you take this option make sure you pay it off within that time frame. Anyone paying off debt knows how painful it is to pay eg 500 a month off a loan but only 430 is taken off your loan principle as you need to pay the monthly interest:rolleyes:. If you do have 2/3 loans make sure you focus on paying the most expensive loan first, eg Credit card, car finance, bank loan, credit union in that order.

Stick with it, pretty soon you will see your debt reducing and that will spur you on to keep going.