I've dug myself into a hole

TonyInch

I need some financial advice please.I’m in full time employment earning 1990 net a month. I’ve been paying 780 a month to credit union for over a year on a 36,000 loan and my half of the mortgage is 600 (have the house 3years). My credit card is 400 over my credit limit, which is 6000 just from combined interest as I can only pay 100 a month. I’ve been juggling all this for a while now but my car just broke down and needs repair so I’m really starting to struggle. My partner covers nearly all the bills and groceries while servicing her own commitments!

What are my options in managing my mountain of debt?

Here's a run down of my unsuccessful endeavours

My bank refused a loan for consolidation purposes and the credit union said I’d get a black mark against my credit rating if I reduced my monthly repayments. We had a meeting in our local MABs office and they said come back when I’d missed repayments but I don’t want to end up down that road!

lucky-colm

showing them kind of wages and them kind of repayments i doubt you will get a loan anywhere for consolidation purposes

the credit card is the most vicious loan as you are now paying interest on interest.
have you got a second credit card? if you do you may be able to transfer the balance to it and get a cheaper interest rate or a 0% interest rate. if you don't have one maybe your partner has one and she might be able to get this offer for you.

next iwould go to the bank and see if you could stretch out your mortgage payments over another 5yrs or more you can allways shorten the loan term when things improve again. if you have a tracker mortgage then you might be better if you could avoid doing anything to the mortgage at all as the bank will instantly move you to a variable rate which is 2-3% higher

next i would go to the credit union and explain to them that a black mark on your credit rating looks extremely unavoidable if your current situation continues and that it would be better if you could reduce payments now by 200 or 250 permth rather than start missing them alltogether. you could explain to them that this is only a temporary measure and that you plan on resuming normal payments once you get over this difficulty.
alternativley ask them for a new loan to replace the old loan and stretch this out over a longer period.

when you are talking to the bank or credit union it is important to emphasise to them that this is a temporary situation and that things should get better in the next 6-9mths <SNIP> banks do not like to hear people that owes them money talking doom and gloom they like to hear positive talk and by telling them that your wages will be increasing again in the forseable future they feel alot more confident about you and will be more willing to help you out. but going in there and telling them that the company iam working for is basically f**ked they close up shop straight away and start playing hard ball with you to try and get as much money back of you as fast as they can before you go bust. this is where they use peoples good will, consciousness, decencey and dying instinct to try to meet payments for risk of getting a bad credit rating against them


hope it works out for you

Jet Black

Based on your income and monthly expenditure im suprised you were given such an amount. Nearly 80% of your monthly income is gone from loans, credit cards and the mortgage. Thats before bills and other living expenses.

Have you considered a remortgage? Put all you owe with the mortgage. It will significantly reduce the amount you are paying each month. The loans can be extended to a term that will be easier to pay each month. You will be paying less interest (depending on the mortgage interest rate) just be aware of the risks.

TonyInch

Thanks lucky-colm & Jet Black for your replies:

Sorry but I should've said that last September I tried to tackle the problem with some of the solutions suggested.

My partner tried for a credit card but no joy unfortunately and we also tried to re-mortgage but our house is in negative equity-surprise surprise

I think I'll meet with the credit union again to ask for a temporary reduction in my payments or an extension of the loan term.I've 2500 savings in the credit union so I had hoped that a new loan from my bank would allow me pay off the credit union early and free up the savings to fix car and sort out some of the credit card.

The only other option is getting a part time job at the weekend.My only problem with this is that if my annually salary is 30k,my part time income will be halved by tax leaving me working for roughly 4euro an hour and long term push me into the higher tax bracket!

ScouseMouse

You may just have to bite the bullet and ask for help. MABS are used to cases like this. It may affect your credit rating, but in the long run, when you work your way out of it, you will be set up.

There are thousands of people in your situation and it will be nothing new to your creditors that you are in difficulty. I say difficulty, because thats all it is. Severe trouble is when you start bouncing things and have debt collectors calling.

Its OK to ask for help, it shows you are responsible and WANT to get sorted. A lot of people do nothing and hope it will go away, but it wont, it will just snowball.

You have stayed on top of it upto now but as times get tougher, you are in danger of floundering.

Get onto MABS. So, your credit card may get cut up, but they can negotiate a cut or even a freeze of your interest charges, but going back to cash will not hurt you.

Do it now.

stepbar

TonyInch wrote: »

Thanks lucky-colm & Jet Black for your replies:

Sorry but I should've said that last September I tried to tackle the problem with some of the solutions suggested.

My partner tried for a credit card but no joy unfortunately and we also tried to re-mortgage but our house is in negative equity-surprise surprise

I think I'll meet with the credit union again to ask for a temporary reduction in my payments or an extension of the loan term.I've 2500 savings in the credit union so I had hoped that a new loan from my bank would allow me pay off the credit union early and free up the savings to fix car and sort out some of the credit card.

The only other option is getting a part time job at the weekend.My only problem with this is that if my annually salary is 30k,my part time income will be halved by tax leaving me working for roughly 4euro an hour and long term push me into the higher tax bracket!

No offence, but 4 eur an hour is better than nothing.

I wouldn't start robbin peter to pay paul. The Credit Union is the best place to have your loan at the present time (and probably the cheapest). I'd hazard a guess that the Credit Union loan is for 5 years? I wonder would they entertain stretching that out to 7 yrs? At least you could then use the difference to pay down the credit card.

You won't get a new loan full stop. So forget about that. You can barely afford the ones you have. You don't need to be a genius to point that one out, and to be fair, you should know that too.

Dare I ask what the 36k went on?

sarahlulu

not sure that telling bank/credit union that your boss has promised a return to full time hours in 6 months is good advice unless this is actually the case. Much better to be straight from the start.

pearcider

stepbar wrote: »

Dare I ask what the 36k went on?

+1

Toots

lucky-colm, please read the charter in relation to 'dishonest dealings'. Do not advise posters to make false declarations regarding their financial circumstances.

TonyInch

Ok the 36k loan is for 5years got it back in 2008.There was a 10,000 student loan from credit union already and then I paid off a 28k GE money loan I'd got in 2006 with 26k.With the GE money I purchased a car 10k (which was a dud and I've already sold), 6k solicitors fees from the house purchase, the rest was for improvements on the house which was in bad repair when purchased.

thirtythirty

I can't give any advice on how you should work your money because honestly I just don't know what would be the best bet.

However as i see it, it seems like your monthly outgoings are either nearly equal, or surpassing your monthly income leaving you with little to none to pay back existing debts, and currently you are looking for ways to aleviate this by paying back the critical debts via increasing debt / sourcing new credit from some other source . Is that semi-right?

Forgive me if i sound like i'm trivialising the whole thing, that is not my intention - literally just trying to think of alternatives. So my question would be: would it be possible to go to either a family member or good friend and ask for a lump dig-out to clear the credit card, and ease the other repayments for the next 6 months? If you could do that then you could work out a repayment option with the family member / friend that suits you both. If still necessary in 6 months, then reduce credit union payments and accept the black mark then.

I know you've probably already assessed that option, but i just thought i'd voice it as a complete different option to trying to think of ways to massage outgoings to the various current institutions. Hope it works out for you either way.

TonyInch

Thanks spottyelephant-You’ve got it right
My commitments eat up 75% of my wages and any unplanned expense sends my finances spinning. I think I'll have to ask a friend or relative for a dig out-bertie style! Its just long term I will keep repeating the cycle every few months until I get a reasonable grip of my debt!

Its ok toots and sarahlulu I'm not interested in any 'dishonest dealings' it always catchs up with you!

NewDirection

I'm guessing selling the house is a very last resort?

loopylo

Im in a similar situation myself..

Although not as much money..This time last year i took a loan of €2,500...i was stupid and took it out over 12 months as it was for a holiday. Shortly after taking the loan out my employer says i was overpaid and i had to pay it back, cut a long story short for the past year iv been paying them back...it was quite a bit of money i owed them and it took a big chunk of my income out... I missed some payments and my bank passed my details onto a credit service company..so basically my hole life is ruined...since then iv had to take a further 5% paycut of top of paying them back...so now iv had to reduce my payments on the loan and my credit history is ruined now for the next 8years..

To top it all off...I recently found out im preganant and i now im stressing out completely...iv been hospitalized once already due to the stress but i literally have no-one to turn to and help me with this...what i really wanted to do was take 1 loan out and pay back the bank straight away so my credit history can go back to normal sooner rather than later but i cant even get a loan from my credit union can i?

I dont know how to go about everything...im living each week on a wing and a prayer...

can someone maybe tell me if they have been in the same situation or know if i can get a loan somewhere?

Dublin_Gunner

Well first things first, use some of that 2.5k in the credit union to bring your CC below its limit - then switch it to the minimum (5% I think) repayment option. That should leave the CC manageable anyway.

As far as the CU loan goes - all you can do is talk to them to see what you can do about getting the repayments down - hopefully they'll be accommodating.


But defo get off the net and down to the CU / Bank and try to arrange something. And do it NOW, before things REALLY get out of hand.

ncmc

I would agree with those who have advised you to go back to the Credit Union, be persistent, they probably don't want to be seen as a soft touch, but if you give them the option of A) I can pay my loan off at a reduced rate over a longer time or I can pay zero cos I'm broke and see you in court. I would be suprised if they went with option B .

Have you talked to them about accessing your savings? I know you normally can't if you have a loan on the a/c, but maybe they could work something out with them when you're in such difficulty.

Longer term, could you maybe look at selling your car? I'm guessing that that's where some of the 30K went so it may be worth a few bob? IF you really needed a car, would you consider trading down to an older car just to get you from A to B, even just for a year - 18 months til you sort yourself out. If it cleared that CC debt (which I would be most worried about) it would be worth it.

Just wanted to add, if you are taking home €1990 a month, you are still abit away from the higher tax bracket by my calculation. If you could even get a part time job for 4-6 hrs a week, you should still be in lower tax bracket and every bit helps!

Shifty

Two options for approaching the credit union to help reduce your outgoings:

Make an appointment to meet with the credit committee:

1. Request to pay interest only for a period of time. Although the arrears will still mount, as it is an arrangement you will not be blackmarked or chased for it and it will give you breathing space.

2. Apply to do a share to loan transfer, this will reduce your existing loan by the amount you have in shares (this option leaves you with no shares though) and renegotiate your repayment plan based on your new outstanding balance.

AARRRGH

I don't really get this.

Income: 1990
Expenditure: 780 + 600 + 100 = 1480
Cash after loans: 510

You should be able to easily live on 510. Judging by your posts it seems you have a lifestyle problem, trying to live beyond your means.

This is what I would do if I were you:

Make a plan for the next 12 months - no alcohol, no junk food, no restaurants, no pub.
Increase your CC payment to 210 per month.
This leaves you with 300 per month which is enough for food and bills.

In 12 months time your CC will be in better shape (probably around the €5000 mark) so you can then try to move it onto a 0 interest CC.

There is no quick fix, so you just have to be patient.

TonyInch

Thanks for all the advice I've enquired with the tax office and I'm ok on that score as ncmc said,so I'm on the hunt for a second job.I've contacted the credit union and I have to provide all my expenditure to prove that I need to reduce my repayments so I'll take it from there.AARRRGH your 100% right and I probably just needed to hear it!

On a separate note and nothing against anyone who posted here you were all very helpful so it’s probably pointless! But before I posted my own problems I looked over some of the older discussions about debt and I could feel the smugness of some individuals when asking where the money went? I’m the first to admit I made mistakes with my finances and I know now that I was living beyond my means and it's reality time now but I'd just like to point out that people come for help not "I told you so" and as I've said definitely not directed at anyone who posted here and thank you again for the guidance!

Best of luck with your troubles loopylo

Heisenberg.

This post has been deleted.

TonyInch

Cant sell car I drive for over an hour to get to work morning and evening so as you can imagine the miles are high on the car now and I'd probaly get very little for it anyway!

glanman

I don't know a huge amount about this and your situation but why don't you use your savings to ease the burden? I would use this on the CC bill. And then cut up the CC as it is not a good way to finance things, you will be able to live without it I am sure. CC interest is tough to stay on top of.

Also, if possible ask family who might have something to spare, might be time to swallow your pride if this is an issue.

Best of luck and try not to panic or do something stupid!

Cicero

OP- from your post, you at least 'appear' to have support behind you in terms your 'other half'- this is good...as long as you have someone else sharing the burden, it won't feel like such an up-hill struggle...but you need to keep communcation lines open weekly if not daily between that person....1st step is getting rid of that CC debt...@ 16+ % interest ...., it's just not a runner....it also indicates that you are spending beyond your means, so you have somehow 'saved up' problems to this point...maybe some behavioural/lifestyle changes are also required?...no judgement here btw, just advice...it happens..you've posted a problem...there IS a solution...while 1990 per month is not huge, I don't think you've posted what other income is coming into the household?...(maybe I missed it)...you're not under yet by a long shot...you have regular income coming in...keep paying 'something' off everything but work with MABs on a long term plan..

PS- I assume you have done an inventory of income Vs outgoings....even something as simple as a mobile phone bill charge could add 600- 700 a year to your income...

dermothickey

Was in a similar situation a while back sold my car got 3200 for it bought a cheap runaround for 500 euro 1.2 ltr engine saved a massive fortune, paid off the cc, tore it up ..got a new one recently and am seeing it rise again..

ball ox

You can also consider asking your mortgage provider to switch your repayments to interest only for a year. You can use the extra cash to handle your credit card each month. If you write to them explaining your situation they should allow it (depends on who your with though).