Debt Consolidation Advice! Please Help.?

Question

I am in debt by quite a considerable amount and would like to possibly consolidate my debts so that I can afford to pay them off better and also to be able to just pay one monthly payment.

I dont know much about all this and was wondering if I do this will the company actually pay off my debts so that my credit score will be getting repaired why I am paying the consolidation company monthly?

I dont want to go ahead with it if it is not going to make my credit score get any better or go back to how it should be.

Any advice or help would be appreciated.

Thanks in advance!!

Answer 1

If you're in trouble, they will probably charge you more interest than you pay now.  Maybe not, if it's store card and credit cards, but it will still be pricey.

Here''s what I'd do.  Sit down with a piece of paper and the latest statements for each of your debts.  

Work out how much you can pay in total each month. Be realistic. There will be emergencies and you do need some small treats or you'll blow the plan.

If you have a mortgage, pay that first. No ifs, buts - miss a prtgage payment and you're in trouble, your credit record just go much much worse.

So, deduct that from your payment amount.  

Then organise the statements into order of interest, highest first.  Usually storecards, credit cards, loans in that order.

Loans you don't have much choice with the amount.

Work out what you have to pay for loans and mortgages.

Then pay the minimum amount for all cards except the one with the highest rate of interest. it should say on your statement what the rate of interest is. It may say a monthly amount (in which ase multiply by 12) or an annual rate. That way you can compare which has the highest rate of interest.    Pay the rest remaining off that one.  

When that one is paid, and it will take a while, redo your calculations; pay the next highest rate.

One thing you can do, if you have some small debts or you get a lump sum.  Phone the companies, tell them you have financial difficulties and can you pay a reduced amount in one go to clear the debt.  Most companies will have taken the lions share of interest and if you're in difficulties will take a lesser amount to reduce their risk of losing the whole lot.  A couple of examples from a friend who I've helped in the last year:

Credit card - £1,200 reduced to £500 when paid in a lump sum

Loan - £9,000 debt reduced to £5,000 when paid in a lump sum.

Last year he had £14,000 debt. He now has less than £500 and will pay that off in the next few months.

Some 'Donts': DO NOT go to one of these companies offering to help you, espeically the ones on daytime TV like Gregory Penningtons..  They will charge you £2,500 or more and won't reduce your debt by a bean.  They will tell you that they will but they will just defer the payments, you'll still owe the money.

Second, by far the hardest, DO NOT ignore them.  If you can't make a payment, phone the company.  Most companies have departments dedicated to helping people in trouble. They can reduce the interest to zero for 6 months for example on a credit card, long enough for you to reduce your debt bya sizable chunk.  It's in their interests to help you.  At the moment, with people defaulting left right and centre, they want people like you to seek their help if you need it. It's in their interests and yours.

By far the hardest thing to do is make sense of it all, admit you have a problem and make a plan to deal with it.  You're halfway there, asking for help here.  Organisations like Citizens Advice and the few debt charities can help you sort the numbers out if you can't do what I suggested above.

Once you start to deal with them, you will be amazed at how much better you feel.  My friend is a different person since I sorted his debts out with him, he was miserable, bad-tempered and withdrawn. Now he's the life and soul of the party, with all that worry gone.

Good luck!

Answer 2

One word of warning, these Company's don't consolidate your debts for nothing, their interest can be quite considerable. If you have Credit Card debts, always pay them off first as their interest is always the highest, and when you are out of debt, make a promise to yourself NEVER to get into debt again!

Answer 3

a debt consolidation loan should be the last resort

try going to citizens advice they have debt counsellors who will help you  

Answer 4

I'm a money adviser.so do not go to a private debt management company..they will charge you...go to Citizens Advice Bureau or any charity oganisation in your area, for more info..mail me. [e-mail]. i'll keep you right.

Answer 5

Hi - I'm in the same boat and it's not nice at all.

However, I've got in touch with a company called PayPlan who have helped me endlessly with dealing with my debt.  Firstly, they take all your details and find out how much you can afford to pay each month.  Then, they write to your creditors asking them to freeze all interest and to accept a percetage of what you can afford to pay towards the debt.  Every now and then they review the arrangement but it does work and you do end up getting your debts paid.

This way you won't need to borrow any more money or add more interest.  Also, pay www.moneysavingexpert.co.uk a visit and see what he has on his site - it's helped me no end.

Good luck.