Dire Credit Card Debt - what are my options?

W

Whoosh

Guest

Hello all, looking for some advice, hoping you can help.

I owe E4,500 on one credit card (due to be paid in the middle of September) and E6,000 on a second (payment due in about a month). I also owe another E6,000 on the second card after transferring the balance from the first cc this week - that payment is due in six months.

Before you say it: I know, I'm a COMPLETE AND TOTAL idiot. Both cards are ripped in two now, honestly, you don't need to tell me how grim this is.

I will be able to clear most, probably all, of the E4,500 next month and should manage a minimum payment on the E6,000 but, obviously, the interest will be nasty on the remainder.

In other words: I'm in a mess.

But, for now, my chief concern is that E6,000 due next month.

I intend talking to MABS to get some advice (tomorrow – I have the number in front of me!), I know from reading these boards they’re the best source of help and advice in a mess like this, but I was hoping I could ask you kind people for some too.

I earn between E3,000 and E3,500 (after tax) each month, with about E2,000 (never more) going on my mortgage and other bills - ie I have about E1,000 left over.

Until now I've been fine, never missed a loan repayment, always cleared cc bills on time, etc. I had never been in debt in my life until the last couple of months, to say I'm having nightmares would be putting it mildly. It’s actually making me physically ill – I’m only telling you that to make you understand how seriously I’m taking it and how determined I am to put it right.

My current situation has been caused by 'exceptional' circumstances beyond my control (I’m being 100% honest, crisis = panic = loss of all financial sense), no crazy carefree spending - those circumstances are gone and now I want to try, whatever it takes, to get back to normal. The drastic cost-cutting has already begun.

I bought a house about 18 months go, paid 282,000, it's now worth 420,000 - but I'm not sure that's relevant to all of this….unless it’s repossessed, God forbid.

Has any kind soul out there some constructive advice (other than telling me what I already know, ie I’ve been an idiot)?

What options have I, if any?

Having already signed up for a second cc and having done a balance transfer is it unlikely that a 3rd cc company would take me on (ie to transfer that E6,000, that’s due next month, for six months breathing space)?

Have I any hope of topping up my mortgage when I’m only 18 months in to it? I know it’s probably a nutty option, eg spreading a loan for, say, E12,000 over 25 years, but I’d happily take that option if available to me just to get me back on an even keel.

Any helpful advice at all would be very, very gratefully received.

Thanks.
 
Whoosh said:
I owe E4,500 on one credit card (due to be paid in the middle of September) and E6,000 on a second (payment due in about a month). I also owe another E6,000 on the second card after transferring the balance from the first cc this week - that payment is due in six months.
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Do you mean that you have CC debts totalling €16,500 or €10,500?
I bought a house about 18 months go, paid 282,000, it's now worth 420,000 - but I'm not sure that's relevant to all of this….unless it’s repossessed, God forbid.
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Sounds like your loan to value ratio is already less than 70% due to house price inflation. This could be useful if there may be the option of a mortgage top-up as a once off emergency measure to clear the CC debts and replace them with mortgage rate credit instead (ideally scheduled over a few years rather than spread over the full term of the loan). Of course the lender may balk at the CC debts but at the moment the mortgage topup may be one of the most promising options assuming that the lender is amenable and you can afford the increased repayments. Obviously going this route requires that you address the budgeting/spending issues that lead to this situation in the first place and avoid it happening again. Otherwise you will be soon back to square one - or worse!
Have I any hope of topping up my mortgage when I’m only 18 months in to it? I know it’s probably a nutty option, eg spreading a loan for, say, E12,000 over 25 years, but I’d happily take that option if available to me just to get me back on an even keel.
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Where does the €12,000 figure come from? If this is a runner then don't spread the topup over the full term of the loan - schedule it over a shorter period in advance or make sure to accelerate its repayment. Spreading it over the full term could well end up costing you more in the long run. How much did you borrow in the first place and how much is outstanding now?
 
you income sounds like 60k a year so you should be able to remortgage , get a lower interest rate like a tracker maybe out of that remortgage , and round the mortgage up to €300k thereby cleaning the cards off in one go but maybe reduce the payments a bit too.

Is there another income or do you pay the mortgage yourself ?? The calculator for number crunching is here

http://www.jeacle.ie/mortgage/ie

Its most important to make minimum payments on all debts in the interim for your credit record , you are not a MABS candidate yet .

You are really fooling yourself but nobody else if you say "I had never been in debt in my life until the last couple of months". YOU WERE OBVIOUSLY IN DEBT when you got that second card because you could not clear the first one off could you .

I do not think the indiscipline with the plastic started in the past few months, did it ??

Oh , and can you let a room to improve the cash flow a bit ??

Can you get a bar job or something in the evenings even if only so you are too busy to spend ??
 
The numbers in your post are confusing. As I see it you owe 16.5k on two cards and you have nearly 4.5k to clear one card and you're looking at remortgaging/topping up for another 12k to clear the second card - is this right? I don't know why you're saying you need 4.5k for next month and 6k for the second card :confused: - the combined min. payments on both cards would be a fraction of that. If you have nearly enough to clear the 4.5k card in one go then that much money is enough to cover min. repayments ( essential that you make these or your credit rating may be affected ) on both cards for several months until you top up your mortgage by 16.5k or remortgage which I think is the way to go .
 
I think you're overreacting a bit. Long term, your CC debts are hardly anything. I'm not saying your situation is not serious, but it isn't serious enough that you'll lose your house or anything. You certainly shouldn't be as stressed and physically ill as you are now.

I used to have quite a bit of CC debt, and I am paying off about €1500 a month. Every month it gets easier, and once you accept it'll be a few month before they're paid off (which isn't really a huge amount of time) it becomes easy to cope emotionally.

You are not an idiot. Every "normal" person gets themselves into situations every now and then. It's part of life.

I'm not sure why you need to pay off all the debt in one go. Simply work out a budget (for example, €750 to be paid off a card each month) which shows how much each credit card will reduce by each month, and when they will be paid off. When you see it written down, it becomes much easier because you can "see" the light at the end of the tunnel, and each month you can see the progress you are making.

Worst case scenario, assuming you get your spending under control, when you have the debt paid off you'll have trained yourself to save, so this situation will be unlikely to happen again.

So... stop being so hard on yourself, in time the debts will be paid off. Your situation is not totally uncommon. Just learn from it and move forward.
 
Thank you all for taking the trouble to reply, you have no idea how much I appreciate it.

First up, sorry if my figures were confusing (I'm confused myself at this stage), just to try to clear it up –

- I have two credit cards with two companies

- I cleared this month's payment on the first but owe E4,500 on it for next month (due to paid in the middle of September – minimum payment 2.5%)

- I owe E12,000 in total on the second card – E6,000 of that is due next month (minimum payment 2.25%), the other E6,000 isn't due for six months (ie it was a 0% balance transfer from the first card)

So, in total, my cc debt is roughly E16,500 – I have six months breathing space on E6,000 of that but need to clear the E10,500 asap.

Some of you have rightly pointed out that so long as I pay the minimum payment on both cards I can keep afloat, I'm just panicking about not clearing the E10,500 quickly because of the interest that will build up on it – and all I see at that stage is the figure spiralling.

Clubman – I just assumed that a mortgage top-up wouldn't be an option for me because lenders would run a mile when they saw my cc debt. I'll definitely look in to it based on your advice, thank you.

I really just plucked that E12,000 figure (ie what I said I might try to borrow/add to mortgage) out of the air, roughly what I need to completely clear the cc debts (not counting the E6,000 due in six months).

I borrowed E260,000 for my mortgage about 18 months ago, I haven't the exact outstanding figure at the moment but I suppose it's not much less at this stage.

2Pack – thank you for your great advice too. Yes, my income is just under E60,000, I pay the mortgage myself. I'm being completely honest about not being in debt before this mess, I had a healthy fear of credit cards and used them as little as possible. You're right, I got the second card to help me deal with the debt on the first but all of this happened, as I said, over the last couple of months, before that I was fine. I promise, I'm not fooling myself, I know panicking and dealing stupidly with a financial crisis has got me in this mess, I am completely determined to sort it out and for it never to happen again.

Demoivre – sorry for confusing you! You're right, I'm not taking in to account the fact that minimum payments will keep me going, it's just, as I mentioned above, that the size of the debt is so grim I feel I need to find a way of clearing it asap.

HotdogsFolks – Thank you for calming me down! Most of the time I tell myself the debt is manageable, I can sort it out, but then I don't really want to think that way, I feel I SHOULD panic just to drive home how serious this is. You mentioned paying off E1,500 a month – this is where I haven't a clue: does the interest on the outstanding amount not send the debt through the roof after a while? That's my biggest fear, never being able to catch up.

I will definitely take your advice on working out a proper budget, thank you so much for the encouragement.
 
Lookit

In a worst case and at 17% assumed interest on all cards the debt is frozen in situ as follows

1st six months 17% of €10,500 is €150 a month .

Pay €150 a month and your debts cannot possibly rise at that interest rate.

subsequent months 17% of €16500 = €234

If you pay €234 you cannot go into any form arrears but are at standstill. Interest rates may rise.

You cannot fall in arrears if you pay those amounts, but you will not get ahead or get a black credit mark.

Digging out will require something like €500 a month to get anywhere, this can be found.

A card with no more than €5000 outstanding can easily be rate tarted, transfer the whole 17% balance to a 0% introductory tesco card or ulster card it gets you 6 months more breathing space at 0% etc etc, keep tarting thru them all. Rate tarting €16000 will not work, rate tarting is for smaller amounts.

If you clear one card down to less than €5000 you can rate tart it and tackle the other one for the next 6 months or 12 months interets free and so on so forth.

If you cannot rate tart a card for all cards change from 17% silver card to 14% gold card with the same provider .

Pay off most expensive first of course

A one off remortgage and no credit cards till you get over this for 2 years while you overpay the mortgage would be best in your case, try NIB or BoS Ireland maybe . They have good deals.

In 2 years get one card, never get two cards again.

Lodgers are good in your case, the rent can go straight off the cc debt every month too and really bite.

Part time jobs distract from the misery while you tackle this :D
 
Definitely paying off CC debt at a rate of €1500 will clear these cards, pretty quickly, as long as no other debt is going onto them.

The plan should be to look seriously at a re-mortgage/switcher option, as your house LTV will have reduced as the value has risen, so you may be able to negotiate a lower % loan.

Check out [broken link removed], as they will [broken link removed] (up to €1000) and valuation, and give you a discounted rate for two years, rolling to their normal tracker rate after that.

If your LTV is >=75% it's the ECB +1%, which ain't bad, considering you have had a 2-year discounted rate.
 
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ring the bank and try to get a tracker off them if on variable, that should reduce mortgage payments and increase funds available for CC payment.

as for the plastic !!!!

ulster bank , 0% interest for 9 months

[broken link removed]

tesco, 0% interest for 9 months

http://www.tesco.ie/finance/visacards/index.html

typically they will accept any card where you do not owe over €5000 so thats one card parked for 6 months while you tackle the other one

Now.

Bank of Ireland silver card

( I think you have one of these :D)

[broken link removed]
  • 0% Introductory rate for first six months purchases or
  • Balance Transfer rate of 2.9% APR .
  • 16.8% APR for purchases,
BUT

Bank of Ireland Gold Card
  • 0% APR for first 6 months on purchases or
  • 2.9% APR Balance transfer rate fixed for 12 months.
  • 14.5% APR on purchases
[broken link removed]

Looks better already :D

also

AIB Platinum if you wearn €50k or more

[broken link removed]

Low APR - 10.5% (variable)

At 10.5% (variable), the AIB Visa Platinum Card has one of the lowest APRs on the Irish market. You can also enjoy up to 56 days’ interest-free credit.


0% APR Balance Transfer

With your AIB Visa Platinum Card you can avail of a special Balance Transfer APR of 0% on balances transferred from non-AIB Credit Cards or Store Cards. This APR is fixed for six months from the date the balance is transferred to your new AIB Credit Card account.

So get tarting now!!!!

Get the small card onto ulster or tesco (and then onto the other so thats 18 months at 0% )

get the big card over to AIB , I'm sure they will accept a 10k transfer at least.
 
If you have a standard variable rate mortgage and they allow you to top up do so. Dont worry about spreading the debt over 25 years but ensure in the shortest timeframe possible you make extra payments into your mortgage account to at least the amount of the top up. This way you will be availing of the lower interest rate and taking the pressure of of your shoulders whilst mentally commiting to not paying 25 years interest on the sum.

Your first post sounded panicy and desperate , there is no need to be we have seen much worse cases on this site. Your situation is manageable and fixable if you dont panic.
 
Whoosh said:
HotdogsFolks – Thank you for calming me down! Most of the time I tell myself the debt is manageable, I can sort it out, but then I don't really want to think that way, I feel I SHOULD panic just to drive home how serious this is. You mentioned paying off E1,500 a month – this is where I haven't a clue: does the interest on the outstanding amount not send the debt through the roof after a while? That's my biggest fear, never being able to catch up.
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My credit card debt was about 12k. I also had a bank loan of 7k. I owed my family about 3k.

I earn less money than you.

The interest is not as much as you'd think. Well, not enough to start panicing anyway. I'd really just focus on the main amount of debt owed. You'll be able to clear off the extra interest fairly quickly (an extra months payment at the most.)

On a calender write down what is owed and how much will be chipped off each month. After x months (perhaps 24) you will have a balance of 0. Being able to see it and visualise it really made a difference for me. Now I'm fairly "relaxed" about my debt. It's getting smaller as planned, and I can see the progress I've made on my planner. Next month will be the termination of one of my credit cards.

You just gotta be patient.
 
Stunningly brilliant advice from stunningly brilliant people! Thank you so, so much. I'm going to study it all tonight and figure how what are my best options. I honestly had no notion that I had as many options as this, I thought I was in so deep there was no way out. You've no idea how helpful this is, I was in despair yesterday but really feel I can sort this out now. Thank you again.
 
Tell us all how it goes once you sucessfully rate tart the plastique and start digging out properly. Success storeies are always nice to hear.
 
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