# At a loss about resolving debt..



## yup (27 Dec 2009)

Hi, I hope I can get some help here... I seem to have gotten myself into a mess that I can't see any way out of... 

The problem is that I now have three loan agreements, as well as a mortgage... I am struggling big time. I've reached the end of my overdraft, have maxed out my credit card.

Loan 1 repayment: 186 p.fortnight (9000 remaining)
Loan 2 repayment: 149 p.fortnight (2200 remaining)
Loan 3 repayment: 182 p. month (11000 remaining)
Mortgage: 700 p. month (200, 000 remaining)

So, all in all I'm paying approx. 1600 a month in loan/mortgage repayments.
My net income is 2000... so I have 400 a month left for bills and to live on.

I had intended on paying off Loan 2 by the end of this year but I was involved in a car crash in September and, to cut a long story short, I had a HP agreement and ended up having to pay the HP company the loss of the car and getting a new Loan to cover the new car. Thus I started paying for my car a lot sooner than I had planned (wasn't due to start repayments on the car until Mar 2010).

I'm also out extra health expenses due to the crash... so that is now adding to the burden. 

Also due a pay cut in January, so I have no idea what I'm going to do... I'm looking ahead at 2010 and can't see any light at the end of the tunnel.

My mortgage is with AIB... would they allow me a payment break to pay off Loan 2 (which is also with them) and pay off my credit card (also with them).

I honestly don't know where to turn...


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## ccraig (27 Dec 2009)

you should contact mabs, they should assist with advice


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## so-crates (27 Dec 2009)

This isn't really a mortgages query yup, you should move it to the Money Makeover forum.

Other than that, you are clearly over-extended. I would suggest like ccraig that you contact MABS but as they are likely busy, you should also do some preparatory work. Start by browsing their website and using their step-by-step guide with your situation. In general though you need to sit down and work out what you can afford to repay (bearing in mind your income reduction and the basic requirements of life: food, heat and light .. and probably transport), contact each of your creditors and explain to them your impending income reduction, your consequent difficulties and your proposed revised repayment. Sounds simple when you say it like that but it is going to be a long hard slog. Taking it in hand and trying to negotiate with them though will be better in the long run though.


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## Sue Ellen (28 Dec 2009)

so-crates said:


> This isn't really a mortgages query yup, you should move it to the Money Makeover forum.



Done.


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## yup (28 Dec 2009)

Sorry guys for posting in the wrong thread... 

Thanks for the advice ccraig and so-crates... I'll get working on the prep work tomorrow


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## chlipps (28 Dec 2009)

Sorry to hear of your dilemma. Few things to consider

Can you rent out a room or is it just 1 bed apartment?
Would AIB give you one loan and consolidate the debts into that loan?
Try get interest only mortgage

You need to be careful though... you need to evaluate how you got into the debt in order to get out of it.. are you spending over your means in general?

Best of luck


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## yup (28 Dec 2009)

I got engaged recently so my fiancee will be moving in and sharing a percentage of the mortgage payments, so that should be something... if that wasn't happening then I would rent out a room.

I'm going to make an appointment with AIB to explain the situation and see what options they have... 2 of the loans are with them and the mortgage so hopefully they can offer either a consolidation loan or interest only payments on the mortgage for even three months. If it were only interest payments then I figure I could clear off the 2500 loan by March, which would leave me with 300 a month to put towards the other loans. I've also applied to MBNA for a credit card that has 10 months interest free balance transfer, so I can just shelve the credit card debt for the moment until next October... 

Part of the reason how I got into this mess is that I had an accident in 2006 and the medical bills etc. were astronomical (even with health insurance) - medications and doctors bills were running at around 400 a month at one stage...a few months they topped over 900... plus I was doing a Masters, so there was that expense. The car accident in September just seems to be the straw that broke the camel's back... Trying to stay positive but I have to admit it's getting more and more difficult...  

Thanks for your suggestions, I appreciate the input.


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## jambo.ie (28 Dec 2009)

yup said:


> I've also applied to MBNA for a credit card that has 10 months interest free balance transfer, so I can just shelve the credit card debt for the moment until next October...


That MBNA credit card is a trap. Once the interest free period is over you will be paying 14.9% interest on the balance. You don't seem to have listed your credit card balance or interest rate. You haven't listed the interest rate on the loans either. This post should help you...http://www.askaboutmoney.com/showthread.php?t=61289


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## yup (28 Dec 2009)

Age: 25

   Annual gross income from employment or profession: 45000 (1180 net per fornight)

   Type of employment: public service

In general are you:
(a) spending more than you earn

   Rough estimate of value of home: 240000
   Amount outstanding on your mortgage: 200000
*What interest rate    are you paying? *2.6%, fixed for another yr.

   Other borrowings – car loans/personal loans etc
    Loan 1 repayment (CU Loan): 186 p.fortnight (9000 remaining) 7.8%
Loan 2 repayment (AIB Personal Loan): 149 p.fortnight (2200 remaining) - 12.1%
Loan 3 repayment (AIB HP): 182 p. month (11000 remaining)

   Do you pay off your full credit card balance each month? Up until two months ago yes. Now pay 50%
   If not, what is the balance on your credit card? 
    1000 limit, maxed at the minute

   Savings and investments:
    1000 in CU

   Do you have a pension scheme? 
    Yes

   Do you own any investment or other property? 
    No

Ages of children: 
    n/a

   Life insurance: 
    Yes


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## yup (28 Dec 2009)

Jambo - I plan to just use the MBNA card until the 10 month period is over, hopefully have it paid off and get rid. No more CC for me... it's either that, or keep where I am with the current 8% interest rate every month...


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## UFC (28 Dec 2009)

You say your salary is 2000 net per month, yet you earn 45k? This doesn't make sense. You should be getting about 2500 net per month on that salary.

Where is the extra 500 going per month?

Your outgoings are 1600 per month - that leaves you with about 900 to live on. That should be more than enough to live on. In fact, you should be able to live on about half that.

You also have 1000 in savings, and you say your partner will shortly be moving in with you and paying rent.

So you are actually doing ok.

1. Figure out where your money is going. No doubt you are wasting cash on magazines, coffees, booze, expensive biscuits, etc.
2. Use the 1000 savings to take a lump off loan 2.

But most of all, figure out where your money is going. You should not be struggling. I earn a similar salary to you yet I am able to save 2k per month, and I have a comfortable lifestyle.


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## yup (28 Dec 2009)

I said it was 1180 every fortnight - which is 2360 per month... have checked payslip and that's correct.
As I said in a previous post - part of my problem is the medical issues as a result of the accident - I spend minimum 200 a month on medication and doctors fees, so that depletes the amount left over. It could sometimes be up to 400 a month, depending.

Maybe I'm going wrong somewhere... 
Health Insurance - 60pm
Life Insurance - 13pm
Phone/Internet - 60pm
Electricity - 40pm
Car Insurance - 100pm
House Insurance -30pm
Car Tax - 28pm
Groceries - 200pm
Medical Expenses - 200 (min)

That totals 731 pm. Could be up to 931 depending on the medical stuff.
Added to the loan/mortgage that's 2331. If the medical stuff has been particularly bad that month, it's up to 2531.
So I'm barely breaking even.

Believe me... there is no wasting of cash on magazines, coffees or booze (I don't drink)...


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## Complainer (29 Dec 2009)

yup said:


> As I said in a previous post - part of my problem is the medical issues as a result of the accident - I spend minimum 200 a month on medication and doctors fees, so that depletes the amount left over. It could sometimes be up to 400 a month, depending.
> 
> Maybe I'm going wrong somewhere...
> Health Insurance - 60pm


You should be paying no more than €100 per month (€120 next year) on medication, via the Drugs Payment scheme. [broken link removed]  If you are not already part of this scheme, get your card asap.

It seems crazy that you are paying large amounts of medical bills plus health insurance. Why are these fees not covered by your insurance?

At a minimum, you should be making sure you are claiming back tax relief on all medical fees (including drugs).


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## D8Lady (29 Dec 2009)

I agree with Complainer - get a Drugs Payment scheme card as soon as possible. You can also ask at your local chemist. 

Have you put in a claim for your insurance? Sounds like a daft question but many people pay insurance but don't claim. Phone up & double check what is covered on your policy. 

To claim tax back, you need to fill out a Med1 form.
This will repay lower rate of tax back on your prescriptions,also doctors/consultant visits e.g. doctors visit €50, insurance covers €30 (depending on policy), you can claim the tax back on remaining €20. 

Copy all of your receipts. Insurance company will need originals, revenue don't need them but copies need to be available should they ever audit you. 
Spend a half a day sorting this out, you should get a chunk of your expenses back. 

When you do, keep some in an emergency fund - you are very stretched. Throw the rest at loan 2, just to be rid of it.


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## dmos87 (29 Dec 2009)

Yup, you need a harsh reality bite.

firstly, dont take my advice the wrong way-  check my only thread- I am in a very very similar situation - also had a crash, etc. Luckily I have no mortgage but do pay rent.

firstly, Sell the car. you cant afford it and a sale can help you to clear some debt. If needs be, cancel your own insurance and go on your fiance's insurance as a named driver. That way you can use it only when needs be. Perhaps look at buying a small cheap and cheerful car instead even? That will free up some money for throwing at the Credit Card. I would make this your primary focus as the interest adds up too quickly. Pay off the card as quickly as possible-  some days I make online payments of only a couple of off cents from my account but it all adds up.  Rule No.1  - stop using the card. Put it in a drawer for genuine emergencies. 

Secondly, you mention your fiance is moving in shortly. I assume he is going to pay half of the monthly mortgage, bringing your repayments to 350 per month. Thats an extra 350 per month spare, I suggest also throwing this at the CC immediately. The CC will be clear within 3 months, and not a moment too soon if you are due a pay cut. 

Thirdly, cancel the phone and Broadband - unless its a necessity it has to go! I assume your fiance will go halves on all household expenses, this will help a lot. The sooner he moves in the better. 

On the medical expenses note - if they are as a result of the 2006 accident, surely you would have been compensated accordingly for your injuries? I understand the 2009 accident will not have been finalized yet (mine was 2008 and nothing yet - I genuinely understand the growing debt from medical expenses) however this seems a bit odd. Thats a 3 year old claim, and under PIAB this is far too long. 

If them monthly cost goes towards physiotherapy treatments, etc. ask around for a homebased physiotherapist. There are lots out there willing to do treatment for much less at home. That could help. 

Does your fiance know the extent of your debt?


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## z107 (29 Dec 2009)

> You should be paying no more than €100 per month (€120 next year) on medication, via the Drugs Payment scheme. [broken link removed]  If you are not already part of this scheme, get your card asap.


Good advice.
However, this scheme no longer covers everything. It is possible to get a valid, legal prescription for certain medications, and the scheme still will not cover it. You will need a hitech prescription, which only certain consultants can issue.
I suppose the erosion of the scheme is inevitable.


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## yup (29 Dec 2009)

Thanks all for the feedback.
Firstly, I have a drugs payment card. It covers 100 a month (thankfully), consultant fees of 125, physio costs 40/50 depending on what's needed... counselling of 70 a session (used to go 4 times but have cut down to once a month unfortunately).
The accident wasn't a car accident (don't want to go into too much detail on specifics as anyone could be reading this) and I have a claim in. The PIAB said due to nature of injuries it was passed on for the Courts. So, that's why 3 years later I'm still in bloody limbo 
I've told my solicitor that I want to settle it and get it out of the way. It is a major part of the debt and I know that (hopefully) when it's settled it will go towards clearing some of the debt at least... but I can't keep depending on that.

DMOS.. I appreciate the advice on getting rid of the car. But I need it. Firstly I live in a rural area so taxis etc. cost a fortune and I also need it for work. Partner works in Dublin so car is unavailable to use, but that was a good idea. I have started to talk with him about the debt but at the same time, don't want him to think that I want him to move in because I need the cash. His wages won't stretch to paying half the mortgage, but it will help.


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## Complainer (29 Dec 2009)

yup said:


> consultant fees of 125, physio costs 40/50 depending on what's needed... counselling of 70 a session (used to go 4 times but have cut down to once a month unfortunately).


Is your health insurance covering any of these fees? Have you spoken to your GP about getting these services from the public health services (at no cost) instead of privately?


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## jambo.ie (29 Dec 2009)

yup said:


> I had intended on paying off Loan 2 by the end of this year but I was involved in a car crash in September and, to cut a long story short, I had a HP agreement and ended up having to pay the HP company the loss of the car and getting a new Loan to cover the new car.





yup said:


> The accident wasn't a car accident (don't want to go into too much detail on specifics as anyone could be reading this) and I have a claim in.





yup said:


> I've also applied to MBNA for a credit card that has 10 months interest free balance transfer, so I can just shelve the credit card debt for the moment until next October...





yup said:


> Jambo - I plan to just use the MBNA card until the 10 month period is over, hopefully have it paid off and get rid. No more CC for me... it's either that, or keep where I am with the current 8% interest rate every month...


This thread's a little bit muddled.

On the credit card... you said the balance is EUR 1,000 but I'm assuming you meant EUR 10,000? At 8% it's actually quite cheap compared with the AIB personal loan.

Getting your fiancee in to pay rent will ease the burden of the mortgage. I'd agree with the advice regarding downgrading the car. You might be able to find something you feel safe in for a lot less and pay off some debt.


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## Murt10 (29 Dec 2009)

yup said:


> The accident wasn't a car accident (don't want to go into too much detail on specifics as anyone could be reading this) and I have a claim in.



Appreciate your not wanting to go into details but did the accident happen in work, or on the way to, or coming home, from work?


Murt


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## yup (29 Dec 2009)

Thanks guys for all the feedback and trying to point me in the right direction. I agree with jambo that the thread has become muddled (just like RL I guess....). The balance on cc is actually 1000 - I reduced the limit that I could spend from 7000 to 1000 to try and limit the damage I could do.

I'm going to look into the car element of the whole thing and think the main priority is getting the cc paid off.

Once again, thank you so much for the help/input


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## dmos87 (30 Dec 2009)

I understand you need the car, but you need A car. Downgrade. People are selling cars for next to nothing now and the extra bob can clear some debt. A smaller car will lower your car tax and Insurance quote. Dont hesitate, do it. I did and it really helps, I love my little car now.


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