# Large CC Debts-Options



## nextyear (22 Jan 2014)

Age: 45
Spouse’s/Partner's age: 42

Annual gross income from employment or profession: 
Annual gross income of spouse:

Monthly take-home pay Me 1300
                                 Spouse 2500
Type of employment: e.g. Civil Servant, self-employed 
part time ,full time

In general are you:
(a) spending more than you earn, or    This I would say!
(b) saving?

Rough estimate of value of home  Renting 1100 pcm
Amount outstanding on your mortgage: 
What interest rate are you paying? 

Other borrowings – car loans/personal loans etc
Aib CC 10800
Mbna 14400
Aib 1000 45 per month repayment
Car Loan 650 (2 months to go)


Do you pay off your full credit card balance each month? 
If not, what is the balance on your credit card? 

Savings and investments:No

Do you have a pension scheme?No 

Do you own any investment or other property?No 

Ages of children: 9,12

Life insurance: No


What specific question do you have or what issues are of concern to you?

As you can see,we have a huge CC debt pile,mostly brought on by 5 years of loss of income (approx 550 a week)

I am just using the two credit cards now as interest only loans ie I pay the minimum balance and then spend back up to the credit limit on day to day spending etc

My outgoings are:
Rent 1100
ESB,Gas 165
Cable BB 80
Phones 80
Petrol 370 (I drive in my p/t job,and take kids to school etc.Wife works 25 miles away)
Food 600
CC interest (as explained above) 320
Tolls 50
Clothing School stuff 100
Car Tax x2 900 /year 75
Insurance x2 700/year 58
Maintenance/tyres 70 (cars getting old now 7 yrs/9 yrs)
Tv license 13
Aib T/L 45
Car Loan 323

These are the main expenses,but something extra seems to crop up on a weekly basis. 

Now,my main problem is that I am almost at the stage where I cant make the minimum payment on the credit cards(about 320/330 each) .I am thinking of asking the two cc providers if I could get a very long term loan at a reasonable interest rate to pay of the credit cards.Is this possible?Neither credit card has every had a payment missed to date.
My other options would be DRN if I can get my borrowings down below 20k,or some form of bankruptcy .
Any views ,ideas ,suggestions gratefully received.


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## 44brendan (22 Jan 2014)

Agree that level of CC debt is a killer. Currently you are not a problem to MBNA/AIB as you are meeting the monthly interest payment. Hopefully you are avoiding surcharge interest.  MBNA/AIB will initially play hard-ball with you as you are not in arrears. First option is to speak to a "good" PIP. try to get a recommendation as there are a variety of different abilities out there and you want someone with proven effectiveness. It should be possible to do a deal with the CC providers, but you will need some level of representation as they may not agree to a PIP proposal.


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## dmos87 (22 Jan 2014)

I can't advise on the consolidation unfortunately, but from looking at your figures its obvious you are in the red each month which needs to be analyzed also. 

 1) Is there any possibility of re-negotiating your rent? 1100 seems a lot (to me), but I know Dublin rents are higher than Cork. I noticed no Bin Charges were listed so I assume they are included in your rent? Might be worth talking to your LL to see if there's any wiggle room. 

 2) The amount listed for ESB and Gas is very high for a monthly cost. Was this for two months? If not, you need to look at this very closely. Be sure to turn plug things out / switch things off when finished using, and at the socket switches too if you have them. Do a scan of the house every night before bed and again before leaving for work. Check the kids rooms too, the 12yr old might have some entertainment consoles in their room they leave on like my siblings do! It might also be worth looking into switching providers, there may be discounts applied when you switch both over (we got a good one with Bord Gais when we switched).

 3) Food bill - this can definitely be lowered substantially. My grocery bill every week is 75, including nappies and creams. Two adults and a baby. I reckon a monthly budget of 450 will definitely cover you all, giving you some wiggle room. I do my shopping in Tesco's, and use my club card points towards my Bord Gais Bill - they double the amount if you do this (e.g. 15 euros in vouchers becomes 30 euros off your next bill). Have tried Aldi and Lidl also in the past but I prefer Tesco's overall, there's more options. and there are heaps of offers on everything. Switch what you can to own brand, watch out for the weekly deals on meats, fruit and veg and of course meal plan. No lunches out etc. 

 4) Phones, TV and BB can be lowered. We have Sky with everything but Movies and Sports (don't watch them) for 37.50 a month. Our BB is 35 a month, unlimited with Vodafone. We recently upped our speed by getting this bundle and so far so good, had them for three years before now. Try and move to Pay as you Go mobiles, there are great deals out there. 

 Its been mentioned umpteen times here, but keep a spending diary. Note everything in there. For me when I was in debt, this was the best thing I did. It showed me how frivolous I was with my spending and I learned to watch my money.


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## Bronte (23 Jan 2014)

nextyear said:


> Age: 45
> Spouse’s/Partner's age: 42
> 
> Monthly take-home pay Me 1300
> ...


 
Welcome to AAM Nextyear. 

Income: 4,060
Outgoings: 2761
Debt servicing: 998

Something wrong with the figures, 2761 + 998 = 3759. 4060 - 3759 = 301


What is the interest rate for your 4 debts? Can you confirm that the total owing on the credit cards is increasing each month even if you make the minimum payment?

No savings is a problem, no life insurance where there are 2 children needs to be assessed. 

Age of cars could be an issue, why is there a car loan on these? I would have thought they were well paid for, but maybe not. 

In two months you will have an extra 323 to pay down debt.

When you come back with more information might have to advice to stop paying the credit cards, it's a drastic step, but those who pay and continue to increase their debt get notwhere with cc companies. Whereas those who default get interest stopped and arrangement put in place to pay down the capital. Looka to me that is what you need. Not an insolvency arrangement.


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## nextyear (23 Jan 2014)

Interest rates are approx:
Aib t/l  14%
Aib cc 20%
Mbna cc 14%
Car loan 10%
I forgot children's allowance,so add 260 to total income.
To clarify,the interest part of the two credit cards totals about 320 a month,while the total repayment comes to 630 ish.Generally,the capital paid of the two credit cards that month is then spent.The cards are not increasing because they are at or near their limit.

One car is paid for,and the other was bought 2 years old in 2007 with a 5 year t/l.
Undoubtedly,I have missed some of the smaller expenditures during the year but like one of the earlier posters said,I would have to run a spending diary to have more accurate figures.
I haven't approached either cc company as I feel that I will be in a slightly better place once the 323 car loan is finished at the end of March.

However,I don't want to ruin my credit rating if there is a solution that would prevent this.Also,if I alert both credit cards companies to my difficulties,the nightmare scenario would be that no agreement could be reached but my cards are withdrawn leaving me worse off


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## nextyear (23 Jan 2014)

@dmos87 re:rent cost
Unfortunately,this rent for a 3 bed house is already lower than market value by about 100! (Check daft.ie )


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## Bronte (23 Jan 2014)

nextyear said:


> Interest rates are approx:
> Aib t/l 14%
> Aib cc 20%
> Mbna cc 14%
> ...


 
I find the price of the second hand car shocking? 

If you don't want to ruin your credit rating then you have to tackle the debts. Starting with the AIB CC at 20%.

Can you confirm that in total you are paying 630 off the credit cards. I will now fix the fixers posted above.

Income in excess of expenditure about 300 Euro?  Plus you'll have an extra 300 or so in two months, giving you 600.  Obviously there is something wrong wtih your figures, can you go back through them.


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## kennyb3 (23 Jan 2014)

Car tax seems high 
Car insurance sees high 

- what cars are you driving? Both suggest 2L plus cars?

I've a 2L diesel and the tax is 710 and insurance €450 for example.

Get rid of sky - you're broke, you cant afford it. You've got a mountain of debt with extremely an high interest rate.

As said ESB & Gas look like bi-monthly amounts or very high.


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## nextyear (23 Jan 2014)

Car tax and insurance figures are a total for both cars.(1.6 and 1.2).Insurance 350 per car.Esb and gas is the total for both utilities.
As for getting rid of upc,this figure includes phone and broadband,and as we don't go out,and I work in the evenings,its not really a runner.


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## kennyb3 (23 Jan 2014)

Thanks for the clarifications.

As Bronte has still shown you should have 300pm left over, but instead you are spending an extra €300 onto a CC ( i think Bronte has given you the €630 payment but you are saying you are re-spending €310 of this immediately that month??). So it appears there is €600pm not accounted for?

Plus you'll have an extra €323pm soon by the sounds of things.

It will take quite some time, but it looks like you'll be able to make inroads into the debt.


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## Guns N Roses (23 Jan 2014)

Why don't you continue to pay the minimum amount on your CC until you've paid off the car and then use the money you were using to serve your car loan to increase your CC repayments?


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## 44brendan (23 Jan 2014)

Going back to my previous post, you will really need to address the interest rate being charged on CC debt. Given you high levels of short term debt I wouldn't worry about credit rating at this time. based on the rates being charged it will take an age to make any serious inroads on the CC debt unless you can negotiate a restructure at a reduced rate of interest. You may have to play tough with the banks to achieve this, but alternative options will mean that the bulk of your monthly payments to these companies is only servicing interest and this noose will be around your neck for a long time.


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## Gerry Canning (23 Jan 2014)

Agree with44Brendan.

It is TOUGH but you have to get out from under the noose of CC DEbt.
Write to them , say you continue to struggle and can they help you. I know Mbna are giving (soft) loans to people that have been genuine. 
Do not worry too much about Credit Rating, for now it is not the major issue. 
If you could see Real inroads on CC Debt it s amazing how it would help.
I do not see a Nightmare Scenario in having CCards stopped , all using these do is to put more petrol on the fire.!!
Tear them up now. 

Also when you get below K20 you can ( if need be) go for insolvency.


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## Bronte (24 Jan 2014)

Gerry Canning said:


> Also when you get below K20 you can ( if need be) go for insolvency.


 
Why would they need to go for insolvency at all. If they negotiate a plan with the CC company they will be able to service their debts?


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## nextyear (24 Jan 2014)

Bronte said:


> Why would they need to fo for insolvency at all.  If they negotiate a plan with the CC company they will be able to service their debts?


Thanks for the input ,guys.I would be thinking along the same lines as Bronte,as I have the quaint idea that you should pay your debts!

Anyway,I'll report back periodically with any progress made.Hopefully,it might encourage other readers to try and tackle their cc debts.


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## kennyb3 (27 Jan 2014)

Best of luck with it.


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## Gerry Canning (27 Jan 2014)

nextyear said:


> Thanks for the input ,guys.I would be thinking along the same lines as Bronte,as I have the quaint idea that you should pay your debts!
> 
> Anyway,I'll report back periodically with any progress made.Hopefully,it might encourage other readers to try and tackle their cc debts.


 
I wasn,t saying (run)from due debts .What I meant was IF cc do not play fair, consider insolvency.
 It is just, I have seen too many cases  were fair people like this seem to stay crucified on their cc debt and the cc comp play hard ball, on fair peoples wish to resolve matters. 

{ I have no sympathy for those who will not pay , yet can pay, but sadly these will not payers end up poisoning common sense!}

Wish you well.


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## Bronte (28 Jan 2014)

nextyear said:


> Anyway,I'll report back periodically with any progress made.Hopefully,it might encourage other readers to try and tackle their cc debts.


 
That's a very good idea nextyear. We used to have a poster that did that and they made great progess.  I think you should start with a spending diary. Also which of dmos87's excellent pointers are you starting with?


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