# €15,000 Credit Card Debt As a result of unemployment and very poor financial planning



## minidriver (9 Mar 2007)

As a result of unemployment and some very poor financial planning I find myself with a Credit Card debt of almost €15,000. The payments are becoming too much per month to repay and im finding it difficult, but just managing to keep up as I currently receive only €185 unemployment assistance per week.

Im thinking about taking out a 5 year loan of 15,000 to clear the debt and pay off the credit card balance completely, paying off around €300 to €320 per month but seeing as I'm currently unemployed what are my options of getting a loan to start with as I do not have any savings. 

Any advice appreciated and where might i get the best deal ??
Am I better with a bank or should I try the credit union ??

I'm confident that with a loan in place I can get around the issue and give myself a less stressful life also. I would then limit my credit card spending to only the essential items paying it off monthly before the interest would bite me.


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## bond-007 (9 Mar 2007)

*Re: €15,000 Credit Card Debt.*

Credit union would be the best option as I reckon the mainstream lenders would not touch you with a bargepole.


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## jhegarty (9 Mar 2007)

*Re: €15,000 Credit Card Debt.*

See if you can get a card with 6 month 0% on balance transfers..... then burn both cards...


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## KalEl (9 Mar 2007)

*Re: €15,000 Credit Card Debt.*

Sorry to hear about your circumstances...you don't need I told you so's from anyone.
Have a look at threads about MABS, they help people with advice on dodgy personal finance. That poster was right, get a 0% rate on your balance for at least 6 months and pay off the €300 per month off the principal and then get a term loan.
Is there anyone who can help you get back on the dtaright and narrow-a relative?


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## minidriver (9 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial plan*

Thanks guys for the advice!!  
KalEl your option sounds good, I will see if I can arrange a 0% transfer on my credit card and pay off as much as possible during the 6 months, then look at the possibility of a Credit Union loan over 5 years to pay off the remainder, I do have property in my name which might help to get a loan, but no savings. 
I got myself into this mess, now its time to fix it !!


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## Johnny1 (9 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial planning*

The credit union are akward enough to get a loan off, they want you to have at least a third of what you want to borrow in a savings account with them which will be frozen during the loan term if you can't do that then you need a guarantor that has his/her account frozen. It doesn't matter what assets you have even if you have millions worth of assets they still want a third of what you want to borrow in an account with them which doesn't make sense why would you put money in an account when you need to borrow.


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## jake108 (10 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial planning*



Johnny1 said:


> The credit union are akward enough to get a loan off, they want you to have at least a third of what you want to borrow in a savings account with them.


 

Completely untrue. I know for a fact that E30,000 can be borrowed on just less than E2,000 savings. It's not all about your savings, it's about your ability to pay it back.


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## DrMoriarty (10 Mar 2007)

minidriver, I presume that since becoming unemployed you've applied to [broken link removed] you paid while you were working? It might help with reducing that credit card debt as quickly as possible. Good luck, and I hope you'll post back and let us know how you get on.


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## Johnny1 (10 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial planning*



jake108 said:


> Completely untrue. I know for a fact that E30,000 can be borrowed on just less than E2,000 savings. It's not all about your savings, it's about your ability to pay it back.


I don't know what credit union you use but that's the way my credit union work's. I have an account with them for 15 years, last year I tried to get a loan off them they wanted a third of the loan in my savings account their interest rate was 6% but there was so much hassel about getting the loan that I ended up going to the tsb instead for the same loan interest 7.5% I got the loan straight away no problem. What credit union do you deal with?


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## jake108 (11 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial planning*

Johnny1, it's in Laois. A friend of mine is a member in Lucan and it's pretty much the same. We both have very good track records with our accounts. I've also paid some loans off early. If I was a member of a credit union for 15 years and they gave me hassle I'd go elsewhere. Last week I was looking for quite a large amount (short term), I rang them in the morning, they met in the evening and I had the cheque the following morning. I'm only with them about 4 years.


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## Johnny1 (11 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial planning*

That was my first time asking my credit union for a loan as I only ever had a savings account with them, I always pay off my loans in time with other banks. Did you have this much trouble when you applied for your first loan with them?


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## jake108 (11 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial planning*

No Johhny1 I never had any trouble with them. I started off with a small (few hundred) loan and paid it back fairly quickly. As far as I remember my next loan was for 3k (deposit for house) and I had to put in a little more. Since then I've kept my savings quite small (but regular) and have never had a problem. If they're giving you hassle go and join another cu. Even if it's not local to you just set up a direct debit and you'll only have to go near them when you need a loan. Best of luck with it!


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## irishpancake (11 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial plan*

minidriver

I think a reality check is called for here.

What you are proposing is not a plan to get out of debt, rather it is a plan to get into further debt. Just look at what you propose



> I will see if I can arrange a 0% transfer on my credit card and pay off as much as possible during the 6 months, then look at the possibility of a Credit Union loan over 5 years to pay off the remainder, I do have property in my name which might help to get a loan, but no savings.



Unlike other contributors, i feel that there is very little possability of you getting either a 0% CC deal or a 5-year loan from any bank, given your current financial and employment circumstances. 

Even if you could get such a loan it would be a very bad idea.

You are on UA, with a very restricted means-tested subsistance-level income.

Also, like Johnny1, i know that most CU's operate quite a restrictive loans policy, with most of them insisting on a savings record of some sort, and having at least a third or a quarter of the required loan amount as collaterol for any loan. They normally don't lend to people who just walk in of the street and open an account. Also, you are restricted to which CU you can join, by their [broken link removed] rule, so shopping around is not normally possible.

So what needs to be done in your circumstances is to contact the CC company in writing, let them know of your circumstances 





> unemployment and some very poor financial planning



and ask for some form of payment plan to pay down the debt, hopefully halting interest accumulation.

Also, you should contact MABS as soon as possible. They can help with a [broken link removed]. 

Please take the time to read through their advice, as it will save you enormous heartache and despair. 

You must proactively deal with this situation now, as further borrowing will only end in further heartache.


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## jake108 (11 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial plan*



irishpancake said:


> Also, like Johnny1, i know that most CU's operate quite a restrictive loans policy, with most of them insisting on a savings record of some sort, and having at least a third or a quarter of the required loan amount as collaterol for any loan. They normally don't lend to people who just walk in of the street and open an account. Also, you are restricted to which CU you can join, by their [broken link removed] rule, so shopping around is not normally possible.


 
irishpancake, I didn't tell johnny1 to "shop around". I have 2 cu's near-ish to me. I could be a member of either one. Friend who hasn't lived in Lucan in 4 years is still a member there. The cu knows it and it isn't a problem. Again, it's about a good track record and building up a strong relationship.

minidriver I don't know if you'll get a credit limit high enough to get 0% balance transfer. If you feel that clearing off this card with a lower rate loan is the right thing to do then go for it. I've been in a bad situation too and all I can say is try to figure out what works for you. One piece of advice though, destroy the card. I know of someone who owed 10k on a card, borrowed 10k from the bank to clear it, kept the card and ran up another 10k. She's still in a dire situation. Trust me the best thing I did was cut up my credit cards. It's all about discipline. Good luck!


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## irishpancake (12 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial plan*

Rather than get into a barney regarding the merits or otherwise of CU's or 0% interest CC's, or 5-year loans, I feel the OP, minidriver, needs to be advised to face up to the implications of continuing a spiral of debt, which will have to be dealt with eventually.

This person is unemployed, on Unemployment Assistance (actually Jobseeks Allowance), which is a means-tested subsistance-level payment of max. €185.80 p/week. 

This level of income cannot sustain debt levels of €15k, and advising a person in this situation to borrow further, over longer terms, will only rebound on the OP and cause a bad situation to get even worse.

I would advise facing up to this now, contacting the CC company, stating clearly the position you are in, and seeking some relief from them.

Also, contact MABS, links in my previous post, as they are experts in this field, and deal with situations like yours on a daily basis.


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## KalEl (12 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial planning*

I think some people are missing the point here.
Nobody was advising the OP to get into further debt...what was suggested was using a 0% for 6 month offer to gain some breathing space and then replace the ridiculously expensive credit card debt with a far cheaper term loan. In other words manage the situation more effectively.
It's clear the OP realises mistakes have been made but the will is there to tidy up the situation. Contacting the credit card company and telling them you can't pay the money back is head in the sand stuff and could have grave consequences. Speak to MABS and best of luck with sorting things out.


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## irishpancake (12 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial plan*



KalEl said:


> .............
> Nobody was advising the OP to get into further debt...what was suggested was using a 0% for 6 month offer to gain some breathing space and then replace the ridiculously expensive credit card debt with a far cheaper term loan. In other words manage the situation more effectively.........



All the above is normally true, but in the circumstances outlined by the OP, where he/she is unemployed and on an means-tested income of €185 p/wk, getting any CC provider to take on a €15k balance is remote in the extreme.

AFAIK most CC providers ask you to send in Bank Statements, proof of employment, Payslips etc. 

Even ppl on substantial incomes, with full employment records, etc, would have difficulty in getting CC companies offering 0% transfers, to take on €5K.

The OP would be wasting valuable time while the debt continues to mount up, as balance transfers take at least 3-6 weeks to set up. This was my experience with UB.

The situation requires action much faster than that.

I do agree with KalEl in relation to MABS. This is vital.



KalEl said:


> Contacting the credit card company and telling them you can't pay the money back is head in the sand stuff and could have grave consequences.



This course of action is precisely what MABS recommend as an essential 1st step. Nobody has recommended telling the CC company you can't pay. You need inform them in order to reach an accomodation with them.

From [broken link removed]:



> It is very important that you, without delay, make contact with those to whom you owe money in order to explain your financial situation. You can do this in person, by phone or by letter. Our advice is to make contact by letter. Do remember to keep a copy.


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## jake108 (12 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial planning*



KalEl said:


> I think some people are missing the point here.
> Nobody was advising the OP to get into further debt...what was suggested was using a 0% for 6 month offer to gain some breathing space and then replace the ridiculously expensive credit card debt with a far cheaper term loan.


 
Well said. A few people reading the wrong way into this. Apparently we're getting into a "barney"!!


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## Welfarite (12 Mar 2007)

Go to MABS. apart from being a shoulder to cry on, they can help you in your dealings with financial companies. Going to them does not preclude you taking any of the advice here, but covers all the bases.


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## irishpancake (12 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial plan*



jake108 said:


> Well said. A few people reading the wrong way into this. Apparently we're getting into a "barney"!!



I have just pointed out how unlikely it is that the OP will in fact be given a 0% CC balance transfer by any provider to park the €15k debt for 6 -9 months. That's not unreasonable I feel. 

Even if it was obtained, it's not a good idea, unless the OP has an immediate prospect regarding employment or an alternative source of steady income. 

This plan is simply not advisable or sustainable.

Also, my being accused of _head in the sand stuff _ for advocating a course of action which is No.1 on MABS list of actions to take when confronted by an out of control debt situation, is not helpful to the OP in resolving the situation.

People need to address the actual situation facing _minidriver_, which is how to handle an out of control substantial debt problem in circumstances of Unemployment and limited future income.

There is definitely agreement on the need to contact MABS, but disagreement on how to handle the actual existing debt problem.

It is up to _minidriver_ to decide upon a course of action sooner rather than later.


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## Welfarite (12 Mar 2007)

Going to MABS is how to begin to handle the actual existing debt problem, irishpancake!! They will advise much better than any of us here, IMHO, judging by some of the opinions posted!


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## irishpancake (12 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial plan*



Welfarite said:


> Going to MABS is how to begin to handle the actual existing debt problem, irishpancake!! They will advise much better than any of us here, IMHO, judging by some of the opinions posted!



You are correct, which is why I have advocated the MABS from my very first post on this topic, providing links to their website and giving details of their Path for dealing with Debt.


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## HotdogsFolks (12 Mar 2007)

I don't mean to sound like a silly boy, but there are tons of jobs out there at the moment (I work somewhat in the recruitment industry.)

Would you consider taking an ordinary job to tied you over? Call centres, etc are always hiring. 

You'll defo feel better about your situation knowing you have money coming in.


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## KalEl (12 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial planning*

As I've said before, you should go and speak to these MABS people.
Don't be afraid to go with what you feel is right however. If possible, try for the 0% balance transfer to get some breathing space and then pay the money back on a far cheaper term loan. If you can do this it's your best option.
I'm sure MABS do good work but personally I have a problem with advice like "If a creditor persists in refusing the offer you have made they can do nothing to get their money back without going to court"
I admire you Minidriver...you want to face up to the situation and get back on track. This MABS option will help, but does seem to be head in the sand stuff for people who can't/won't pay their creditors.


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## ClubMan (12 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial plan*



KalEl said:


> This MABS option will help, but does seem to be head in the sand stuff for people who can't/won't pay their creditors.


I don't really understand what you mean by this. Maybe you can explain?


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## KalEl (12 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial plan*



ClubMan said:


> I don't really understand what you mean by this. Maybe you can explain?


 
I mean the OP is looking at to tackle this cc debt by converting it into a more manageable and far cheaper term loan. If possible, this is obviously a wise course of action.
I've gone through this MABS website and while I'm sure the (voluntary) work they do is very helpful, it seems quite confrontational and potentially damaging to someone's credit rating.


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## jake108 (12 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial plan*



jake108 said:


> minidriver I don't know if you'll get a credit limit high enough to get 0% balance transfer. If you feel that clearing off this card with a lower rate loan is the right thing to do then go for it. I've been in a bad situation too and all I can say is try to figure out what works for you. One piece of advice though, destroy the card.


 
irishpancake, see my earlier quote. Far from encouraging op to get further into debt.


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## ClubMan (12 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial plan*



KalEl said:


> I've gone through this MABS website and while I'm sure the (voluntary) work they do is very helpful, it seems quite confrontational and potentially damaging to someone's credit rating.


Like what specifically?


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## KalEl (12 Mar 2007)

*Re: €15,000 Credit Card Debt As a result of unemployment and very poor financial plan*



ClubMan said:


> Like what specifically?


 
The section I quoted about courts for example.
It looks to me that MABS is a fantastic resource for people who have found themselves in dire financial trouble and literally have no idea what to do. All I was saying is the OP has their head screwed on and has a plan of sorts which has to be better than jeopardising credit ratings by telling the cc company payment is a problem. If that's the only option, then so be it


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