Debt

[Jenny]

I am surprised that no one has mentioned interest free balance transfers, although appreciate this may not be an option for those with bad credit. There are sites now where you can check which deals you are eligible for without having to do a credit check, Martin Lewis' site is one of them. Transfer all your high interest debt to interest free and make sure you pay it off in the interest free period (or transfer it another interest free offer before your offer ends).

This is what I did with all my wife's store cards, credit cards etc. Transferred them all to one card, interest free for 26 months. You're actually paying off the debt then, not the 24% interest or whatever it is. Plus you have the flexibility to pay a bit more off or pay it off sooner if you fancy.

The key of course is having the discipline to make sure you only use the card for paying off debt and do not spend on it under any circumstances.

Problem with this is that if you're credit rating is already trashed because you have missed payments or you are at your mad available credit you're very unlikely to get a balance transfer credit card.

Stuff like this makes a mockery of those trying to pay their way in society... if you can afford to save £30k you can afford to pay it off your debts in my opinion.

[Metalmicky]

Cheers guys.

Been seeking advice today, got around 8.5k debt so looking into a potential iva.

£85 a month for 5 years, in 6 years it will be off my file completely and can hopefully start my credit again. At the moment it's atrocious.

All this whilst knowing it will eventually be paid off and I can save money each month for the next six years to hopefully have a hefty deposit of 30k ish by the time it's off my credit file.

That's the goal.

Not sure how paying £85 a month over 5 years is going to clear an £8.5k debt...?  By my reckoning £85 per month over 60 months would be just over £5k.... unless my maths is really bad.  If that's the agreement you've struck then you've done well.

I also don't understand the saving £30k bit.  Surely if you are able to save £500 a month, the better option would be to pay a larger sum back and clear the debt quicker.  For instance, if you paid £350 month back a month you could clear the debt in 24 months and still save £5.6k over the same 24 month period.  Then you would be debt free and have £585 a month to proceed with.     

[5minstogo]

Cheers guys.

Been seeking advice today, got around 8.5k debt so looking into a potential iva.

£85 a month for 5 years, in 6 years it will be off my file completely and can hopefully start my credit again. At the moment it's atrocious.

All this whilst knowing it will eventually be paid off and I can save money each month for the next six years to hopefully have a hefty deposit of 30k ish by the time it's off my credit file.

That's the goal.

Not sure how paying £85 a month over 5 years is going to clear an £8.5k debt...?  By my reckoning £85 per month over 60 months would be just over £5k.... unless my maths is really bad.  If that's the agreement you've struck then you've done well.

I also don't understand the saving £30k bit.  Surely if you are able to save £500 a month, the better option would be to pay a larger sum back and clear the debt quicker.  For instance, if you paid £350 month back a month you could clear the debt in 24 months and still save £5.6k over the same 24 month period.  Then you would be debt free and have £585 a month to proceed with.     

That's my point an £85 per month IVA over 6 years doesn't clear the debt in full. The remainder gets written off.

The idea to save 30k in the meantime isn't what an IVA is intended for.

[jackthelad]

Gotta look after yourself and your family first in this world.

[Metalmicky]

Gotta look after yourself and your family first in this world.

Yep I agree - that is why an IVA may not be the right way IMO....

https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/individual-voluntary-arrangements/individual-voluntary-arrangements-explained/what-is-an-individual-voluntary-arrangement/

[Superspy]

As some of the other guys have said if you've got that kind of disposable income the far, far better way of going about this in terms of your credit rating would be to commit the extra to paying off the debt and leaving the IVA, or any other specific agreement alone.

You've said you've got bad credit, but have you actually looked into a loan to consolidate the lot from a bank or are you just assuming you won't get one?

If that isn't an option then why not just pay the debts off one at a time? Sure, you'll generate interest on the ones you aren't paying, but you'll still get the lot paid off a damned sight quicker than 5 years and won't damage your credit file in the process (or not by as much at least).

I don't mean to sound patronising but the thought of going down the route you're going, guaranteeing that you'll be in debt for 5 years, whilst in a position to pay off almost 600 a month from an 8.5k debt paying it off in less than 18 months seems like absolute madness to me.