how to get out of debt?

[02gf74]

not sure why I am posting this but ......

i have a friend who lost her job - QA analyst - over 4 years ago and has no had any work in that time. the mortgage is 1,000 per month so if you do the sums, the JSA plus cost of living is insufficient so she has £ 30 k debt on credit cards. :facepalm:

IMO she is at the brink - or over the bring of about to lose her house - missed the last mortgage payment. Those unlucky to be in that position will know that when you are in such as position, the banks do nothing to help but pile on the financial pressure with interest, late payment fees and so on on those who are in no position to pay any of them. I have stepped in, foolishly perhaps, to pay off her bank debt + a little bit extra, money that I am pretty sure I have thrown down the pan. Her mortgage plan is crap but the lender will not change it to a better i.e. lower interest due to missing 1 months payment until there are 12 consecturive good payments. :twisted:

She is having to resort to renting out rooms in here house but that may be a too little too late.

I am not sure what to suggest - the mortgage needs to be changed but not sure if that will be possible. Also the credit card debt has to be moved to a bank loan at a lower interest rate.

???????????? it is all quite depressing

 

[GuyWood]

The first thing your friend needs to do is talk to the Citizens Advice Bureau or a similar organisation such as the national debt helpline. They see this situation alot and can really help your friend out by talking to creditors on her behalf and helping her find a way forward. Alternatively perhaps, talk to an independent financial advisor who can perhaps do as you say and have all the debt converted to a more manageable solution.

I hope everything works out for her eventually.

 

[FluffyChicken]

Sell up and move somewhere much cheaper ?

 

[daugs]

Sell up and move somewhere much cheaper ?

doesn't necessarily work, mortgages are cheap debt (or should be) as unemployed won't get another mortgage, renting may or may not be cheaper as generally rental returns enjoyed by landlord higher than interest costs.

Anyway, must have a plan where cash out is sustainable and matched by sources of cash even if from savings. If only increasing debt (which it sounds is what has been happening on credit cards) then long term it doesn't work. It does sound that long term the sale of the house and repayment of expensive debt is required but first things first need to get some breathing space. As said CAB etc.

 

[highlandsflyer]

One of my friends bought a flat and then got sacked from her well paid job, she had debts running to even more than that. She entered into an IVA and was able to keep her flat, car and everything else. The credit cards are all non secured, no reason to worry too much about them.

Main thing is to make sure of the mortgage payments and keep that rent coming in, and get back into some kind of work.

Oh, and try not to worry too much.

 

[Geoffthechef]

She needs help from http://www.consumeractiongroup.co.uk/forum/ She can save her house and the debt can wait with just token payments until she is back on her feet...She must act now...

 

[GuyWood]

Some good and helpful replies so far. General consensus is GO AND SEE SOMEONE NOW. As soon as someone who knows what they're doing says "Try not to worry, we can help you with this", the sooner she can take a breath and maybe sleep properly .

 

[suburbanreuben]

Does she not receive help with the mortgage?
As has been suggested, get down the CAB pronto! They can talk her through her options and even make the necessary calls for her if needed. It really helps to have them on your side. Never, though, Never pay for debt advice or help. It's all available for nowt!
Be wary of IVAs; they are not all the same. Some take more in fees than they actually pay the creditors!
Don't be scared of bankruptcy as a last resort. Suddenly, she'll have no debts, and no large men are going to come round and take all her stuff. It should even be possible to hold on to her house/flat.
There's some good advice here that should help her sleep! http://forums.moneysavingexpert.com/
Good luck!

 

[FluffyChicken]

I'm certainly not saying don't go and see someone.
Though with a mortgage that high and if the room rental (hadn't noticed that) is not covering it then moving to somewhere where rent is 400 quid a month is saving 600 quid straight off. If there is money in the house it releases the cash.
Also 4yrs no job? Has she tried supermarkets? Cleaner? Etc.. Not as glorious as her original job, but needs must.
None in the area, move when going to a rented place might help this.

My friend was left with a similar debt (divorce), but she still had a paying job and went the IVA route after advice iirc.
She managed to keep the house, but only as she earns enough to cover the mortgage and never missed payments on it. She got advice straight away though.

Sell up and move somewhere much cheaper ?

doesn't necessarily work, mortgages are cheap debt (or should be) as unemployed won't get another mortgage, renting may or may not be cheaper as generally rental returns enjoyed by landlord higher than interest costs.

Anyway, must have a plan where cash out is sustainable and matched by sources of cash even if from savings. If only increasing debt (which it sounds is what has been happening on credit cards) then long term it doesn't work. It does sound that long term the sale of the house and repayment of expensive debt is required but first things first need to get some breathing space. As said CAB etc.

 

[Alison]

I would also say look at the IVA route, you only pay what you you can afford at the time and then it is stretched over 5 years and after that no more debt, the only snag is you'll never get a loan, by on HP or a cheap credit card again

Alison