I keep hitting brick walls trying to get out of debt...

[Optimisticbanana]

I need to get this off my chest and try and breathe cos I'm getting completely overwhelmed.

Basically over the years we've had bad luck, made bad choices and now have debts in various places that we need to pay off.

One of which is our overdraft. We changed banks, after taking advice due to huge bank charges making us go over our overdraft each month. Things are improving in lots of ways but we still have the old account open and I've been trying to pay £1-200 each month if I can.

We recently got a letter from the bank to say they wanted us to the full amount over overdraft back 4.8k by next month.

We can't do it.

We've tried to get 0% balance transfer cards but all have been declined due to DHs credit rating.

I can make an arranged payment scheme with the bank but this leaves a 6 year bad credit marker on our credit rating and we are desperately trying to get back onto the property market and get our own house again. We are trying to repair our credit rating as well as getting out of debt.

It's all such a mess!

Is there anyone who has any suggestions. I'm so worried about things I'm getting snappy with the kids and just want to run and hide.

Has anyone else been in a similar situation who has resolved things with the bank without it affecting their credit rating?

If it were me, I think an IVA would be the absolute last thing I’d do. You can end up paying huge amounts in fees and if you do end up owning your home and your circumstances change and yiu can’t pay the IVA they’ll just make you bankrupt and take the house.

If you do want an order because the loan route doesn’t work, I’d be looking at an Admin Order (for debts under £5k), a Debt Relief Order for debts upto £20k or bankruptcy if your debts are over £20k.

I’d be very surprised if you can get a mortgage, while being declined for a credit card? this doesn’t make sense to me either.

You won’t be able to get a mortgage with the overdraft. Our broker told us that an overdraft shows lenders you can’t live within your means, and the overdraft charges make it a really high interest way of borrowing. Ours was £500 and we had to pay it off before applying.

Focus on the overdraft, speak to your bank and ask them to freeze interest and set up a payment plan. If they won’t, speak to Stepchange. They were fantastic when I was in a mess a few years ago.

op I don't think you will get a mortgage if you can't get a credit card and the psrson with the higher income has a bad credit rating plus debt i think you need to be realistic about that. Do you have a deposit saved ? if yes could you not pay it with that I know it's disappointing but it's not worth wrecking your credit rating. I would try and put everything into getting all your debt payed off asap. if your husband is 600 a month better off can you put all of that into paying the debt off ? I would in my mind set yourself a timescale say 2 years to pay all the dept off improve credit rating and save as much as you can then try and get a mortgage

Hi bifs I really want the bank to do this. My worry is that I'll end up with an AR marker on my credit rating for the next 6 years.
Paying off our overdraft is something we were trying hard to do before applying for a mortgage.

You need a deposit for a house - so you won't get a mortgage without one.

Pay DH salary into the overdraft account - then transfer the remainder into a spending account.

It shows you are being 'paid' and by how much

Honestly, the first thing to do is speak to them and see if you can agree something together.

Tell them you will be speaking to a stepchange otherwise and proceeding down a debt management plan with them.

Sleephead that's definitely an option. We have money available to us for a small mortgage deposit (as part of an early inheritance).

We previously thought we would not get a mortgage any time soon, but thought we'd speak to a broker just to see and they were a lot more positive than we'd thought they would be.

We obviously wanted to use that money for our deposit.

As folk have said, there's great advice available om MSE.Try the Debt Free Wanabe section.
2 excellent board guides called fatbelly and sourcrates are former debters and now impart their knowledge to those struggling.
Good luck.

@Huskylover1 that's not necessarily the case. My husband is in an iva, year 3, he will pay back 72p in the £ over 6 years. It depends on income, expenditure and what creditors will accept. If he has to reduce payments for any reason then the term will increase until the 72p in the £ is paid

You can see why I'm frazzled.

Brokers were all really positive with me until it came to actually applying, we couldn’t get a decision on principle from anyone with the overdraft.

Focus on that first, and then on the mortgage. If you can pay the overdraft off now then do it. Use the £200 a month you were paying towards the deposit.

Have you checked your credit reports out of interest?

sugarhunny that's extremely high! Normally is around 10p in the £ I've dealt with loads of them.

If it were me, I think an IVA would be the absolute last thing I’d do. You can end up paying huge amounts in fees and if you do end up owning your home and your circumstances change and yiu can’t pay the IVA they’ll just make you bankrupt and take the house

The fees are absorbed into the arrangement. You do not pay anything to enter into an IVA or Trust Deed. KPMG (or similar) will charge ££££ for handling it all, but all that means, is if the debtor pays (for eg) £7000 over the course of the arrangement, KPMG skim off about £5000 for themselves, and pay the remaining £2000 to the Creditors. This is why KPMG push to get all Creditors to agree to the Trust Deed, as it's so lucrative to them.

Should you have an IVA/Trust Deed, of course, the last thing you'd ever do is default on it. And if you are only repaying 10p in the £, why would you. And, it's all based on Income and Expenditure, the point being that you only arrange to pay what you can afford.

I think that might be the best option as if you think about it pay it off then you will have the 200 you where using to pay off the overdraft to save up plus possibly some if the extra 600 if you could save even 300 a month in a year the money you payed off the overdraft will mostly be payed off and you will be in a much better position. You can go to a bank and do a affordability check if you wanted to speak to a actual bank rather thank broker

If you have some money set aside for the deposit, I would use it to repay the overdraft and start from scratch with saving for the deposit - if yiu are currently looking at an extra £600 in wages, and are currently paying £200 of the overdraft you would be able to put away at least £800 per month for a deposit.

No point having a deposit and having to screw your credit file which will prevent you getting a mortgage anyway.

Ah sorry just re-read - is the money I my available on the condition it's used for a mortgage deposit?

The reason you might get a mortgage and not a credit card is that the bank will take your house to pay the mortgage if you don’t pay. With a credit card it’s harder for them to get the money back. Not saying that you WILL get a mortgage, but that’s why it’s more likely.

We were in your position a few months ago. I would try your hardest to avoid an IVA, or any other long lasting arrangement. We contacted the bank and said we couldn’t afford to pay back the overdraft all at once. They don’t really expect you to, they will be happy to accept regular payments of whatever you can afford. You may have to talk through your monthly budget with them to agree an amount.
Our arrangement lasted for 6 months, we have just renewed it for another 6 months, increasing the payments a bit. This will show on our credit file until we have paid it off, but is not there for years like a bankruptcy or IVA.

Dh has a similar arrangement on his credit card, but with that one they have stopped adding interest to the balance, saving us a lot of money.

Finally, I took a loan from a credit union to pay off my credit card. The interest is 12%, so not a cheap option but cheaper than the interest on the cc.

Don’t panic, if you’re sensible now you can get rid of the debt without too much damage to your credit rating. Also look at the bad decisions that got you here, and how to avoid them in future (we’ve had to work really hard on this!).
Good luck.

Brokers often say they can get your a mortgage. They can. But with huge monthly repayment figures. The bigger the risk, the bigger the interest and repayments.

My ex h had horrendous credit that was impacting my individual score because we were financially linked, by having both our names on the mortgage. The mortgage payment had been missed a couple of times. Without my knowledge.

My broker looked at mortgage providers who could give me the mortgage, then looked at high street banks. The high street bank, would give me a mortgage. It saved me around £100 per month.

You aren't going to get a mortgage with a decent repayment amount until the debts are paid and your dh, improves his rating. So concentrate on that.

Like PPs I'd advise you have a look on MoneySavingExpert for advice.
Once you've sorted out your overdraft, start looking at the rest of the site to see where you can cut bills and expenses and increase income.

As savings interest rates are low it will probably be best to pay off the debt with your deposit money. You will be paying more in overdraft interest and fees than your deposit can earn in interest.

Try Christians against poverty. You don't need to be religious. Someone will sit down with you and help you make a plan and write to the various organisations you need to. You don't need to do this alone.

Definitely agree with working out how to reduce your monthly bills. We’ve just knocked £100 a month off ours just by switching a few providers. Also, look at anything like Sky, it won’t hurt to knock a few packages off until your debts are paid. Can you downsize your cars too?

Thanks for all your words of support and wisdom. As you can see there are lots of ways to tackle this. My first port of call will be to talk to the bank and maybe see if there is a way of paying it back in guaranteed instalments without messing up my credit ratings if not perhaps with a loan...
Wish me luck x

P.S. We've already done lots of energy swapping, I've changed mobile to SIM only etc. We were heading in the right direction before this happened.

Is it possible to get a mortgage after a DRO?

cactus no a DRO will stay on the credit file for 6 years, just like an IVA, Admin Order, CCJ or Bankrupty. I think that’s why everyone is trying to encourage the OP to get this debt sorted without going down that route yet.