Are consolidation loans ever a good thing ??

[nutcracker]

I have a resolve loan with Barclays which is costing me over £100 a month for the next 9 years and some other debts.

The total is about £10500 and we pay out about £270 a month in repayments.

Looking on some debt consolidation sites, we could clear the lot and have repayments of between £120-£150 a month which would be a huge saving for us and give me some peace of mind.

I have heard bad things about them though, can it ever be a good thing ?

Oh we both have bad credit so can't just get a bog standard loan with Tesco or someone.

No one

Are you struggling with your current payment? I have recently been in contact with cccs who are a charitable organisation who help you to budget and they negotiate with your creditors to make a payment plan that you can afford - might be an idea?

To be honest I don't really know much about them but long term you probably don't save anything as you end up paying more in interest.

I think that if you can 100% guarentee you will stick to paying it off and don't run up any more debt it may work.

Also they are normally secured against your house I think so if you miss payments it can be sold to get their money back.

Can you not work out one of these arrangements whereby you pay x% of your debt back to all your creditors and wipe off the rest instead? If you already have a crap credit rating it will not really affect you that way.

Bestg option is to speack to someone who deals with this properly.

what about an IVA? not an ideal situation, but it helps you clear all debt off in a managable way.

theres lots of sites on the net with info.

The main problem with consolidation loans is that they are often secured against your home (if you own it). So you go from unsecured loans over say 5 years, to a secured loan usually over a longer period (hence the lower monthly repayments). This means that if you default on the new loan you risk losing your home. Also, even though the consolidation loan may have a lower interest rate and monthly repayments if it is over a longer period you often end up paying back much more then you would have done if you had stuck with the original loan. Schneebly is right, try debt counselling services first.

ALWAYS read the small print. I know it sounds obvious but i saved loads of money by turning down a consolidation loan after reading the small print.

If it sounds too good to be true, then it probably is too good to be true..

There are some places that will give unsecured consolidation loans - I know because I have had one.

Ours was over 15 years, although it didn't run the course. We still have a large chunk of the debt to pay off over about the next 7 years but we have transferred it back to a bank loan. The repayments are now a lot higher but the overall interest rate is lower.

The consol loan helped us out at a time when the main problem was cash flow on a month by month basis. It wasn't an ideal solution but did the job at the time.

I would recommend debt counselling first but if you want the details of the company we used feel free to email me.

antlxstew at yahoo dot co dot uk

I think the main problem for most pple is that after clearing credit cards and overdrafts, it doesn't take long to start spending on those again once you realise you've still got funds available to spend.

But if you cashflow issues, then you need to go to CAB or cccs. If you get an IVA, I just discovered that you will be put on the insolvency register which is available free to check on the internet. not advisable

I have made the mistake of tranferring balances for dh three times this year to clear his debts and he has consistently gone out and bought stuff afterwards.

Thanks for the advice, we don't own our own home, we rent from a HA.

I will email you for that info SG as that would be really helpful.

Nutty, would you consider posting your incomings / outgoings to see if we can back on track?

Well at the mo CC I don't actually know what our income is. Dp went back to work on tuesday only to be told he can't as he hadn't been signed off as fit, and when he went to gp to get him to sign him off he refused saying that as far as he is concerned dp cannot physically do the job any longer.

He has rung the place he worked at before to see if he can get back in there and they said it's a possibility but they won't know for a couple of weeks.

At the mo dp os only getting SSP.

OMG what a nightmare :-(

Don't sign up for a consolidation loan while you don't know what your income is/is going to be. Consolidation loans tend to be longer term, can have high tie-in charges and people wouldn't sell them to you if they weren't making money out of it. To make a saving of £120 to £150 a month you're going to be paying back over a hugely long period, especially if you don't have an asset against which to secure the loan.

Go to Consumer Credit Counselling Service (0800 138 1111), National Debtline (0808 808 4000), Citizens Advice (adviceguide.org.uk) or visit your local CAB centre (citizensadvice.org.uk). These are free services, they'll help get you organised and onto the right track for you (they're not getting paid to sell you products or services so they're looking after your interests).

Good Luck.