told I can't afford loan repayments......

[Simonandrod]

I'm in the frustrating position of having a lot of credit card debt, that I can service - I have never missed a payment but I'm paying a lot of interest.
I applied for a loan to consolidate my debts with my bank that I've been with for 25 years and they turned me down on the affordability criteria. It is very frustrating because I'm paying out £1500 a month on cc payments, and the loan would have been £500 a month, I can easily afford it and they can see that in theory and the woman was very kind but computer said no.
I appreciate their reasons - ie there is no guarantee I won't do it again etc and not be able to service the loan, which rules me out.
I know I won't (I haven't run up any further debt in the last year, I have finally learnt and am living within my means and paying off the debts slowly, but it would definitely be better from the point of view of the sky high interest I'm paying on ccs for me to consolidate) however they don't trust me. Fair enough. But has anyone been in a similar position and found a company that will take them on under similar circumstances?

We followed the Dave Ramsey approach to get out of debt. Not for everyone but it worked for us. Worth a look.

Could perhaps see if there's a credit union you might be eligible to join?

Have you tried to move any of the CC debt to a CC with 0% interest? If you can do that, and keep doing it on an ongoing basis as you pay debt off, that's likely to be a cheaper way to pay the debt back

Sorry no advice but I wonder if you could complain to the Financial Ombudsman for unaffordable credit card lending by the bank -

https://www.financial-ombudsman.org.uk/businesses/complaints-deal/consumer-credit/unaffordable-lending

I have a debt management plan with step change and they have been brilliant! It was a scary step but it’s been a really positive experience!

thank you - I think that might work for me, at the moment I'm over paying on all of them and feeling I'm getting nowhere perhaps the snowball method would work, then at least I'd feel I'd achieved something. It feels like a very long uphill struggle at the moment.

Keep paying them as much as you can & apply again in 6 months. I done the snowball method (paying off the smallest amount first) & found that as the amount of debt decreased, the better my affordability was & then I could consolidate.

sorry to be annoying, and feel free not to go into detail, but does that not muck up your credit rating? Our mortgage is up for renewal in June next year....

Go onto Martin Lewis website.
Loads of advice.
Step change is one company.. that writes to your creditors on your behalf and offer them a lower payment.. you pay step change
. Then they pay the creditors.. so you're only paying them ..

I was really concerned about this and didn’t check my credit score for a couple of years… my credit score is good on clear score… but obviously I’ve not taken out any further credit and have paid a lot back. I have still been able to take out phone contracts. I wouldn’t like to advise on mortgages as I’ve actually can’t remember if we have renewed over the time I’ve had the plan off the top of my head. I am sure stepchange would be able to advise? I think it’s worth a call you don’t have to go ahead if you’re not happy. My interest stopped which was what was crippling and I don’t have anything to deal with I just pay stepchange a monthly payment, they deal with creditors.

I did ring all my creditors when I first started to let them know I was now with stepchange and was really scared about it but found it really supportive.

@Simonandrod if you have a lot of cc debt and can afford to pay, then why did you put purchases on cc in the first place?

Stupidity and over spending but also sporadic payments from clients, for example at the moment I'm owed over £5k for work that has been delivered...some of it going back for months. So I would commit to something, pay for it on a credit card, knowing that in theory I had the money, but then not get paid for ages. But it's irrelevant how it happened largely, I am where I am, I've changed, I only spend what is in my account not what I'm owed, there have been no holidays this year etc it's just convincing my bank that I've changed as interest rates on cc debts is so much higher than on a loan.

Dave Ramsey will tell you ‘beans and rice, rice and beans’. That sounds like a LOT of debt so I would do absolute lockdown on spending to the bare minimum to throw everything you have at this and then when it’s down try to reapply for a 0% cc

@Simonandrod you need to call in the monies owed to you, via court if necessary!! dont know the process in england but small claims in scotland can be done youself just by filling in the simple procedure claim form and submitting it to court!

It's probably better financially to snowball by paying minimums on all CCs except the one with the highest interest rate - and throw everything spare at that (rather than paying minimums on everything but the smallest debt and then focussing on quickly clearing that).

Having said that, clearing a debt can give a welcome boost, so it may feel better to aim to clear a smaller debt first. I suppose you need to think about which strategy will keep you motivated and positive?

I had one it messed up my credit. I ended up with defaults because the companies I owed money to decided the debt wouldn't be paid in time. Some even sold to debt collection agencies.

So cutting the monthly payments down was useful but 5 years later I'm still paying the price(only another year for all but 1 default to come off my file). My mortgage rate also wasn't as good as it would have been when I came to remortgage, and a lot of companies won't lend to me and the ones that do will with high interest rates.

I'd try every other approach before going down the dmp route.

i would do this

I wouldn’t necessarily go into a debt management plan as yes I do believe your credit is affected. Step change is a debt charity though and will give you sound advice - it’s worth speaking to them.

It sounds as though you don’t need to have a formal plan anyway because you are making overpayments. snowball your debts. Line them all up and pour all overpayments into the smallest debt first (unless it’s interest free). Once you’ve paid that, it’s one less minimum you have to pay, so you can roll that up and pay even more off the next smallest debt.

Additionally, the loan company won’t do it as they belief you are asking for credit on top of the existing credit card debt. Have you tried moving your credit card balances to interest free?

A debt management plan (DMP) will affect your credit. High street lenders will not lend to you. You will probably be able to do a product transfer (assuming you have no mortgage arrears).

But op says she is paying her debt, why would she do a DMP?

Use the snowball method.

Write down every debt now on a spreadsheet or piece of paper. Lender, balance, current interest rate, how many months left if you are on a 0% or introductory deal. Then redo it each month. Psychologically clearing one or two small ones works better for some people but it’s better to start highest rate first.

Post here if you want help/encouragement or on the Debt free wannabe board on money saving expert.

Post your outgoings too , we may help you cut costs.

Try and find a few cheap pleasurable things to do and schedule them in as treats to reduce the desire to spend. Library. Take a coffee and walk with a friend. Movie nights and home made popcorn. Any crafts you have not completed. If you have an instrument laying around learn to play/get better. Do YouTube free art videos or origami or learn to sing or yoga. Sell any junk and pay off debt. Reduce shopping bill. You need activities to look forward to so you don’t feel deprived!

but why should op want people to lend to her when she already has debts?

Cc debt is awful, the interest you pay is crippling.
id look at interest fee credit cards and move what you can, there is a usually a small fee but would still be worth doing.

Then I would concentrate on putting wheels in motion to ensure you are paid on time. Wording on your invoices about payment, ask new customers to open an account with you agreeing to such terms etc.
Then for those that owe you from months ago, send letters telling them a date to be paid by, warn them that if payment isn’t received, in full, you will be taking action to recover the debt, and they will be liable for all costs and interests. (Be firm but polite) .
if they don’t pay, then small claims is very easy to do. But you should show you’ve actively given them a date to pay by and communicated this.

Can you transfer some to an interest free card. Then use the snowball method.

Step change is a debt management plan. I wouldn’t recommend for manageable debt. It’s pretty much guaranteeing you won’t get credit for the foreseeable.

Firstly see if you can get approved for any 0% credit cards and transfer any balances you can to that one. Then just pay the minimum on it and concentrate on the high rate ones. Keep an eye on your banking app , once your card balances start to reduce you might find your credit score improves and you are eligible for a personal loan. It's only a No for today. I would stay away from step change etc unless as a last resort as you're right it will affect your credit score. As for your mortgage being up next year, if you stick with your current provider they will just change your rate, there will be no affordability checks or credit scoring unless you move providers or want to borrow more. I work in mortgages and have had quite a few people borrow extra to clear credit card debt. It's more common than you think, would that be an option for you? You'd have to take into consideration that you'd be paying off the cards over the term of the mortgage though.

How much do you owe already and is it all with your existing bank?

financil institutions are subject to strict rules about affordability, part of that will be the assumption that you may run up those cards again, they can’t take your word for it. They can’t make you spend the money on paying them off and they can’t make you close the credit facilities once they’ve lent you the money.

If you have any credit with them you could ask if they’ll convert it into a loan IE the credit card will no longer be available.

don’t do loads of credit applications though that can hurt your credit and might impact your ability to change your mortgage.