Thinking about a loan to repay other debts? BatchedMetting

#1
Between me and my live-in life-partner (girlfriend), we have about £20k of debts across different credit cards and overdrafts.



In my name, I have about £7 and the rest is in her name.



Interest on the credit cards and overdraft are pretty high and while paying the minimum payments, we're not making much of a dent in the outstanding balance at all.



I'm tempted to get a loan to pay off the full amount but have a few questions/concerns:We both work through our own LTD company and take a salary from the company and dividends - so basically self-employed - company has only been live for just over a year.
We've only been back living in the UK for about 1.5 years (after 6 years abroad). I did have my bank accounts registered at a UK address during this period.
We are renting.
The debts are in both our names but I imagine the loan would just be in one of our names (or should we aim for two loans, one each?).
I've looked on Clearscore (my score is 416 out of 700) and they say there's a 70% chance I'd get a £20k loan


I've also had a look using the MSE tool and only came up with 50% eligible for a £20k loan with Yorkshire bank. For £10k, my chances are 60% with Zopa at 3.2%



Do you think it's worth trying to apply for a loan to cover it all? Or two separate loans (one each)?



Or should we wait a few more years until we have been in the UK for 3 years and have more income records to show from HMRC for our business/work?



Even getting a loan to pay off one credit card would probably lower our monthly outgoings and help us try and get back on track.



Any thoughts? And yes, I know getting a consolidation loan is risky in case we spend on the credit cards again, but it's such a black cloud hanging over us at the moment.



Thanks.

#2



Between me and my live-in life-partner (girlfriend), we have about £20k of debts across different credit cards and overdrafts.



In my name, I have about £7 and the rest is in her name.
Originally posted by BatchedMetting


I'll lend you the £7 to clear your debt.



For the other £19,993 though, list out what amounts you have at what rates. You should look at other options rather than total consolidation. Consolidation rates are likely to be high, if you;re accepted at all.



For example, could you BT some of the debts to a 0% offer?

#4
Thanks! I'll take you up on that £7 - what's the APR?



I will check the details but for starters....



One credit card balance is £11900 (limit of £12000) and the minimum repayment is £269 with about £150 of that being interest.



I just signed up for the MSE Club thing and my Experian score is FAIR and 830 out of 999.



My affordability score for credit cards and loans is VERY WEAK.



Through the MSE Club, for a £12k loan to pay off that credit card, I have a 70% chance of getting a £12k loan with £1050 interest to pay and monthly payments of £217.49 over 5 years.



Alternatively, after doing an eligibility test, MBNA will offer me 0% on balance transfers for up to 18 months on £12k. Their best deal is 43 months but they will only give me (up to) 18 months.



If I pay off £250 of the card per month for 18 months, that will be £4500 paid off. Then I guess I could try and find another 0% card.



Although I'd be worried that if the payments were voluntary, I might not pay the full amount each month.



Where as with a loan, you have to pay the set amount each month.



Such a mess! Maybe I should go bankrupt ;-)

#7
You should each make attempts to get as much of the credit cards onto 0% as possible.



See if you can get one 0% with sufficient space to clear a whole card, preferably the highest-interest one you can.



If you can get that first card emptied over to your new one, you might find your first lender offers you a better interest rate so you can then use that to switch more money, and so on and so forth etc... It also means that for a month, your payment is made in the clearing of it, so you get a month to make over-payments elsewhere.



However, for now, I would keep your debt in your name and hers in hers. If you marry, buy a house together etc, then shared debts are a thing, but don't be tempted to borrow £20k to clear her debts. If you do, they are now your debts and if things do go bad, they remain your debts regardless. Work as a team to support each other, but take care of your own business.



Good luck!

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