Loan Consolidation

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Aaron

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Post by Aaron » Wed Jun 18, 2008 9:17 pm
Hi. Told my friend about IVAs as he's in debt and has a ccj. He owes £10k so don't believe he will qualify for an IVA. He's tried to get a loan to consolidate his debt as i've said it's so much easier just to have one amount coming out each month, at an affordable level and you can monitor spending. He's tried to arranged a loan for consolidation, but got declind. probably because the ccj, but also because he has moved recenltly is my guess. He's paying £300 in payments and a loan over 5 years would be about £200.

His parents are willing to act as guarantor to a loan since he's been declined, but where can you find these loans?

Is this the best option for him?

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size5

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Post by size5 » Wed Jun 18, 2008 10:19 pm
I can only assume that, if he has a ccj, all of his credit will have gone bad and probably be with debt collectors or indeed the court. On that basis, if we assume that he is paying his regular payments, then it is highly likely that there is little or no interest being added on an ongoing basis.

The question would be, therefore, why a loan would benefit him. The answer is that it wouldn't. Firstly, his original debt, even if such a loan were possible, would automatically increase his total indebtedness, 60 times 200 is 12000. Secondly, at 300 he will clear his debt, at £300pm, in 33.3 months, not 60 months. Thirdly, his credit rating will not improve by taking such a loan in the first place. Fourthly, what happens if he suddenly finds himself in a bad place again and cannot meet the repayments? Poor old Mum and Dad saddled with the debt. There are no winners in this scenario at all, far better to let him pay the debts back as they are in my opinion.

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Viki.W

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Post by Viki.W » Wed Jun 18, 2008 10:44 pm
Hey Aaron, I'm obviously not an expert, but in my opinion he should go for a debt management plan instead of getting his parents involved in a loan. My Dad is guarantor for me on my business lease and also he remortgaged to help me pay debts off.......and now I can't afford to repay him, it's awful and I'd hate them to be in the position my Dad is in now. Just my opinion. Viki X
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