I took out a personal loan when we needed to have our roof repaired and a new conservatory built but we never expected to get into debt.
The loan was for £5000 and it was through a high street bank, which meant we weren’t paying high interest or charges on it every month.
The repayment was over 2 years and was within our budget, however we couldn’t have foreseen the additional problems we were about to face.
This meant were had to borrow an extra £2000 which we hadn’t budgeted for and we weren’t sure how we were going to repay it.
We had asked to extend the loan and explained our situation to the bank however they seemed unsympathetic with our problem.
Despite our finances being strained, by the time all the work was complete on our house we had only defaulted once.
A friend suggested we should take out a consolidation loan which would be paid over a longer period of time, however we were refused.
The financial collapse meant even though our credit rating wasn’t too bad our default on the loan and our mortgage meant banks wouldn’t lend to us.
We couldn’t continue to manage the monthly repayments and eventually we defaulted for a second time which meant additional charges.
A year and a half after initially borrowing the loan we owed £9,000 and we didn’t know how we would going repay it with our other credit commitments.
How We Solved Our Loan Debt
Our first plan to repay the debts was to re-mortgage, which would have allowed us repay about half of all our debts and would make the rest manageable.
We tried with 3 different lenders and even spoke to a mortgage adviser who eventually told us we wouldn’t be able to get one because our credit rating was so low.
I then called a debt advice charity I found online who advised me bankruptcy wouldn’t be an option because the equity in the house.
They explained to me we could enter a joint IVA for 6 years and which would still protect our property including the equity in it.
My IVA will be completed in 2 years and plan to never get into debt again but i can now see how easy it is too get financial trouble.
[accordion title=”Story By” load=”hide”]Donna Skimin[/accordion]