Q – I have accumulated a number of debts and wonder where the best place to borrow is to clear off these debts – I have a credit card balance of €11,000, a car loan of € 8,500, a family loan of € 3,000 and an overdraft of € 5,500 ( fully used ). I am thinking of going to my local credit union ? Paddy – Clontarf Dublin 3
A – You will need to think very carefully Paddy about which direction you are going to take. If your credit card was obtained from the bank where you maintain your overdraft, then that bank should be your first port of call. Ordinarily banks do not lend to clear other debts but if the two main debts are with the one bank, then it may be prudent for them to consolidate these two debts and turn into a term loan – your overdraft and card will be cancelled. You will have to show the bank you have budgeted for these repayments and be able to meet all other living costs. The key is planning. While there may be valid reasons why you ran up the credit card debt and the overdraft ( which is meant to be in credit at least for 30 days of the year ) you now have to show you have the capability of honouring a new commitment to repay your debts. Check your credit history too before applying – www.centralcreditregister.ie – it’s free and only takes a few days. As a back-up if you are turned down, you could apply to your local credit union – request as long a loan term as possible.. the longer the term, the cheaper the repayments – they are generally more flexible on purpose and repayments. In the event you are unsuccessful anywhere, you could consider Debt Relief Notice (DRN) via an Approved Intermediary (AI – MABs offices are approved AIs ) if your total debts are under € 35,000 and your income only covers your Reasonable Living Expenses. Check the Insolvency Service of Ireland for details on their web site – www.isi.gov.ie