Struggling with debt? Ask a debt advisor a question

StepChange_James · 3 December 2012 at 10:46AM

greenwoodlad wrote: »

Could you give some advice on my situation :

I am married with 3 children, we are in our 40s - we have a 5 bed house worth £280k with an outstanding mortgage of 222k - we have unsecured debts of approx 21k with 4 creditors.(loan, next card, overdraft , credit card)
We have been struggling for the last couple of years with rising costs and our loss of valuable overtime - i have a good job and now part time jobs too to try and bring in as much cash as possible - i am sometimes working 60 + hours a week and being in approx £2000-2200 a month - my wife has a part time job bringing in £750 a month - we have £180 a month child benefit - we have cut everything back to minimum - but i stupidly got a credit card this year to "help"- but somehow it is now at £4600 balance . We are always at overdraft limit and i am now some:(times doing small cash jobs to buy food - we have had to sell our car at a loss and now have a cheap £750 runabout. we have sold things we dont need or use on e bay... Basically we are not meeting ends meet - we looked at a DMP but then i decided to sell the car which has helped in the short term - our utility bills & debts come to about £2500 a month excluding food, housekeeping & fuel etc
I have suggested to my wife selling our dream home of 5 years - paying off the debts and then renting somewhere and getting totally debt free - my wife doesnt want to let our house go or move - we live in a village - the kids have friends and are settled in schools - i dont think we could buy again - we would be left with about 30k deposit and we would probably get a mortgage of about 150k . For £180k we could by a small 3 bed house back in the city where we really dont want to move back to, similar to the one we had 15 years ago - we have 3 teenagers now - we are just lost at what to do - i don't know how we will get through Christmas even - we have not defaulted on any payments yet but we are forfeiting daily essentials to prevent this - our salaries go in and we are hardly ever out of overdraft

Hello,

Thanks for posting, hopefully we can help you get back on top of things.

Selling a property to pay off unsecured debts is always a very tough decision and it's impossible to say what the right thing to do would be. From what you've said it sounds like staying in the property is a priority though, so making sure you keep on top of the mortgage and household bills is also a priority.

To make that affordable it would make sense to get in touch with us and plan out an income and expenditure budget. Then we'll advise you on what options are available (including a DMP if that still suits your situation).

Dropping payments to unsecured debts isn't something that should be done lightly, but at the same time it's sometimes important to do this to make sure you've enough money to look after the family.

Obviously making reduced payments to unsecured debts will mean taking a hit on your credit rating but if you're not wanting to take any more debt out then that's perhaps a sacrifice worth taking if it gets your debt payments down to something more manageable.

I'd recommend using our online advice tool, Debt Remedy (http://www.stepchange.org/msehelp), which will take your information and give you a customized advice booklet and recommend the best solution for you.

If you'd prefer to talk you can speak to an advisor (http://www.stepchange.org/Contactus.aspx) and they'll be able to talk you through things.

All the best.

James

StepChange_James · 3 December 2012 at 11:07AM

Tinam1982 wrote: »

Hi.

I am in a big mess really and I really don't think there is anything I can do about it.

A little over 2 years, my parents took out a loan on my and my husbands behalf to consolidate some debts for us. It is in their name. Everything was fantastic for about 3 months as the monthly repayment was a lot less and we were very happy. Then my husband lost his job. He found another but the salary is much less. Then we made a massive mistake and borrowed my mums credit card. We thought it was the only way to make ends meet at the time and within a 18 months had run up £12000 on it!! Now we are drowning in it all. It's a struggle to get through the month and I cannot sleep because I am so worried. The problem is the debt is in my parents name so there is nothing I can do about it. My parents were trying to help us but it was the worse thing we could have done.

My and my husbands credit ratings are terrible. Is there anything at all we can do??

Tina.

Hi Tina,

Thanks for posting, this sounds like a really tough situation but there may be more options than you think.

Firstly, I would recommend giving the card back to your mum to avoid the balance going up any more. It's probably worth talking things through with her too, if the card's in her name I assume she'll know the balance too but it might be worth making this clear.

Another thing that might help would be to use our online advice tool, Debt Remedy, to create a monthly income and expenditure budget (http://www.stepchange.org/msehelp) which will show you what you can afford to pay towards these debts.

The best thing to do would be to make the full payments to these debts in your mum's name, planning out a budget will tell you if this is affordable or not.

If you cut back as much as possible on non-essential costs and still can't cover the payments to these debts then it's worth talking to your mum and explaining what the situation is. Obviously it's not a great situation but if you're clear about things with your mum, she can make a decision about what to do next.

If she can afford to make up the difference between what you can afford and the full payment then she'll preserve her credit rating. If she can't cover the difference then I'd suggest she gets in touch with us(http://www.stepchange.org/Contactus.aspx) and we can give her advice about offering lower payments (as these debts are in her name it would be her we'd need to speak to about reducing payments).

Hope this helps.

James

StepChange_James · 3 December 2012 at 11:22AM

dozy-debtor wrote: »

hello,

I am currently owe my bank approx £9k split up from a loan and 2 overdrafts. 3 years ago I defaulted due to my work situation and it was passed from a bank to a DCA. I have been paying £1 a month to the DCA as a token payment.

I downloaded my credit file from Equifax, Credit Expert and Noddle. The loan is nowhere to be seen and this makes up the majority of the outstanding debt.

I requested my CCA from the DCA who passed me back to the bank. The bank still own the debt.
Following my request to the bank for my CCA's using my DCA reference number (I no longer have any details of the bank accounts ) they advise that I need to provide them with the sort code and account number.

Can this be right? Surely they should have details of the debts they have passed on to a DCA to chase me for?

Im really confused as what I need to next - are they just fobbing me off because I am trying to deal with this myself?

any advice would be greatly appreciated

Hello,

Thanks for getting in touch. It sounds like they genuinely can't find your details from what you've said. You'd think your name and address would be enough to identify you on their systems but a quick phone call should be enough for them to find you on their computer.

I'd also add that requesting the original agreement in something we'd only recommend if you weren't sure that the debt was yours. If you'd like to explore other options to deal with your debts we can give you advice, just go to http://www.stepchange.org/msehelp.

Hope this helps.

James

Tinam1982 · 3 December 2012 at 11:26AM

Thank you for your reply.

We have already done these things. I have always been totally open with my mum with everything to do with this, as it's all in her name, we always felt it was only fair. We have never missed any of the repayments as I never want to get her in any trouble, especially as she has done her best to help us out. If she were to set up a DMP, would that not hurt her credit rating? If so I can't ask her to do that.

Is there anything else I can do? It's such a mess.:(

StepChange_James · 3 December 2012 at 11:28AM

Frida wrote: »

Hi,

I was hoping someone could advise me on how to proceed with this issue.I owed the DWP a debt due to an overpayment of benefits which occurred around 17 years ago and the last time this debt was serviced or acknowledged was 1998-99, at this point I contacted DWP and they claimed that the debt was no longer on their system and therefore I did not owe them money. Upon hearing this I assumed that I no longer owed money and the fact that I did not hear from them for another 13 years indicated I was correct in my assumption.

However, after 13 years they have recently contacted me saying that I still owed them this money. Upon receiving their letter I replied stating that I did not acknowledge this debt and that I believed it was now statute barred as 5 years have passed. The DWP wrote back claiming that this debt would not be extinguished until after 20 years and that the "Prescription and Limitation (Scotland) Act 1973" did not prevent them from instructing any of their private sector partners to pursue repayment on their behalf.

Therefore, I was wondering if someone could advise me how I should reply to their recent letter. Any help would be greatly appreciated on this matter.

Hi Frida,

Thanks for posting. I've looked up the law that was referenced in your letter, you can find it here: http://www.legislation.gov.uk/ukpga/1973/52/contents. I would add though that it's not an easy read and I had to check it's meaning with our Scottish debt law specialists to clarify.

It does seem that the time period to collect this sort of debt is 20 years, so legally speaking they are entitled to ask you for the money back.

Did you receive anything in writing from the DWP when the told you there was no debt to repay? If so then you could dispute the debt using that letter. If it was a phone call then it would be harder to prove but you could still contact them and see if there's any record of the conversation.

The next step, if you do have to repay the debt, will be to come to an agreement about the best way to do this. We can give you advice on this if you get in touch (http://www.stepchange.org/Contactus.aspx).

Hope this helps.

James

StepChange_James · 3 December 2012 at 11:39AM

Tinam1982 wrote: »

Thank you for your reply.

We have already done these things. I have always been totally open with my mum with everything to do with this, as it's all in her name, we always felt it was only fair. We have never missed any of the repayments as I never want to get her in any trouble, especially as she has done her best to help us out. If she were to set up a DMP, would that not hurt her credit rating? If so I can't ask her to do that.

Is there anything else I can do? It's such a mess.:(

Being on a DMP itself doesn't really affect credit ratings but through the DMP debts are paid less than their full amount and this is the were credit ratings start to suffer.

Any debt solution that involves paying less to debts has an adverse effect on credit ratings so it's hard to think of what to suggest.

You mentioned your credit ratings aren't great, so it's unlikely you'd be able to apply for a new debt in your own name to repay these other debts.

Stopping spending on the card and being clear about the situation with your parents are the most important things, so it's good that you've done these things already.

When I've spoken to people in similar situations in the past they've found it useful to actually show their budget to the family members to give them an idea about what you can afford to pay towards these debts and using that as the starting point to put a plan together.

I'm sorry there isn't more I can suggest, but I hope I've been able to help clarify things for you.

James

dumbmonkey · 3 December 2012 at 12:13PM

hi,

I divorced in 2008 and it was a bitter split. The financial cost of this ruined me and I was forced to declare bankruptcy. Since then I have struggled desperately with my ongoing expenses - my job requires I travel a great deal that I pay for and claim back but because I have no credit options this comes directly from my pocket so when they are late in paying expenses (pretty much every time) I have been forced to try and find a way of covering the money.

I've ended up using payday loans.....

I entered a debt management agreement on a number of loans but this didn't solve the base underlying problem and I'm now even further in debt. I really don't know what to do.... I'm not looking for sympathy but hope someone can give some useful advise...

StepChange_James · 3 December 2012 at 5:42PM

dumbmonkey wrote: »

hi,

I divorced in 2008 and it was a bitter split. The financial cost of this ruined me and I was forced to declare bankruptcy. Since then I have struggled desperately with my ongoing expenses - my job requires I travel a great deal that I pay for and claim back but because I have no credit options this comes directly from my pocket so when they are late in paying expenses (pretty much every time) I have been forced to try and find a way of covering the money.

I've ended up using payday loans.....

I entered a debt management agreement on a number of loans but this didn't solve the base underlying problem and I'm now even further in debt. I really don't know what to do.... I'm not looking for sympathy but hope someone can give some useful advise...

Welcome to the forum. It must be really hard to manage your finances if you're having to find money to cover business expenses and can't be sure when they'll pay you back.

Is your debt management plan with us at StepChange Debt Charity? If so you can call us up and we can review your situation and give you advice about what to do next.

If you're not one of our clients you can still get in touch and we can help you plan a new income and expenditure budget and look at your finances with a fresh pair of eyes. You could do this online using our advice tool Debt Remedy (http://www.stepchange.org/msehelp) or by giving us a call (http://www.stepchange.org/Contactus.aspx).

You mention the debt management plan didn't solve the underlying problem. It's hard to say why this might have happened but often the problem lies in not having an accurate budget in place.

If you struggle to keep to a budget, or find your not sure what you actually spend then I'd recommend keeping a spending diary for a month. Jot down a quick note every time you spend money and by the end of the month you'll have a clearer picture of where the money goes.

Hope this helps.

James

john10001 · 3 December 2012 at 9:15PM

[FONT=Arial, sans-serif]Hi James,[/FONT]

[FONT=Arial, sans-serif]Thanks for thegreat advice in your reply to me here:http://forums.moneysavingexpert.com/showpost.php?p=57392313&postcount=73[/FONT]

[FONT=Arial, sans-serif]Ireplied back to the bank concerned regarding the overdraft and theseare some of the points I reitterated:[/FONT]

[FONT=Arial, sans-serif]1)They're sending correspondence to my old address where I no longerlive and I am not getting a lot of the statements and other lettersthey send me.[/FONT]
[FONT=Arial, sans-serif]2)They're getting my name incorrect.[/FONT]
[FONT=Arial, sans-serif]3)They haven't responded to any of the complaints I made or informed mewho their CEO is so I could take it higher.[/FONT]
[FONT=Arial, sans-serif]4)They are making unrealistic demands when they have been informed thatI am in financial difficulties.[/FONT]
[FONT=Arial, sans-serif]5)I have contacted them several times on coming to an agreement about arepayment solution but they have failed to read or respond to themand only keep sending the same letter factory template demands.[/FONT]
[FONT=Arial, sans-serif]6)There has never been a minimum required payment amount on theaccount.[/FONT]
[FONT=Arial, sans-serif]7)The fact that I have never paid the large sums they are only recentlyrequesting (in line with that banks financial troubles) into theaccount and have only ever paid up to £50 into the account everyfour weeks going back several years is proof to the contrary andimplies otherwise.[/FONT]

[FONT=Arial, sans-serif]Unfortunately theynever replied to this letter again though I did receive another oneof their template letters from them which is dated a day before Isent the above letter so there may be some crossover, but I thinkthat they're unlikely to respond anyway.[/FONT]

[FONT=Arial, sans-serif]The new letter Ireceived is a Final Demand letter and listing me as a debtor, thoughthey have got my name wrong again.[/FONT]

[FONT=Arial, sans-serif]It says:[/FONT]
[FONT=Arial, sans-serif]Despiteour previous communications concerning your debt, we have to datereceived no satisfactory response.[/FONT]
[FONT=Arial, sans-serif]Wenow demand immediate repayment of (over £1200).[/FONT]
[FONT=Arial, sans-serif]Italso states interest will be added on the same basis as presentlyapplies.[/FONT]
[FONT=Arial, sans-serif]Itgoes on to say I have 18 days from the date of the letter to pay infull.[/FONT]
[FONT=Arial, sans-serif]Actionmay be taken against you through debt collectors or solicitors if youfail to comply with this demand within 18 days of the date of thisletter. You may also be taken to court.[/FONT]
[FONT=Arial, sans-serif]Itcontinues: As you have not made payments that are due to be paid,this information including your name and address will be given to thecredit reference agencies named below if we do not receive asatisfactory response from you.[/FONT]

[FONT=Arial, sans-serif]I have previouslycontacted the Ombudsman about this but there wasn't much they coulddo and only referred me to the CAB or said I would need to phone thenumber of the bank to speak with their financial difficulties linewhich I'm not prepared to do, only to correspond in writing so thereis a written record of it.[/FONT]

[FONT=Arial, sans-serif]I have only justgot this latest letter as it was sent to an old address where I nolonger live and there are only a few days left before the deadlinethey give in the letter.[/FONT]

[FONT=Arial, sans-serif]I am thinking ofsending an offer for full an final settlement as an ex-gratia paymenttomorrow but for roughly 33% of the amount as that is all I canafford and would be able to raise.[/FONT]

[FONT=Arial, sans-serif]Do you think thiswould be likely to be accepted or not?[/FONT]

[FONT=Arial, sans-serif]If they don'taccept I think really my only option then would be an IVA for all mydebts which run close to £20k.[/FONT]

[FONT=Arial, sans-serif]If it is acceptedthen it would make paying my others debts a little bit better.[/FONT]

[FONT=Arial, sans-serif]I did go throughthe Stepchange tool last week I think it was and it recommended theIVA route for the size of my debts, my income and expenditure.[/FONT]

[FONT=Arial, sans-serif]I am just wonderingwhether it is possible to tweek the allowances in the statement thatis made online using this tool before you eventually sign and agreeto this? For some of the questions it recommends certain amountswhich I never thought to include as outgoings which was quite helpfulbut other questions where it included amount that I simply don't haveas outgoings and others where it didn't include enough. E.g. I don'thave an outgoing for TV License as I don't watch or record televisionas it is broadcast, and even if I wished to I wouldn't as I am a TVLicense/BBC objector. Then on the question for hair cut/styling itonly does allowance for £12 but it costs me much more than this.[/FONT]

[FONT=Arial, sans-serif]My expenses foroutgoings like food/drink, and similar things though are quite lowoverall.[/FONT]

[FONT=Arial, sans-serif]Is the onlineprocess through Stepchange a fixed thing or can it be changed to reflect your costs moreprecisely in different categories before you agree to go ahead withan IVA? Can the statement be updated?[/FONT]

[FONT=Arial, sans-serif]Thanks very muchfor your help,[/FONT]

[FONT=Arial, sans-serif]John[/FONT]

EDIT: Correction After re-checking it's actually a few days after the deadline they give in their letter.

kaydizz · 3 December 2012 at 11:51PM

Hello,

I was just wondering how long it takes for a debt management plan to be set up from the time you receive a completed application pack.

Also regarding income, are bonuses and overtime included in calculating your income or is it your basic salary. Concerned that creditors will want to include bonus and overtime and this is one of the reasons I have ended up in a mess ( along with being made redundant twice in the last four years) as bonus and overtime is not guaranteed and it has got to the stage where I am relying on credit and overtime and bonus to live on. I am up to date with payments at the moment but have been making minimum payments on around 20k of credit card debt for about 8 years but cannot continue like this as my income has dropped by 10k per year and bonus and overtime has dried up or is very inconsistent.

I have completed the Debt Remedy online and it has recommended a DMP. Worried that if I apply for debt management plan that not all creditors will accept.

Any help would be really appreciated

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