CCCS - information please

Hello – apologies in advance as it’s a long one!

I have been reading the threads here recently and I have some questions of my own regarding Consumer Credit Counselling Service and the debt repayment plans resulting from this. Perhaps others who have experience of this can help.

I have a very large (unsecured) debt and have reached the point where I can’t deal with it on my own. Having said that, I full accept my responsibilities and am happy(!) to pay it back, but I need some guidance. The reasons and circumstances which resulted in the debt are a long, long story, which I won’t bore you with. However, I think I can comfortably say that these things are now ‘past’.

I’ve been following the tips on MSE and have managed to reduce my outgoings considerably, although I haven’t managed to dent the debt in a massive way. I have not defaulted or been late with any bills and consequently have a ‘good’ credit record. I have been ‘managing’ the debt by juggling with balance transfers for quite some time. However, I recently have been turned down for two cards, which I intended to use for 0% BT. I imagine that the refusal is due to the amount of credit I am now exposed. Without the ability to balance transfer for a cheaper rate, the interest is spiralling and I’ve finally faced the fact that I am in a mess and if I don’t act now I may well be defaulting by the new year. And no amount of taking packed lunches and switching my utilities can make up for this level of interest ;)

I phoned CCCS today and have an appointment for a phone interview in a few weeks time. My level of debt is high, but is roughly equivalent to the equity in my flat. CCCS said that I will be able to keep my flat as the debt is unsecured, which is a relief as it’s my anchor at the moment. I had considered increasing my mortgage or a secured loan but they advised me against this – they seem to think some kind of plan is preferable.

I have a few questions about it all:

1. Am I right in thinking that debt problems stay on credit files for 6 years? If so, if a repayment plan is eg 8 years, will it be on file for 14 years in total?

2. Whilst I now realise I have no need for credit (cards etc), what about other companies who search your file – eg utilities? Will I be able to change to a cheaper deal in the future or will my poor credit file prohibit this?

3. I usually have an overdraft of around £1000 at the end of every month. CCCS suggested that I open/use another bank account for day to day banking and put this overdraft into the debt plan. I have a good record with my bank. Whilst I will not use an overdraft in the future, I would still like the ease of using a debit card. Would it be advisable to pay off the overdraft, eg using a balance transfer from a card, before any plan is made - so that I can still retain my bank account, not have the hassle of setting up a new one, and still have a decent record with someone?

4. What happens if my personal circumstances change (eg marriage)? What relevance would my plan have to a spouse’s life?

5. If I wanted to move house in the future, eg because of marriage/job would I be able to take on a different or joint mortgage? Or do I have to stay in my current home, with this mortgage until the end of the plan? Or even until 6 years after the plan is settled? :eek:

6. When my mortgage current capped deal expires next year, how will having a debt repayment plan affect this? Will I be unable to remortgage with another company? Will the plan affect my ability to negotiate with my current lender?

7. I have recently put my personal pension payments on hold but do not want to extend this for more than another year or two. Will the plan allow me to recommence payments in the future?

8. What happens with ‘luxury’ items eg mobile/cable tv where there is a contract? Would I be expected to cancel them immediately even if the financial penalties incurred make it not worthwhile? Or do they become ‘debts’ too?

9. Do I have to declare all assets? If I have eg £500 in a savings account, is it advisable to keep it aside for emergencies

10. If I make occasional income – eg EBay do I need to declare this, or should this be used for emergencies etc.

Are there any other things which, from experience, you think I should know about?

A lot of questions, I know! Hopefully some answers amongst you all.
Thanks.
:)

Comments

  • Jolinar
    Jolinar Posts: 179
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    I've just gone through the process with CCCS so I'll try and answer to the best of my ability :)

    1. Yes as far as I am aware bad debt will remain for that amount of time on your credit file.
    2.I had no problems changing the gas and electricity over. I'm not sure if they do a credit search.
    3.I imagine if you plonk £1000 onto a card and then tell the card company you want reduced payments they will object, I went with CCCS advice and set up an account with Alliance and Leicester with debt card with no hassle at all. You will soon build up a good record with them if you keep your account in good order.
    4.Your debts are your own, as far as I am aware it will not affect someone else.
    5. CCCS will help you in this regard, they will help you find a mortgage with a high street lender rather than a subprime lender (that's what they told me anyway!)
    6.Don't know - see above?
    7. The plan is flexible and subject to periodic review I would mention this when you have your interview as it was not an issue for me.
    8. Don't know we had already dispensed with the luxuries in an effort to reduce spending.
    9.I declared my £300 savings and was allowed to keep this.
    10. If it's occasional then I would use it for the emergency fund.

    You will feel a lot better after your interview, good luck :)
  • Eager_Elephant
    Eager_Elephant Posts: 4,714
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    I'll try to help as much as I can.

    1. When you say debt problems, do you mean CCJ's. These stay on file for 6 years from the date of judgement - not the date you paid it off.
    I would think that you will have defaults registered first and these also stay on file for 6 years.
    The only problem I can think of which happened to a poster on another debt forum is that she entered into a DMP with Payplan, everyone accepted payments but some did not issue defaults for 18 months. This means that you will receive some defaults near the start and others further down the line so your file will not be clear for 6 years after the last default or CCJ.

    2. I know some utilities credit check, I can't see how having CCJ's or defaults will stop you changing to better deals. The only problem I could see is if you became bankrupt and I have heard of occasions when people have had to have a card meter. (Actually as I type I have just remembered that I have 2 defaults and I have changed my utility supplers loads over the past 5 years - they must be glad of the custom)

    3. I would not use a balance transfer to clear your overdraft as this could be seen as preferential treatment towards your current debt. Once you start getting defaults then your file will not be as positive and if you have a bank that does external credit checks then your good record will count for nothing.
    You need to find a bank which is not connected with any loans or credit cards as there is a clause which says that they can take any money from any account you hold with them.
    If you apply for a current account this week before you start missing payments or before you enter a DMP then you should be able to get a debit card with your new account.

    4. These debts are yours and yours alone. Once you are married your spouse's income cannot be taken into account for your DMP - unless of course he wants to help. The only difference I can see it making is that your bills such as mortgage, utility etc will be halved which may allow extra money for your DMP. (I have a defaulted loan which I took with my ex, I am on a payment arrangement and they do not even know that I am married and I always exclude my husbands income as it is not fair for him to pay for my past mistakes)

    5. If you have defaults or CCJ's then I can't see what problems you will have as the mortgage is secured on your house/flat so if you defaulted with them then they can take the house back. If you do experience problems or think you will then it might be worth approaching a broker, they will know companies who can offer mortgages to suit everyones situation.

    6. I don't know much about re-mortgaging so I don't know whether they will credit check you again. I would think again that your current provider would be glad to keep you with their company.

    7. I see no reason why you can't start paying into your pension now, everybody needs to save for their future. If your pension is from your employer and they also contribute then you are missing out on free money. As long as it is not an excessive amount I can't see how your creditors can moan. CCCS will have a list of things which are acceptable so I would ask them.

    8. You would be surprised what expenses are allowed. Everybody is allowed to have a life so getting rid of cable tv when it could stop you going out as much is a negative thing. If I was a creditor and someone owed thousands then I would be narked if they had the top package say at £45 when they could pick a cheaper one.
    I would tell CCCS how it is and if they say it is too much maybe see if you can cut down the package both on cable and your mobile. If they say it is acceptable I would cut it down anyway and put the extra money in an emergency fund.

    9. You do not need to declare assets, well unless you had thousands tucked away. The only time you would need to declare all assets is if you were going bankrupt.
    I think it is a really good idea to keep some money in a savings account for an emergency fund because where else would you be able to get help if the washing machine broke. etc.

    10. Occasional income does not need to be declared each time. If you made £20 one month and sent it to CCCS then it would have to be pro-rated amongst your creditors and for the amount they would get it would probably cost more in administration.
    I would save it up and once you had say £500 in your emergency fund everytime you manage to save a further say £150 then forward it on to CCCS so it will bring forward your Debt Free Day.

    I hope this is of some help, I don't have direct experience this is just what I have picked up over the years.

    Make sure you include your yearly expenses divided up into monthly, like birthdays, christmas, car tax etc.

    My bank account allows me savings pots connected with my current account so each time I get paid I transfer a set amount to these pots for when they are needed.

    Any other questions fire away.
  • Eager_Elephant
    Eager_Elephant Posts: 4,714
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    That took me ages to write and now soemone has beaten me to it.

    Note to self : Must type quicker.
  • Thank you both very much for your responses - it's given me a few things to think over.

    I guess I had better apply for a new bank account then - if I try First Direct, at least I might get myself a free £50 :D

    Eager Elephant - no, I haven't got any CCJs, and I haven't defaulted on any payments - my repayment record on my credit file is perfect. However, I know that this can't last much longer which is why I'm taking action now, before it has the potential to be even more stressful!

    Am I right in thinking that once the DMP starts, my debts will all be noted as defaults? I have decided to deal with this 'sensibly' and get a plan arranged before I start missing payments/ignoring demands, which I thought would be better. However, I get the impression that this probably doesn't make any difference - the end result of defaults and a bad record is the same - is that correct?

    Jolinar - re the 'luxuries'. Yes, I've managed to cut right down too and learned to be more imaginative with the money I do have! My mobile phone and cable tv are on contract so I still have those for a while yet. TV is £20 and I have a good minutes deal on the phone, so I only need basic line rental for my home phone, so not too bad, although obviously could be better. Doing fairly well on the budgeting otherwise. While the weather is ok, I'm walking the 3.5 miles to work, and back, which saves a fair few quid on tube fares. My job is quite stressful and I'm v.busy, so I've found the walking to be really beneficial. Because I'm busy I find it hard to get the time to catch up with friends/ family - however, I now use my walking time to make all my catch up phone calls, which of course wasn't possible on the tube. Not so sure how well this plan will last come the November rain though................. :D

    I will have a mull over the advice given and will probably be back here with some more questions over the coming weeks.

    Many thanks - it's good to have somewhere I can ask these questions.

    :beer:
  • If you have a perfect credit record you could look at an unsecured consolidation loan if it had a low rate & you would never run up any cards etc again. This would maintain your perfect credit score, but you would have to be disciplined.

    The consequences of the DMP depend on the exact numbers. Banks are willing to lend consolidation loans (no credit check, but high rate) which if the numbers work would avoid a default or any adverse data. A new loan is opened with lower monthly payments, but for longer.

    If that is not an option, it is likely account would default. A benefit of this is interest would be possibly frozen, whcih would allow you to pay it off quicker. The default would only stay on your file for 6 years from date of default.

    If you want to remortgage in next 6 years the default would go against you, but it would allow your debts to be settled quicker.

    If you contact creditors now it will avoid the stress of them calling you & sending letters, but you are correct if it defaults, a default is much worse than a few missed pymts, so there is no advantage to you in having contacted them.
    ...
  • inhotwater
    inhotwater Posts: 34 Forumite
    Thanks Louise - very interesting.

    I had considered some form of consolidation - probably a combination of increased mortgage and a loan. However, when I phoned CCCS they were adamant that I should not go down this route as my debts are currently unsecured. As far as an unsecured consolidation loan goes - I don't know whether it would be enough (personal loans are usually up to £25kish?) - what kind of limits are we talking about?

    At mortgage rates or slightly higher secured loan rates, I think I could afford the repayments. (I say 'think' because I've only worked out rough estimates on website calculators). However, I'm not sure whether my salary would allow the large 'multiples' required for this level of mortgage/loan. (My mortgage is currently 3.2 times my salary - I would need to increase it to would just under 5.5 times my salary :eek: ) I definitely have the discipline not to use cards any more - all the reasons and circumstances for that are now past. And I haven't got the room in my flat for any more 'stuff' anyway :D

    Interested to know what others think re DMP v Further Loan/Mortgage.

    thanks
    :)
  • Jolinar
    Jolinar Posts: 179
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    Sounds like you are making good progress with your budget inhotwater :) CCCS will help you further, it's amazing the things I didn't budget for, like car tax, maintainance, servicing and insurance then I wondered why I could never afford it when the expenses rolled around. I now have a separate savings account and put money it towards these things and it's a great feeling knowing the money is there when I need it :)

    Re the consolidation route, I've done this twice now with poor results if you do it as louise says you need to be disiplined and I wasn't, however knowing what I know now it may have helped. My loans were unsecured though I always balked at taking out secured ones for the reasons CCCS state. See what CCCS come up with first would be my advice they know their stuff, are non judgemental and best of all impartial.
  • I've been reading some of the other threads and the problems faced when dealing with debt collectors. If I set up a DMP with CCCS, does that mean that I will be 'safe' from this kind of thing? Or am I still likely to be pursued by debt collectors/bailiffs etc? I'm a woman living on my own, so I'm a bit nervous about this. I live in a flat which has an intercom, so it's not 'on my doorstep' so to speak, but I worry about somebody else in the building letting a debt collector in and suddenly finding a big burly bloke outside my door. My flat is at the top, tucked out of the way, so I'd feel a bit vulnerable if this was the case. If anyone could clarify, I'd really appreciate it.

    cheers
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