Struggling with debt? Ask a debt adviser a question

Hi

I’m sorry to hear that your friend is struggling and has been through what I imagine has been a very difficult time.

I’m glad that your friend was able to contact us to discuss her options. I’d suggest your friend getting back in contact to discuss the concerns she has and for further advice.

Her job might be affected by a type of insolvency and I’d suggest that she checks her contract, her employer or Union. As she’s a Nurse this should be quite easy to find out through the Nurses Union.

Your friend can check in her rental agreement to see if Insolvency would affect her contract. Even if a clause is in there which means Insolvency would breach the contract it doesn’t always mean the landlord would act on the clause especially if the rent is up to date and she's on good terms with the landlord.

The Insolvency clause is less likely to be written in to Council or Housing Association rented properties.

Assets are taken into account in Insolvency and IVAs offer more protection for assets.

In Bankruptcy most assets would be taken into account especially vehicles worth over £1000.

What you’ve mentioned about making an individual agreement to the creditors to make a reduced payment is basically what a Debt Management Plan (DMP) is, but instead of your friend doing it herself, it’d be supported through us.

As we don’t charge any fees for the service so the creditors are receiving what is affordable based on your friend’s financial situation to pay back the debt.

We’d give an estimated time frame that’s based on creditors stopping the interest and charges, so I’d assume the 13 years 2 months is based on that calculation.

Certain debt solutions may be perfect for some and not for others and vice versa. I’d certainly advise your friend to call in to discuss these concerns with us further.

You can find our contact details here.

Thanks
Rachael

Toolman2001 wrote: »

Hi
My friend has a debt from her Ex husband. She took out several loans to try and bail the family out of debt and now having separated from her husband is left with the debts in her sole name.
She has a total of £20k debts all with 5 creditors.
She had been offered three solutions from Stepchange.
1, Debt management plan £140 over 13 yrs 2 months
2, Iva
3, Bankruptcy


She is in rented accommodation and her only asset is a car £3000.
Her concern about Bankruptcy is being made homeless should she need to move to another rent property and also any effect this might have on her profession as a nurse.


My initial thinking is to try and make individual arrangements with each creditor, with the out come being to freeze interest and other charges. To enable her to pay the debts without and need for IVA or Bankruptcy.


Any advice is very welcome.
Thank you in advance.
T

Hi

Thanks for posting.

I can understand you’d want to get on top of your finances and get things back on track and that it’s important to find a way that is suitable for you and your situation.

I know you’ve mentioned you’ve been unable to get a consolidation loan but I wouldn’t suggest further borrowing as a solution in any case as this rarely solves the problem of interest and high monthly payments.

I’d suggest looking into other options to becoming debt free. There are many different solutions depending on your situation some may be more suitable than others.

A Debt Management Plan (DMP) is one debt solution which is likely to have less of an impact on your credit file than other forms. This is because a DMP is paying back the full amount of the debt but with affordable payments so that you can maintain your priorities such as mortgage payment and other priority household bills.

If you have debts that have already defaulted and the creditor has issued a default, then a DMP is unlikely to have further negative impact. This is because it will show on your credit file that you’re making regular repayments. The defaults will fall off your credit file 6 years after the first date they were issued.

In a debt solution you’d need to include all your unsecured non priority debts as this shows the creditors you’re not giving any preferential treatment.

Creditors may check your credit file and will see if you’re making contractual payments to some creditors and are paying them a reduced amount in a DMP. It’s much more likely the creditors in the DMP will take the debt through a court to set a Count Court Judgement (CCJ) against the debt to try and get a higher payment through the court.

It’s important to budget for all your expenditure including setting an amount aside for sundries and emergencies for unexpected or irregular expenses. This should stop any need for further borrowing when in a debt solution.

If you’d like to look further into what debt solutions would be suitable for your situation you can use our anonymous online Debt Remedy tool, once completed you’ll be able to access and read through our advice and recommendations.

Take care,

Rachael

iamkingy wrote: »

Hi all.

From the day I turned 18 I have had a terrible relationship with spending and money. At the age of 27 I'm now desperately wanting to get married, have a mortgage and a baby. But none of those things come cheap!

I have a wide variety of debts now, old and new, amounting to approx £10,000. My credit score is absolutely appalling from missed payments and all sorts. I have two defaults, no CCJs as I've never let it get that far.

I am now on a reasonable income for my age, around £1,800 a month depending on overtime/enhancements. If I was able to consolidate my debts into one, I'd be able to get it all paid off in no time. Unfortunately I have a number of lenders with large minimum payments, which has lead to me using all sorts of dreaded payday loans, and as you all know it's a slippery slope.

I'm desperate to get one consolidation loan so I can put it into one affordable payment, whilst getting onto of my credit rating. But my credit score is too bad to qualify for even the most basic of lenders. I am considering a DMP but I'm worried this may effect my credit score further as it's not all of my accounts that I'm struggling with. As terrible as it sounds I would also like to be able to hold on to one credit card for absolute emergencies, as I do not have anything at all to fall back on.

All advice welcome. Happy to give more details if needed!

Thanks so much