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    • Papps
    • By Papps 11th Nov 17, 2:37 PM
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    Papps
    Repay student loan or debts?
    • #1
    • 11th Nov 17, 2:37 PM
    Repay student loan or debts? 11th Nov 17 at 2:37 PM
    I wish to understand if I should pay my student loan off or my debts off.
    I have managed to save about £6,000.

    I also rent (some day would like to save for a home).

    I have the following student loans, which is over £4000 in interest since 1997.
    The total now is £8,340.73..

    I have also contacted Erudio to ask when my debt will be written off, should I not pay before that time. They replied "We can confirm that 25 years after your final loan was taken out would be 2024, so as long as you do not have any arrears on your account at this point then your account will close".

    On the other hand I have debts which are interest free as they are managed by debt management companies where I also pay a minimum each month and have been for nearly 15 years or so. This of course effects my credit. The total debt in this respect is about £30-£35k.

    With the student loan I am thinking I would like to avoid paying the monthly amounts (of approximately £150 each month) when I am at the threshold (I am just under that at the moment) just to free up some money and possibly save again, I'm looking for new job which could go over my Threshold (£28/29k) which means I would be paying towards the loan.

    I'm aware that the repercussions for not paying the student loan are great should I miss a payment, etc?

    With my savings I am hoping to pay off either the student loan in full or my other debts (with partial final settlement figures). Could you please advise me of what is the best thing to do here...should I also consider saving still?
Page 1
    • Sncjw
    • By Sncjw 11th Nov 17, 3:42 PM
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    Sncjw
    • #2
    • 11th Nov 17, 3:42 PM
    • #2
    • 11th Nov 17, 3:42 PM
    Isn’t the debts better to pay off because the student loan would only be payable over a certain amount on wages. If you lost your job you wouldn’t have to pay anything. I’m assuming you got the loan from student loan company.

    Pay some of the debts off
    • Tarambor
    • By Tarambor 11th Nov 17, 3:48 PM
    • 1,543 Posts
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    Tarambor
    • #3
    • 11th Nov 17, 3:48 PM
    • #3
    • 11th Nov 17, 3:48 PM
    Do you have an emergency fund of 3-6 months of outgoings? If not then use the money for your emergency fund.

    However if you are hell bent on spending the money on debts do the maths for both options and go with the one that benefits the most.

    Remember that even if you sink this £6k into the debts that it will still not improve your credit because you are still in arrears, still in a DMP, and the effect will continue for 6 years after the last negative on your record.

    On the face of it given you're currently under the threshold to repay the student loan and are only 7 years from it being written off, if the £6k is not going to clear the DMP I'd just not do anything at all.
    Last edited by Tarambor; 11-11-2017 at 3:50 PM.
    • Papps
    • By Papps 12th Nov 17, 7:15 PM
    • 3 Posts
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    Papps
    • #4
    • 12th Nov 17, 7:15 PM
    • #4
    • 12th Nov 17, 7:15 PM
    Hi

    Thank you Sncjw & Tarambor for your replies.

    I think paying the debts off would be a better idea at this stage instead of the SL. With my offer letter to the debtors I shall request that the offer is only based on the notion that my credit file is updated also. I'm hoping this will settle the debts and clear my credit, and worry about the student loan as and when I need to.

    Would you happen to know that if even if I went over the threshold with my income and I did start making monthly payments, that the student loan will still write it self off in 2024 as confirmed by Erudio?

    I always tend to keep emergency funds, you can never know when you'll need it, right?!

    Last edited by Papps; 12-11-2017 at 7:16 PM. Reason: missed a word
    • Tarambor
    • By Tarambor 12th Nov 17, 8:18 PM
    • 1,543 Posts
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    Tarambor
    • #5
    • 12th Nov 17, 8:18 PM
    • #5
    • 12th Nov 17, 8:18 PM
    With my offer letter to the debtors I shall request that the offer is only based on the notion that my credit file is updated also.
    Originally posted by Papps
    The only change there will be on your credit file is the debt will be showed as partially settled/satisfied from the date you pay it off. All the previous negative marks will continue to remain and will not be removed. They can only be removed if they were placed there in error but they weren't as you are in a DMP. You seem to be under the mistaken belief that paying off the DMPs you have will wipe the last 6 years negatives on your file, it won't.

    As for the student loan, yes it will be wiped off in 2024.
    • Pixie5740
    • By Pixie5740 13th Nov 17, 6:34 AM
    • 11,089 Posts
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    Pixie5740
    • #6
    • 13th Nov 17, 6:34 AM
    • #6
    • 13th Nov 17, 6:34 AM
    Please tell me that you are not paying a company to manage your DMP. Use the money to offer full & final settlement to your creditors so that you can get shot of them once and for all. To be honest it will probably make little or not difference to your credit files if you've had a DMP for 15 years. The credit reference agencies only hold 6 years worth of data so I doubt your debts still show up on there if you first defaulted 15 years ago. You can check yourself:

    Experian: Free from MSE Credit Club
    Equifax: Free from Clearscore
    Call Credit: Free from Noddle

    Actually as your debts are that old it might be worth sending letters requesting a copy of the credit agreement under sections 77, 78 and 79 of the Consumer Credit Act to find out if the debts are even enforceable before making any full & final settlement offers.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • Panesha
    • By Panesha 13th Nov 17, 4:19 PM
    • 1 Posts
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    Panesha
    • #7
    • 13th Nov 17, 4:19 PM
    • #7
    • 13th Nov 17, 4:19 PM
    I am making minimal payments to the debt management companies that purchased my debt back then, but no interest or fees on each debt.

    I understand that my credit file will not reflect my past but will it not help in rebuilding my credit file going forward with offering a settle amount?

    Pixie5740 what do you mean by 'enforceable'? also I dont have the funds to make a full payment, it would only be partial for all the debts.
    • Pixie5740
    • By Pixie5740 13th Nov 17, 5:05 PM
    • 11,089 Posts
    • 15,343 Thanks
    Pixie5740
    • #8
    • 13th Nov 17, 5:05 PM
    • #8
    • 13th Nov 17, 5:05 PM
    If you request your credit agreement from your creditor and they cannot produce it then the debt is not enforceable. For further information read the link that I provided in my previous post.

    A full & final settlement is when you offer your creditors a reduced sum to pay off your debt, rather than the full amount you owe. All full & final settlements will do for you is draw a line under the debts. I don't think it will make one jot of difference to your credit files because your creditors should have stopped reporting the accounts to them 6 years after your first defaults were recorded. Check your files with all 3 credit reference agencies to find out.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
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