Credit history already ruined - so might I be as well defaulting?

triticale

Ok first of all, don't misunderstand what I am thinking here. I have debt, I spent that money and the debt is mine to pay off. I am not one of those people who look to wriggle out of paying back what I borrowed just because I want to have no consequences to my choices!

Right, well I have approximately £14,000 of debt. £9,000 is from an unsecured loan with AA Loans, £3,000 is on a Barclaycard (cut up) and £2,000 is remaining on a defaulted Tesco credit card, which is now with Newmans DCA.

I currently pay £265pm to AA, £70pm to Barclaycard (min. payment, so getting nowhere:mad:) and £90 to Newmans for the Tesco debt.

Over the past year I have streamlined relentlessly, I cut my mobile phone bill from £50 to £15pm, got rid of my TV to save £12pm on the licence, I have made every possible saving including lifestyle changes (don't go out to drink or for meals, eat basics food with no wastage), everywhere I could possibly save money, I have.

So I now can afford my debts each month, but the end is so far away and I'm getting frustrated at never having any spare money to do anything nice. I rarely buy new clothes, if I do they are Primark/ASDA. I live in a shared bedsit with bills included in my (low) rent. I rarely holiday (never abroad) and can't buy my kids nice birthday/christmas presents or take them out without humming and harring over pence.

So thinking drastically, I thought since my credit rating is already kn*ckered from the defaulted Tesco debt, would defaulting on, say, the AA loan, actually be worth doing in my situation?

If I had that £260pm (or even half of it, once an agreement was made with a DCA) spare, I could eventually clear the Barclaycard and Newmans debt, then actually save for a modest holiday, afford those shock car repairs, eventually save enough to move into a slightly less hideous/pokey flat, etc. Get myself back into a respectable, debt free quality of life.

When the Tesco CC defaulted, it was actually a weight off my shoulders! I have nearly 4 years left on the AA loan. 4 years of scrimping and just getting by.

I am not greedy, I just want to not have debt dominating my thoughts all the time.

If I default the AA Loan, am I likely to get a similar process to the Tesco debt - nasty threatening letters, followed by it being passed to a DCA? I can handle that I think.

Seeing as the tesco default is on my credit record anyway, another black mark from the AA loan isn't going to make much difference, is it? Or am I wrong? I don't ever want (unsecured) credit ever again, and I won't be interested in/be in a position to apply for a mortgage for the forseeable future anyway.

All thoughts welcomed, both positive and negative!

Charco_2

It's not something i would ever recommend, but i know where you're coming from! It's the fukitol stage - Dr Pepper, what's the worst that could happen?

For my tuppence worth, you're far better being proactive first!

Stop flagellating yourself at the altar of debt! It's unbearable now because you've made it so. I know the ethics of the money saving brigade on here encourage scrimping and saving, cutting the corners and making the most out of everything... but there has to be a limit! I'm not encouraging you to become a spendthrift, but be reasonable to yourself.

Work out what you CAN afford to pay your creditors after you've given yourself some kind of standard of living (by looking at a standard SOA template you'll get an idea of some of the more reasonable expenses allowable without being luxurious). Once you have a figure, speak to a DM company. Or CAB. Or SOMEBODY. You could always run a DMP for yourself paying what you can afford (be strict but remember you're not a monk)... or ask CCCS if they'd be able to administer it for you - it's free from them anyway so you may as well let them spend THEIR money on the letters and phonecalls!

Tixy

Hi Triticale

Whilst I see the reason for your question I think you would be better getting professional advice from one of these organisations - http://www.moneysavingexpert.com/loans/debt-help-plan#help
Its good to cut back on unnecessary expenses but not so much that life is totally miserable. You would be better coming to an agreement with your creditors to pay reduced payments (which may still mean you'll default) rather than stopping paying altogether.

You could try the CCCS debt remedy tool to see what it recommends (although its a computer not a person so obviously is only a guide.

Whilst in a debt management plan you may still default you are less likely to end up with CCJs which will have a more serious impact. Plus if they mark your file as 'arrangement to pay' this looks better than just a default.

Charco_2

Might also be worth speaking to CAB about a Debt Relief Order - costs something like £100 to set up so you could just see if it suits your situation!

stevie39

Charco wrote: »

Might also be worth speaking to CAB about a Debt Relief Order - costs something like £100 to set up so you could just see if it suits your situation!

Er, a DRO ( debt relief Order ) is a form of bankruptcy. In fact is is bankruptcy generally for people who cant afford to go bankrupt.

Because you are paying you debts, you are certainly not classed as being insolvent.

I commend you on your efforts to ensure your debts are getting paid and you are an example of what people in debt should at least try and do.

The fact you have no standard of living is of concern of course. You have 2 options as already mentioned. You can contact creditors yourself to see if you can negotiate better terms. Some may be flexible and some may not be. Doesnt cost you anything to ask and you have nothing to lose.

You could alternatively speak to a professional organisation and look at a DMP. This will certainly give you some money back into your budget as long as you are prepared to take some kind of hit on your credit file. You will avoid CCJS as said before and can recover from defaults etc.

Hope this helps
Steve

Charco_2

stevie39 wrote: »

Er, a DRO ( debt relief Order ) is a form of bankruptcy. In fact is is bankruptcy generally for people who cant afford to go bankrupt.

Because you are paying you debts, you are certainly not classed as being insolvent.

Er... i know what a debt relief order is! If the OP was to return his life to some kind of standard of living (because this surely can't go on indefinitely), then he wouldn't be able to afford his debts would he? He's still struggling with the credit cards even when he's stripped spending to the bare bone! A DRO is just another option he can look into!

If i lived in my mother's shed, without electricity, eating only dog food and washing in a nearby river, every two years i could afford to go on a lavish cruise...
QUESTION: Can i afford to go on a lavish cruise every two years?

As for the OP, you can double check this of you like but...
- A lot of lenders sell bad debts for a fraction of the original value to DCAs
- These DCAs can afford to settle with you for a lot less than the original debt because they're still making a profit
- AA loans are part of Bank of Scotland
- Bank of Scotland dont sell their debts to DCA
- Bank of Scotland pass it on to a company called Blair Oliver and Scott
(the similarites are no coincidence!)
They may not be as easy to deal with as your experience on your other defaulted debts.

I hope some of this helps!

triticale

Thank you all for your replies. I realise now that deliberately defaulting was a bit of a silly idea, just needed it pointed out to me I think! Don't want to get on the wrong side of BoS.

I have decided to write to AA and ask for either: temporary cessation of payments OR temporary reduced payments (I was thinking £100?).

If they agree to either, then I will plow as much as possible into the Barclaycard debt, as that is costing me £40 interest every month. I've worked out I could clear it within a year, or sooner if AA agree to cessation.

Then I could resume payments to AA while being £70 better off each month with an expensive debt eradicated. :T

Does this sound like a good idea? I know Martin always says tackle the most expensive (not largest) debts first, which Barclaycard certainly is! :mad:

Should I ask AA for cessation or reduction do you think?

p.s. I am a lady

Charco_2

I hope there was no insult - I just lost a bet with someone haha

misspoppy

HI

You are unlikely to get a company to accept reduced payments whilts you pay off another one in full. You either have to pay all your creditors reduced payments prorata or pay them all in full.

Why don't you pop up a Statement of Affairs there is a link on the forum page, lets see if we can help you budget to manage this situation.

triticale

I will get my SOA done asap, it's difficult to put together as 'groceries' and 'leisure' are pretty much 'whatever is left'! I guess I'll look at some sample SOA's to get an idea of what reasonable figures for these are.

Another thing I have discovered on digging out my AA paperwork, is that I'm paying them over 5 grand (7.5 with interest) for PPI!! Now I'm SURE I wouldn't have knowingly agreed to the that, but it was over 3 and a half years ago now. I never sign up for things like that because of the stability of my job. Not wanting to 'jump on the PPI bandwagon', but 5 grand is a lot of money.

I've only briefly read some of the info on claiming PPI on here, I need to look into it more to see whether it's worth progressing. Now I'm unsure whether to go down the PPI route first, or leave it for now...

Must do statement of affairs before making any decisions :rolleyes:

Charco_2

Well you're not currently in a debt solution really (and certainly not anything formal) so get the ball rolling on your PPI recalim ASAP - i would recommend a no win/no fee company but there's probably some people on here who could talk you through doing it all yourself if you were that way inclined!

Yours is almost a perfect of case of PPI being the straw that broke the back! There are no end of reasons to reclaim but i suspect even without a reason persistence would see some sort of return.

:eek: That's a shocking amount of PPI by the way!