Struggling with debt? Ask a debt advisor a question

Milltowngirl

I have admitted to myself that my credit cards debts have gotten out of control and I need to do something to sort them out. I got into debt trying to self finance myself through a masters degree to improve my career prospects and although this paid off as I walked into a job that I loved, the salary and pay increases havent been quite what I expected and this plus the fall in the housing market wiping out some of the equity in the house and therefore taking away the opportunity to release some of that equity have meant I am now struggling). I suspect a DMP is going to be the only way forward as we do not have enough equity in the house (about 85% LTV) and I suspect too much overall borrowing to be successful with a consolidation loan etc

So I have some questions and wondered if someone could advise.

Firstly, the debts are my own on sole credit cards, and my partner does not know about the mess I am in. I intend to tell him. However, I wondered whether it is possible for me to enter into a sole DMP without it affecting any joint debt we may have ? For example, would my sole creditors accept a DMP if I was continuing to make full payments to a joint personal loan I have with my partner ? I dont want to jeoprodise his credit record as well as my own, as this is no fault of his, so didnt want to enter into a joint DMP or include this joint personal loan (for a car purchase) into a plan. We have a joint personal loan and mortgage, both with nationwide.

Secondly, is it advisable to try and minimise the number of creditors that you enter a DMP with ? For example, I could transfer some balances around to reduce the credit card debts from 4 cards to 2 - is it better for my credit record to have only 2 cards showing as defaulted with the other 2 showing as closed with nil balances / repaid in full ?

Thirdly, I have not yet defaulted on any cards although have been paying minimum payments for quite a while now. Do you think any of my lenders (most importantly Llloyds TSB and MBNA, as they are where the main debt is) would consider offering me a reduced final settlement figure now, if I advised them I was considering a DMP via CCCS ? Im just thinking that with the amount of debt involved c£20K, it would take a long time for them to get their money under a DMP and may they accept a reduced final settlement figure instead upfront ? If so, I could possibly then shift some of these debts around between cards (I still have about £11-12K available credit across my 4 cards) and reduce my debt this way, therefore not needing the DMP ? I know its probably a long shot !!

Finally, about a DMP; I believe it is on your credit record for 6 years ? Is this from the time of the original/first default or when the DMP is repaid ? We have a fixed rate mortage with currently about 6.5 years left on the fix so could in theory my credit record be repaired by the time I may want to remortage if I entered into a DMP soon ?

Many thanks for your help x

suziq5001

Hi, Sorry in advance - this is going to be a bit of a long post ... I'm hoping you can help me decide what to do about a letter I've had from the RBS. It's a bit of a long story but the short version is that they took me to court four years over a debt I had to them of £28,000 - they won and I now have a CCJ and they have a charging order on my house against this debt. I have kept up the agreed repayments of £124 monthly since the CCJ and they have just written saying the following:

'You are now able to have the remaining arreas added as a fixed term loan account, repaying these over the remaining terms.
Terms available:
Equity release over 19 years, payments of £159.54 secured against your property or
Fixed Term loan over 15 years at £191.64'

They go on to tell me that the advantages are (a) I'd be able to apply for 'new borrowing or alter your current Mortgage package' and (b) any default registered in relation to the account will be removed within 40 days (c) the account wouldn't be owned by Credit Management services "therefore removing the risk of litigation and reposession" as long as payments are kept up.

My question is, do you think there is any advantage to me to take up this offer?

At the moment I'm not paying any interest and if I did what they suggest I would be agreeing to pay around £8000 interest over the term of the loan if I took option 1. I could just about manage the repayments on this one. There's no way I could manage to find £191 per month for option 2 so I have to rule that out - but option 1 is secured on my home so I would still have the 'risk of litigation and reposession' that I do now surely?

Regarding the default - from the advice you kindly gave me a few months ago, I think I'm right in saying that this will be removed from my credit reference files after six years anyway. And also, I have other debts which are in a DMP with Payplan - is having a DMP just as damaging to my credit rating as a CCJ? If it is then, again, it seems that I won't be in any better position by taking up the RBS' offer.

The only thing that makes me wonder whether to go for their loan is the part about altering my Mortgage package. The RBS is my mortgage provider and I'm pretty sure that in my current position there's no way that anyone else would have me. So I am stuck with (a) the RBS and (b) the high interest rates that I've got which I guess is because I'm seen as someone who's likely to default.

OK, I think I've said everything I wanted to - sorry it's all a bit long and garbled. Any advice you could give me at all would be really gratefully received!

Thanks in advance.

Sweetie427

Recently i have been looking at getting an equinox or experian credit report done to see what debts i have and what is outstanding as years ago i got out of control but then moved, every time i moved they found me and hounded me and i was not in a position to pay anything back. now i am and i want to see what is owed but am living at an address with my partner and he has said he doesn't want them all sending stuff to his house. i want to get a credit report done so i can contact them all directly and pay them off without giving them that address. thing is the credit report requires your most recent address and i don't want to put that down if every other company, including ones i may well owe, can see it and start hounding me again. Do they give the details to other companies and can they access the new address i give?

Sweetie427

i meant equifax in last post sorry

Queenbelbake

Another question. As i have equity on the house would it be an option to try to remortgage? Pay off all my debts in one go and then have one payment a month.

PUREHOMES

Im on a DMP with CCCS at the moment............the best decision ive made, wish i had done it sooner!

Anyway 7 months in with 49 to go!

My question is.........my mortgage is up for renewal in December.........what is the best course of action here? Normally i would obviously shop around and get the best deal, however due to the DMP, i expect i should stick with my original lender on their standard rate?

Thanks

CCCS_Sue

manorpaul wrote: »

Hi, I have been reading through these excellent and very helpful forums. I am looking at making myself BR very soon and have been 'running away' from my creditors for a year now and have come to the conclusion things aren't just going to go away! I have spoken to a couple of debt help lines who were very helpful. I would just like some final advice from some of you guys.
My question is, what are my options other than BR? I cannot afford to miss a payment/default 'IF' I weren't to go BR which is fairly likely as my income is very erratic (I am a self employed engineer, so if I have work, I have work, if I don't, I don't). So my income goes straight in to paying the rent, bills and the CSA, sometimes I may be short and my partner will help out. So I do not have a mortgage, I rent privately, have a van on HP with about £4k owing, its the only vehicle in the house hold and is a 'tool of my trade' (thats another matter, I know). I owe about £28k in debt (including the van) 2 x loans, 1 x credit card and 1 x over draft. Other than BR can anyone see another option?
Thanks in advance.

Hi manorpaul and thank you for your message

There are other options you could consider but without knowing your full financial details, I am not able to advise which would be your best solution. Bankruptcy is a big step to take and you are right to seek advice on all the options available to you first.

If your debts are personal debts and not business debts, and you would like to speak to one of our counsellors, you can either use our online advice facility Debt Remedy, or ring our free Helpline to book a telephone appointment with a counsellor.

Debt Remedy will assist you in completing a financial statement which includes information on your household, employment, income, expenditure and debts. All this information is used as a basis to determine the options available to you to deal with your situation.

Once you’ve followed the process through and completed all the required information you will immediately be presented with an advice booklet, which will provide tailored advice for you based on your current circumstances. It will also provide advice on ways you may be able to improve your situation.

Alternatively if you would prefer to talk to a debt counsellor about your situation, you can book a telephone based appointment by calling our helpline free on 0800 138 1111. Lines are open Monday to Friday 08:00-20:00.
If bankruptcy is your best option, then we do have a bankruptcy support team who can offer ongoing support and advice.

If your debts are mainly business debts, then I would recommend you contact Business Debtline. They give free confidential advice to the self employed who are struggling with debts.
http://www.bdl.org.uk/englandandwales.asp

Kind regards
Sue

jasperconran

Hi, I just need some more reassurance.

Basically we have just started our dmp, OH and myself. first payments due to go to creditors on the 25th of this month.

All have been fab, however halifax have passed OH account to Blair Oliver and Scott. I have been reassured by CCCS that all the information has been to BOS. However, we received a 3rd rather scary letter headed notice of intended court action:eek: stating papers are now being prepared, you need to call and make a payment now etc etc etc.

I have rung BOS as OH sent a letter to them last friday explaining everything and giving me authority to talk on his behalf. When I rang BOS just now however, no letter has been received/processed as yet.

So I rang and spoke to a lovely lady at CCCS who advised that BOS are one of the better creditors and dont go down the court action route. She explained that they do take a while to process paperwork/payments anyway, and that I was to ignore the letter. She also advised me not to ring BOS again.

Whilst I do accept what I was told earlier, I still feel very very worried and sick! my heart is still racing and I feel very shakey. Can you advise please?

thanks

CCCS_Sue

Milltowngirl wrote: »

I have admitted to myself that my credit cards debts have gotten out of control and I need to do something to sort them out. I got into debt trying to self finance myself through a masters degree to improve my career prospects and although this paid off as I walked into a job that I loved, the salary and pay increases havent been quite what I expected and this plus the fall in the housing market wiping out some of the equity in the house and therefore taking away the opportunity to release some of that equity have meant I am now struggling). I suspect a DMP is going to be the only way forward as we do not have enough equity in the house (about 85% LTV) and I suspect too much overall borrowing to be successful with a consolidation loan etc

So I have some questions and wondered if someone could advise.

Firstly, the debts are my own on sole credit cards, and my partner does not know about the mess I am in. I intend to tell him. However, I wondered whether it is possible for me to enter into a sole DMP without it affecting any joint debt we may have ? For example, would my sole creditors accept a DMP if I was continuing to make full payments to a joint personal loan I have with my partner ? I dont want to jeoprodise his credit record as well as my own, as this is no fault of his, so didnt want to enter into a joint DMP or include this joint personal loan (for a car purchase) into a plan. We have a joint personal loan and mortgage, both with nationwide.

Secondly, is it advisable to try and minimise the number of creditors that you enter a DMP with ? For example, I could transfer some balances around to reduce the credit card debts from 4 cards to 2 - is it better for my credit record to have only 2 cards showing as defaulted with the other 2 showing as closed with nil balances / repaid in full ?

Thirdly, I have not yet defaulted on any cards although have been paying minimum payments for quite a while now. Do you think any of my lenders (most importantly Llloyds TSB and MBNA, as they are where the main debt is) would consider offering me a reduced final settlement figure now, if I advised them I was considering a DMP via CCCS ? Im just thinking that with the amount of debt involved c£20K, it would take a long time for them to get their money under a DMP and may they accept a reduced final settlement figure instead upfront ? If so, I could possibly then shift some of these debts around between cards (I still have about £11-12K available credit across my 4 cards) and reduce my debt this way, therefore not needing the DMP ? I know its probably a long shot !!

Finally, about a DMP; I believe it is on your credit record for 6 years ? Is this from the time of the original/first default or when the DMP is repaid ? We have a fixed rate mortage with currently about 6.5 years left on the fix so could in theory my credit record be repaired by the time I may want to remortage if I entered into a DMP soon ?

Many thanks for your help x

Hi milltowngirl and thank you for your message

I know it’s difficult, but because you have joint debts with your partner, then it would be better if you could both sit down together and discuss your finances as a whole rather than try to struggle on your own as you are doing.

If you are making regular minimum payments to your creditors, then it is unlikely that the creditors will accept a full and final settlement.
A DMP is only one of the solutions if you are not able to meet the minimum payments.

However, if you are struggling to meet the minimum payments and you are using credit for everyday living costs to get by, then you could call for an appointment to discuss your situation with one of our counsellors.

If after speaking to a counsellor a DMP was the best option for you then you do need to include all your unsecured debts, including any joint debts.
As you would be paying a reduced amount, then the creditors could pursue your partner for the rest of the payment.
This is because if you have joint debts, then you are both joint and severally liable for payment.

If you have joint accounts or have made a joint application for credit, the name of your partner will show on your credit file as a financial association.
I have attached a link to a booklet called ‘Credit Explained’ which explains this further
http://www.ico.gov.uk/upload/documents/library/data_protection/practical_application/credit_explained_leaflet_2005.pdf

Your joint mortgage and any loans secured to the property would be included on your income and expenditure as priorities and you would need to maintain the payments to these.

If you feel you are not able to maintain the minimum payments any longer, and would like further help and advice, you can either use our debt advice facility Debt Remedy, or if you prefer to speak to a counsellor, you can call for an appointment to speak to one of our counsellors on 0800 138 1111.

Kind Regards
Sue

Milltowngirl

Hello Sue

Thankyou for your post. Well, I took the plunge last night and told my partner everything. He was very shocked and a little angry but he has agreed to help sort things out. We have a joint account which we both pay into to cover the joint mortgage, personal loan and all the house bills, but then all our other money is seperate. He has no other debt, except a HP on a motorcycle which is due to be paid up in August. So he is going to increase his payment into the joint account to allow me to decrease mine, so I can concentrate on tackling the credit card debts. Im also going to look for a second job, sell some stuff we dont need on ebay and he may also sell the motorcycle come september as it was a luxury more than a necessity. We're cutting back on our non essential bills like sky, magazine subscriptions etc and reducing our food spend. We are hoping that by September when this HP agreement finishes plus when Im hoping to have had a small salary increase come through, to be able to throw an extra £500-£750 a month at the cards and finally start paying the balances down. So, thankfully, I dont think a DMP will be needed at this stage.
I dont feel like all the weight is off my shoulders yet but can finally see a small light at the end of the tunnel. Im aiming to be debt free (unsecured; the mortgage might take a little longer!) within the next 2-3 years.

One last question I wanted to ask; what do you think are the chances of virgin/mbna and lloydstsb freezing or reducing my interest rates to help me pay the balances down quicker ? If I explain the circumstances i.e. struggling to make anything above minimum payment, dont want a DMP if can help it, am seeking additional employment / help from partner to clear debts, do you think there is any chance they would reduce the rates if I agree to close the accounts ? Theyve been hiked up to the 20%+ range over the last few years and obviously if I could reduce these rates then we'd make inroads on the balances a lot quicker.

Many Thanks