Struggling with debt? Ask a debt advisor a question

Greg_S

Just to add, I have completed the debt remedy on the CCCS website and it recommends either a DMP or selling the house. Selling the house is not an option. Got to say though it was a bit difficult filling in the details for the debt remedy as the cards are in my name only, but the bills are paid from a joint account with the OH so its difficult to specify what I pay and what she pays! Reading a lot of the threads about DMP though here, its a bit daunting, and I am now wondering whether I should contact my card providers and ask them to reduce or freeze the interest for a fixed period, of say a year, and try that. I'm very reluctant to send them a letter telling them that I am setting up a DMP and just making token gesture payments.

Any advice would be appreciated to let me sort out all the things going on in my mind just now!

StepChange_Pavan

Greg_S wrote: »

Hi folks, this is my first post, so please be gentle! I am trying to sort out some debt but really don't know what to do and could do with some help to clear things in my head! Basically I am in a position where I am managing to pay everything without a massive struggle, but it leaves very little at the end of the month. I am really wanting to try to reduce what I pay out to allow me to start to build up some savings.

My bug bears are 2 credit cards, with a combined total of around £14,000 on them. I know thats a lot to have on cards, but I was made redundant about 7 years ago and had to fully retrain, which meant a pay cut while I was retraining, and the debt built up. I make my monthly payments, always try to pay a bit more than the minimum, but because of the interest, the balances just don't really shift at all. I was not overly worried before as I have a decent job, but then a couple of years ago the pay freeze came in, and cost of living went up etc.

I do intend to fully repay these debts, but am trying to find a better way to do so, preferably with a lower monthly repayment. I was looking at a consolidation loan spread over 10 years, but seems they are secured against the house and as we increased the mortgage to extend the house just before the credit crunch and property values dropped, there is not much equity in the house so I don't think I would be able to secure anything as the LTV would be too high.

I am wondering whether a debt management plan may be a sensible option. But my concern with this is whether it would damage my credit rating and, if so, to what extent. My reason for being particularly concerned about this is that I have a joint investment with family members, and I am worried that if I messed up my credit rating too much this could impact on them in the future as there is a connection. If I have read it right, it seems the creditors will still send default notices if I was in a debt management plan, and so I assume each one of these defaults would be noted on my credit report?

Or should I just contact the credit card companies and see if they will agree a plan direct with them? If I do this, what are the implications regarding whats recorded on my credit report?

And can anyone offer any suggestion on how much my repayments may be reduced by, I currently pay about £400 a month.

Any help or guidance would be appreciated!

Many Thanks

Hi Greg S and welcome to the forum.

From what you’ve mentioned it sounds as though you can afford your minimum payments. However f Debt Remedy has recommended a DMP, this suggests that your commitments outweigh your responsibilities so it could be that you’ve not entered your figures correctly or you’re overcommitted.

If you enter a DMP your credit rating will be affected as you’ll be breaking the agreement that you signed. You can ask your creditors if they’ll reduce the interest but there’s no guarantee that they’ll agree to this.

Have you thought about transferring some of the balances to a 0% interest credit card? It’s unlikely that you will cover the whole amount but it could help.


It’s also a good idea to go through your budget with a fine tooth comb to see if there are any changes you can make so that you can afford to pay more towards your debts.

It’s difficult for me to give you detailed advice as I don’t have access to your Debt Remedy. I’d recommend that you contact our web support team as they’ll be able to see your figures and discuss your options thoroughly.

I hope this helps.

Kind regards,
Pavan

Greg_S

Thanks for the response. What about if I contact my card provider and ask them to reduce or freeze the interest for a period of time. This will let the payments I make reduce the balance more, plus leave a wee bit aside to save- would this have an effect on my credit rating?

Also, if I do do something that effects my credit rating, could this have a detrimental effect on the family members I have a joint investment with (this investment is not connected in anyway way to the debts I want to clear but we do have a shared secured loan for it)

StepChange_Pavan

Greg_S wrote: »

Thanks for the response. What about if I contact my card provider and ask them to reduce or freeze the interest for a period of time. This will let the payments I make reduce the balance more, plus leave a wee bit aside to save- would this have an effect on my credit rating?

Also, if I do do something that effects my credit rating, could this have a detrimental effect on the family members I have a joint investment with (this investment is not connected in anyway way to the debts I want to clear but we do have a shared secured loan for it)

Hi again,

You can contact your lender and ask them to reduce or freeze the interest but there’s no guarantee that they’ll agree to this. It’s more unlikely if you’ve never missed a payment before but it’s worth trying. It may affect your credit rating if they consider it to be breaking their agreement – you would need to discuss this with them.

As you’re financially connected with a joint loan their credit rating could be affected by yours. I can’t say how much though as you would need to speak with a credit expert. You could contact one of the credit reference agencies and they should be able to help.

Like I mentioned, you can also contact our web support team for more detailed advice as they will have access to your details.

I hope this helps.

Kind regards,
Pavan

wantstobreakfree

I have had been in debt since 2009. I'm currently burying my head in the sand about it but need the courage to take the first steps to do so. When I finished uni in 2009 I saw no way of how I could get out of my situation. I was going back to study to do my masters degree and never sought advice on how to deal with the situation.
I left the flat I was living in and did not inform my bank that I was moving. (this was where I was recieving letter about my debt from RBS) I moved back home to my parents and since then have been working part time during study and when ever and whenever shifts have become available.
One of my main problems is I have lost communication with my bank, I have not stepped into a RBS bank since 2009 and have not used a bank card since then either as the last time I tried the machine swallowed it. I have only been able to live part of a life as I get paid in cash weekly from my work. I really really want to get out of this cycle and start to take control of my life. It has been affecting my personal relationships as well as my ability to move my career further as I have not told anyone the situation I am in.

What advice I'm hoping for is who to contact first and the best way to go about it. I'm from scotland and have heard about the debt advisory scheme. I'm afraid that if I contact the bank first do they have the power to take everything away? Will it affect my parents lives, will they be forced to pay anything or expect debt collectors on their doorstep. I'm worried my situation will affext theirs. In 2009 my debt(overdraft debt was mounting over £2500) I'm not sure how much I owe now as they were adding charges monthly which also added to my fear of how I was to pay.

PLEASE HELP!

Greg_S

CCCS_Pavan wrote: »

Hi again,

You can contact your lender and ask them to reduce or freeze the interest but there’s no guarantee that they’ll agree to this. It’s more unlikely if you’ve never missed a payment before but it’s worth trying. It may affect your credit rating if they consider it to be breaking their agreement – you would need to discuss this with them.

As you’re financially connected with a joint loan their credit rating could be affected by yours. I can’t say how much though as you would need to speak with a credit expert. You could contact one of the credit reference agencies and they should be able to help.

Like I mentioned, you can also contact our web support team for more detailed advice as they will have access to your details.

I hope this helps.

Kind regards,
Pavan

Thanks again for the response

Sounds like I'm pretty much stuck then! The credit card company are unlikely to reduce the interest unless I miss payments, but if I do that will effect my credit, and any other scheme seems will effect it as well, which impacts on others. Only option is to apply for a 0% credit card, but not confident I'd get accepted (Last credit score I got was 880, which is 'fair', and the negative was the amount of unsecured debt, so not sure if anyone would offer more unsecured debt!) and if I don't get accepted, that will effect my credit, which effects others.

Only option left sounds like a secured loan. Might try freedom finance as I note they offer quotes with a soft search on your credit which won't effect your score, so I will know if I'm likely to be accepted before I do anything.

Part of me is really annoyed with myself for getting in this position, everything seemed fine a couple of years ago, and part of me is annoyed that it seems unlikely the card companies will help unless I start missing payments, which really goes against my ethics! :mad:

cambsno

Hi

Finally come to my senses and realised I need help!!! I have been constantly juggling debt around over the last 10 years or so, have generally found enough to pay loans/cards but have kept spending and now its all too much!

So, am mortgaged with a secured loan taken out, so that + mortgage pretty much = house value.

Have a car finance agreement costing 375pm plus 2 loans, one at 300pm, one at 360pm. The 300pm has 11,500 left and I think the other has about 3k left. Have approx. £25k on various credit cards totalling around £500 a month.

What options are available - wife has good credit record with no loans and very small credit card balance but lowish income. I have a much higher income, and pretty much all the debt. Take home pay is around £2500 but the unsecured bills comes to £1200 plus the car, so around £1575 in total.

How would freezing interest and making much smaller payments make a difference or do I need to do something more major. I am aware of IVAs but dont want that affecting my wife or the house.

Rednelly_2

CCCS_Pavan wrote: »

Hi whattodo1967 and thanks for you post.

We usually take payments by direct debit on the 1st or the 10th of the month and the creditors receive the payments on the 25th. In your case this would be the 25th of June. You can make token payments of whatever you can afford in the mean time.

Your DMP can be set up within a few days so as long as you get your paperwork to us by mid May you should be fine.

I hope this answers your questions, but just let us know if not. And congratulations on starting your journey to becoming debt free

Kind regards,
Pavan

Hi Pavan, please can you tell me how the distribution process you describe above is OFT debt management guidance compliant?

To remind you the new March 2012 OFT guidance says that it is an unfair or impromper business practice:

" 3.43 a. where a debt management plan or other non-statutory debt management option has been entered into, failing to pay creditors at the earliest reasonable opportunity.

In the OFT’s view, this should normally be within five working days from receipt of cleared funds".

This clause hasn't changed materially from the previous guidance.

Gimpsdad

Not an unreasonable question by the looks of things. If there are OFT guidelines that have to be followed then CCCS cannot be excused for ignoring said guidelines.

As CCCS are happy to trumpet their charity status then they should be only too happy to address an issue of serious non compliance, certainly when compared to those who they are more than happy to denigrate on every occasion, with OFT guidelines. Holding onto a clients money for nigh on a month with no payment to creditors in the meantime would have the free sector up in arms and issuing press releases left right and centre about the evils of the commercial sector should the boot be on the other foot. I am amazed, frankly, that they are happy to admit publicly that this practice exists in the first place.

craftybynature

Could somebody have a quick read of a couple of my posts on this thread,
and point me in the right direction.


Many thanks.

https://forums.moneysavingexpert.com/discussion/3846329