What to do with £500 tax return?!

gregdedman

Hi everyone,

Ill keep this simple but any advice would be much appreciated.

So, i got £500 back from the taxman and wondered what to do with it after the initial excitement wore off.

I have a loan in arrears of £900 with an interest of 7% and a credit card with an outstanding balance of £2000 at 25%

I also have no job, and am not currently recieving benefits, I have no savings, and its christmas coming up.
Where should I put this £500?

Is it worth asking the loan company for a settlement of £500 (ive been paying what I can afford for years, loan has long finished)
or should I use it to take a chunk out of the credit card?
The interest is killing me!

Any help would be great

What would you do?
Greg

irishjohn

Hi Greg
The info you give indicates that £500 will not make a great deal of difference in the scale of things.

For someone with no job, savings or benefits - I think Christmas is an irrelevance. Are you saying you have no financial means whatsoever and just this £500 - if so how do you live from day to day? It may be that the answer to that question will be necessary to enable people to give you the best advice on your debts as £500 will not make a significant enough different to the overall debt whichever one you would choose to reduce.

gregdedman

Hi John,

Well ive been working abroad (seasonal work) and got home yesterday to this £500. Tomorrow I go on a chairty walk until christmas (yup 2 months long!)so I live day to day, not really worrying about what money I have.

£500 is a huge amount for me and when I back ill look for work again, but my initial thought was keep it for me, in case or give it to the CC company, and get that figure down to £1500 on 25% interest, at least my interest will be less right?

gabriella90

Hi Greg,

Who is your CC with at 25%, if as you say have been paying them what you can afford for years and it is with a DCA i'm guessing you would be able to get a settlement. If this is a route you do not want to go down. I'd suggest you write to them to get the interest reduced.
As said could do with a little more info to try and help you out with the best route for you.

Thanks G

Tixy

Hi

Is the credit card an active account that you can still use or a closed account that you have no access to but just pay off the minimum payments?
With the loan account - are you sure they are just charging you 7% interest on the outstanding balance? not late fees etc? Do you have an agreement in place with them to repay at least a set amount each month or anything?
It might well be worthwhile considering a full & final settlement with the loan company.

gregdedman

Hi guys, thanks for your replies,

The loan is on an agreement, £100 per month and the interest is 7% and is with KPR debt recovery.
The HSBC credit card is closed and Ive been paying a little over the minimum for the last 6 months (£70 instead of the minimum £52) and the interest was reduced from 29% after I asked but of course the account had to be closed.

So its looks like a good idea to ask KPR loan collections to take a settlement figure of £500?

Tixy

Well to be honest I'd start by asking them to accept £400 (after all they don't know you just received £500). You need to do this in writing though and get written confirmation from them that the payment would be in full & final settlement before you make the payment.

gregdedman

Hi everyone,

Thanks for your advice on this, just an update....

I called the debt collection department and offered them £400 on a £1,200 balance on a loan in arrears and they said no, they could only go down to 60%.
I said that was what I was offering and they said they could maybe stretch to 50%
I said that was what I was offering and they went away and spoke to their manager and said OK, £400 as a full and final settlement figure.

Such a good feeling to get that loan cleared....thank you, all, all of the time, for all your advice.

Regards
Greg

Tixy

Have you paid it?
You need to get written confirmation from them that the debt has been settled in full & final settlement.
There have been instances of people being chased after 5years for the remainder of the debt and being unable to prove the sum they paid was meant to be in full settlement.

gregdedman

No, I have not paid it, I have the offer for 14 days and am waiting for the tax return cheque to come through before I request written confirmation then pay the amount, dont worry, Im always careful.

Greg