Would it be better to let debts default?

lookingforthelight

Hello everyone...

I have about 80K debt and will take over 10 years to pay off.

If my debts are not defaulted now, they will be sooner or later. I am thinking of letting the debt default so that I can then offer full and finals for less than the total.

The way I see it is that it may be quicker to let the debts default and pay F&Fs. I know defaults will take 6 years to drop off my credit file but this is still quicker than 10 plus years of chipping away and still getting defaults anyway.

I don't intend getting any credit/mortgage so think the default & FF is the quickest way to clean the slate.

Has anyone done this or is there anything I've missed?

Thanks

debtfreenewbie

Why not try doing f&fs anyway before ou default. I am sure some companies would accept an offer.

Tixy

Are you currently meeting your minimum repayments?
Are you unable to continue to do so? is that because of a reduction in income or why? is that why you say they will be defaulted sooner or later?

Do you mean you intend to stop paying altogether, wait for defaults to be entered and then try to negotiate reduced settlements? If so it might work but it might well not.

-If you stop paying and your creditors think you can afford to do (as you have previously been paying them) they may take you to court - which would mean you end up with CCJs, have to pay the full debt and court costs.

-Sometimes creditors refuse to accept F&Fs. Sometimes they won't sell your debt on for a couple of years and its only really once they have gone to 3rd parties that people tend to get really low F&F offers.

-Where will the money come for the F&Fs? from not paying your creditors? your creditors are likely to realise this.
It might take you too long to build up enough to make F&Fs and in the meantime your creditors have obtained CCJs against you.

-If you have large individual creditors it is even possible they would apply to make you bankrupt (maybe not that likely but possible).

-Do you have a property? you may find that your strategy leads to creditors seeking to obtain a charging order against the property.

Just some of the things that could go wrong with your plan.

Personally I would say if you cannot meet your repayments get in touch with one of the debt charities. They will help you arrange a DMP (or maybe an IVA if it suits your situation). If you go on a DMP and start paying reduced payments you will get defaulted within 6months and will probably find some will be prepared to freeze interest.

lookingforthelight

Sorry, I should have pointed out I have been making token payments for the past year. This is why I expect defaults. I will check Experian etc.

I have accepted an offer on the sale of my house and will be going into rented. The equity profit I receive will not cover all the debt. I want to stash it away and top it up when i can to make the full & finals.

Tixy

Ah thats a bit different.

If you have been making token payments for a year I would have expected most would have issued defaults by now - probably check experian and equifax to see. Assuming they have then you are already into the 6year period it will take to improve your credit file (although obviously any court proceedings that were started would need dealing with promptly (I suppose by using some of the house funds to stop it getting to the CCJ stage).

jonjamie1970

lookingforthelight wrote: »

Sorry, I should have pointed out I have been making token payments for the past year. This is why I expect defaults. I will check Experian etc.

I have accepted an offer on the sale of my house and will be going into rented. The equity profit I receive will not cover all the debt. I want to stash it away and top it up when i can to make the full & finals.

This might be the wrong time to say this but it can't just be me.

I'm working my backside off to pay my debts and making huge sacrificies to do so.

Is it right to just ignore your debts, stash profit away from your house sale and walk away from them all ??

The whole thing makes me feel very very fed up !!

lookingforthelight

Sorry jonjamie1970 that you are fed up.

I am lucky to have an asset still worth some money that I can sell. Its my home but I cannot afford to have money locked away.

I am paying what I can - the creditors have my income and expenditure details - but its a long way short of paying it all off in a decent time. I am also living on the bare minimum. No clubs etc and do not eat lunch to save a bit more.

I am effectively doing an IVA - paying off most of the debt and writing off any balance.