Debt management: Token Payments?

Limmy

Hi,

I have got into a problem with my debt, particularly since I became unemployed.

I have an appointment with the CAB later and I've been advised that 'token payments' could be an option by a friend.

The problem is I'm concerned about my credit rating with regard to this...

Will I be negatively affected credit wise after this debt is sorted?

Can I go back to using the services from these companies after the debt is paid off?

Will I be able to pass a credit check for a job?

Is there anything I should know before going through with this?

All advice is very appreciated !

Tixy

Hi and welcome

If you are unemployed then paying token payments is often the only real option. If you do pay token payments for more than a couple of months then your creditors will issue a default notice and a default will be entered on your credit file. That will be on your file for 6years and will make getting any normal high street credit difficult for those 6years.
If the debts are paid off in less than 6years then the default will be changed to show as a satisfied default but it would still be hard to get credit.
If the debts are not paid off after 6years the default and the record on the debt is still removed from your file.

Just to mention if you are paying only token payments it is possible that your creditors could take you to court - this isn't that common providing you keep in touch with them and keep paying token payments but if they did take you to court you would be issued with a CCJ, which again would stay on your credit file for 6years. I'm not trying to worry you regarding this - and even if you went to court a judge won't order you to pay more than you can afford a month - but its something you need to be aware could happen.

Regarding a job credit check - it really depends what industry you are in. Having a lot of defaults could affect a job in banking/finance etc but usually do not affect other jobs.

Good luck with your CAB appointment.