To Default or Not to Default .... That is the question

Lewby

Hi all,

I would really appreciate some advice about defaulting on credit card accounts please as I have trawled the internet and feel the most expert advice is usually to be found on here!

My OH lost his job in Feb and I decided to self-manage a DMP and immediately contacted our credit card companies - all 14 of them! I work full-time and have a reasonable income - enough to live on carefully. The cards companies were all great I have to say as I was contacting them so quickly and had not missed any full payments. They all agreed to give us 3 months to look at things and see if he could get a job. Barclaycard immediately put us on a 12 month, one third of our min payments, no interest payment plan for the 4 cards with them and will review it in April 2013. This made a huge difference straight away.

Others have stopped the interest and accepted much reduced payments but have still sent default notices ... as we expected but told me to ignore them as we have an arrangement.

As 3 months came to an end on some I decided to try to prevent the defaults as I hoped my OH would get a job but the hasn't yet. I have gone back to paying the min payment on 4 cards as they got to the point of handing it to a DCA as we could just manage the payments and they agreed to let me keep my 'low balance tranfer rates of 5.9%' so I thought that would be better than defaulting.

I wanted to avoid defaulting to stop my credit file being shot to pieces and also I don't want to stop my kids getting tenancys etc when they apply for them (they are at Uni and have to rent property there and use this as their home address).

I am starting to think that I would be better off just defaulting the lot now as the 6 year date for getting this off my credit file has not started ticking as I have made arrangements and not defaulted. If OH doesn't get a job in next 2 months we will struggle to pay min payments on those I have tried to stop defaulting us. We owe £48k across 14 cards and can just meet the payments. We have one card that I can't got back to the min payment on as the balance is £8k and min pay £115 so I believe they will default us in Oct when our 'arrangement' ends.

If one card defaults us is it better to bite the bullett and default on them all to get the clock ticking?

So the question is 'defualt or not to default' .... what is your experience? What made the decision for you and how has defaulting affected you?

All advice will be very much welcomed

panda40

Can't offer professional help but have a few suggestions so I hope it helps.

I would review your total Income and Expenditure. Think about where savings could be made and be strict with yourself. After you have figured out what is left write to ALL those companies you owe money to and make them an offer. If they refuse, maybe revise the offer (it must be reasonable!) and try again, if refused allow defaults, in my opinion and experience sometimes it seems to be the only way of being able to pay what you're able to afford.

Please remember though that default could mean you may incur extra costs due to court costs etc. Maybe a small price to pay when dealing with such a huge debt you have (sorry to remind of that!!)

Once these have been passed onto DCA make them a reasonable offer, similar to what you had offered originally perhaps, rarely are they refused since you have made an offer and you can show through your IE that that is really all you can afford. Again, remember - do not default on these or will will incur further costs, not wise when you want to be debt free.

Paying off the debts, I would focus on the lesser amount first and pay more off on that....once that has been paid a little quicker focus on the next lesser amount and slowly increase the repayments.....you will see the results and you'll feel much better as each one is paid off.

I hope this is making some sense

Some people may suggest declare bankruptcy. I never like that advice unless you really can not offer nothing. It might mean you gonna have you debt for many years but you'll never really runaway from them as it ain't so easy today.

This advice is something I have applied to my own debts, certainly nowhere near as bad as yours but it does work and you can always see the light at the end of the tunnel once you start seeing those debts getting lower.

You certainly must control you future spending and maybe leave the rewards for when you have some success in removing some of the debt you have.

I hope this helps and makes sense. Good luck

Time_to_face_the_music

Hi Lewby :wave:

Have you checked your credit file(s) to see if any of the "threatended" defaults are actually showing already? We have much higher debt than yours and have been on a CCCS DMP for 5 months and only 1 of our 11 creditors has actually defaulted us.

In our situation, we don't actually care if they default us or not as we never intend to have credit again but there seems to be no guarantee dates on defaults and when they are applied. Some people here say they have been defaulted almost immediately, others have made DMP payments for years only to find they are defaulted just before their plan is coming to an end. As you know, the 6 year clock ticks from the date of the default so if you do want credit again, a late default is real blow.

I don't think you have any worries about your children and tenancy agreements, I am almost sure the credit information comes from linked financial affairs and not the same address.

Am sure someone will be along soon with better advice/information than me but just wanted to wish you good luck