Debt collection, Credit card interest query.

dougens

Hello

I have found out that my girlfriend has a a debt of £4500 on her credit card from years ago. Basically, she could only afford to pay the minimum amount per month and after some bad advice from a friend she just stopped paying back altogether. I'm not sure how long ago this was.
So she started to receive debt collection letters and has ignored these as well. She has since moved in with me down South.

I know that her credit limit will be black and she won't be able to get a loan, mortgage, credit card etc but what position is she in now?
Is the credit card company still accumulating interest on the money borrowed or is it capped and the full amount is to be paid in full?

She thinks that she can just pay an agreed minimum amount, through a government website helping with debt, and the rest will be waived?

This doesn't sound right to me.

Currently, she is looking for work but has just receieved some inheritance. I said she was best to pay soem of the money back, which she can, but she thinks she can just pay a lesser amount or just not pay it at all as it's been such a long time, and needs the inheritance to live on until she finds a job. I know credit card companies won't forget!

Does anyone have any advice on the best way to handle this or on any of the above questions regarding debt collection, stopped interest and agreed lesser payments etc?

Many thanks for any replies.

Tixy

Its likely that interest is still accruing. It will depend on the exact terms of the agreement but usually they allow for interest to continue to be added even after the debt is sold on to a debt collector.

It would be useful to find out how long ago she stopped paying altogether. If there was a 6year period where she didn't pay anything and didn't acknowledge that she owed the debt, and if she was never taken to court - then the debt would be statute barred. Which means legally she doesn't need to pay and could not be taken to court. (rules are different in Scotland if she lived there when she took the card out).

If its not statute barred and if she is in a position to do so she could consider a full & final settlement (where you offer to pay a reduced figure in full settlement of the debt). http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=24_full_and_final_settlement_offers

Or she could consider offering a small monthly payment - the creditor/debt collector may accept this and may agree to freeze interest - but they don't have to.

If its very nearly but not quite 6years since the last payment and she makes a payment now then that would 'reset' the statute barred time period - and it would be a further 6years before it went SB.

Regarding her credit file - depending on how long ago she first had payment problems/ started missing payments, this debt could potentially not appear at all on her credit file (debts only stay on file for 6years from the date of default marked on the credit file).

dougens

Hi Tixy

Thanks very much for your reply.

The credit card was opened in Scotland and will need to look into this. The problem is as she is annoyed at herself for getting into this mess, she won't let me look into it at all and won't give me any details!

"(rules are different in Scotland if she lived there when she took the card out)." Do you know where I could find out more about this or can you answer?

Regarding the interest still accruing, I thought that this would be the case as this is how lenders make their money! I'm sure it won't have been 6 years since the debt collectors got involved but will find out. If it hasn't been 6 years can she just ride it out and not pay until this period is up? Surely she will have to pay it back at some point?

She doesn't even know which debt collector was dealing with this, so cannot contact them.

Best thing to do is to find out how long ago it was since she first received the debt contact and see how to progress from there.

How would you know if the debt was "sb"? Especially now her address has changed and she hasn't updated yet.

Thanks for your help.

Tixy

As she is in Scotland then a debt becomes statute barred after a 5year period with no payments and no acknowledgement (and assuming no court action).

To know when a debt becomes statute barred she needs to know or work out when she last paid them. In Scotland a debt is extinguished after the 5year period - that means not only can they not succesfully take court action - but the debt is effectively written off.

Factsheet here - http://www.nationaldebtline.co.uk/scotland/factsheet.php?page=23_prescription_and_limitation_act


In terms of who owns the debt now - she could get a copy of her credit file and update the address section - and that should show whose name the debt is in. BUT this will inform them of her address and they will then start chasing again.
If its longer than 6years since she defaulted the debt might not appear on her credit file anyway.

The downside of them not having her current address is that if they did take court action against her then she wouldn't know about it (unless someone is forwarding on all post).

dougens

Thanks again Tixy.

I'm going to do some reading regarding the debt from the links you kindly posted and find out how long ago it was since she last paid etc.
Then I'll have a better idea of how to progress.

I've just been researching there, to no avail yet, whether debt agencies can look into your accounts etc to see how much savings you have. For example, if she could pay off £3000 of the debt but only said she could pay £200 as a minumum payment to cancel the debt, would they know how much she has left?
I don't agree with this, as I've always stayed on top of my bills and don't overspend, but if she needed to keep money to live till she gets a job (i.e. £1000) would the above get her into trouble?

Finally, the debt cannot get transferred to me at all can it?
We are not married.

Thanks for all your help, much appreciated.

Tixy

No way of them knowing how much money she has in her bank accounts etc. In terms of trying to settle a debt for a reduced figure - ts just down to her what she can agree with them (remembering that they will have bought it for a lot less than the balance). Occasionally debt collection agencies try ask people to provide bank statements / payslips etc - she is under no obligation to do so and would be advised no to.

The debt cannot transfer to you (not even if you were married).
However if you had a joint mortgage / loan / bank account you would be financially associated with her - and any problems on her credit file could affect your ability to get credit.