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dpclark

Hi, I took out a short-term loan with Wonga two years ago to pay off a Council Tax debt that was about to go to court. Although I initially only borrowed £80, due to a seperation at the same time I couldn't really afford the repayment when I got paid so then had to borrow a larger amount to cover the cost of interests and charges. This spiraled out of control and after six months I was borrowing an amount where the repayment was larger than my take-home pay (something Wonga knew). After chatting with a friend I decided the best thing to do was close the bank account they took the money from, and wait for it to go to a debt collection agency to take interest out of the equation.

The final amount I borrowed was £1,000 with a repayment of £1240, but the debt collection agency have just got in touch demanding £2278. This seems very steep, even for a STL company. I was offered a settlement of £2100, but that's completely unrealistic as I take home roughly half that. I have set up a repayment plan of £50 a month, but is there anyway of getting the overall cost down? I know I was stupid for borrowing more than I can afford in the first place, but it seems ridiculous that Wonga were allowed to lend me an amount they knew I would be unable to pay based on my earnings, before doubling my debt ahead of passing it to a collection agency.

StepChange_James

dpclark wrote: »

Hi, I took out a short-term loan with Wonga two years ago to pay off a Council Tax debt that was about to go to court. Although I initially only borrowed £80, due to a seperation at the same time I couldn't really afford the repayment when I got paid so then had to borrow a larger amount to cover the cost of interests and charges. This spiraled out of control and after six months I was borrowing an amount where the repayment was larger than my take-home pay (something Wonga knew). After chatting with a friend I decided the best thing to do was close the bank account they took the money from, and wait for it to go to a debt collection agency to take interest out of the equation.

The final amount I borrowed was £1,000 with a repayment of £1240, but the debt collection agency have just got in touch demanding £2278. This seems very steep, even for a STL company. I was offered a settlement of £2100, but that's completely unrealistic as I take home roughly half that. I have set up a repayment plan of £50 a month, but is there anyway of getting the overall cost down? I know I was stupid for borrowing more than I can afford in the first place, but it seems ridiculous that Wonga were allowed to lend me an amount they knew I would be unable to pay based on my earnings, before doubling my debt ahead of passing it to a collection agency.

Hello,

Thanks for posting.

An £80 loan turning into a £2278 debt really illustrates how payday loans can snowball if you get stuck in the recycling trap.

I think it'd be worth investigating how the debt jumped up by £1,000 when the debt collectors took the debt on. You could ask for a statement breaking down the charges that were added and this'll give you a starting place.

If any of the additional charges seem excessive, unfair or inaccurate then you can complain and try to get them removed. If you make a formal complaint and they don't resolve it to your satisfaction you could then involve the financial ombudsman.

Hope this helps.

James

dpclark

Thanks James,

It makes me wonder if STL clients would be better off refusing to pay straight away - even if a lot of charges had been added on moving the debt to a collection agency I would almost certainly not have had to pay more than £300. With the six repayments I did make to Wonga I think this experience will cost me around £5000 for an £80 loan once this ordeal is finished.

StepChange_James

dpclark wrote: »

Thanks James,

It makes me wonder if STL clients would be better off refusing to pay straight away - even if a lot of charges had been added on moving the debt to a collection agency I would almost certainly not have had to pay more than £300. With the six repayments I did make to Wonga I think this experience will cost me around £5000 for an £80 loan once this ordeal is finished.

It's an very interesting point. I'd hope it won't get to £5,000 but you may be right about the penalties for not paying being less than the additional interest of recycling (though I don't have exact figures to know for sure).

Please post again if there's anything you'd like help on.

Regards

James

Tua

Hi ~

I received a letter this morning informing me that there is still £355 outstanding on a NatWest credit card debt that I've been paying off since 2002. This debt has now been sold to a DCA called CapQuest.

According to NatWest, CapQuest will instigate legal proceedings if I don't make them a repayment offer (and the legal proceedings will increase the debt).

So I need to make an offer of a small monthly repayments ... please could you advise what is usually the smallest amount that a DCA would be willing to accept? I'm a pensioner, so my income consists of my state pension & the pension credit 'top up'. My home is mortgaged, and I have the usual gas/electric/water/grocery/buildings insurance/TV licence bills to pay. Generally I just about break even with my 'incomings and outgoings', so I don't have much money at all left each month to pay towards this old debt.

mum2one

I just wanted to say a massive thank you to the staff in the call centre, I had to ring up due to a couple of changes, the lady was so helpful, its the 1st time I've used the follow up service, and there so helpful, and if anyone does ever need to ring, your in very safe hands x

winka

just a bit of honest advice needed and will be greatly appreciated.

as we all know everybody makes mistakes but will give u a quick rundown of mine.

approx 4 year ago i was debt free with a credit of around 25k

well me being me i decided to spend it when i was in trouble in and out of work etc etc.
if i remember the detbs were as follows approx
mbna 6500
mbna 3500
barclaycard 4000
barclaycard 3500
halifax 4000
santander loan 2500 outstanding was 8000
and a few store cards.

since then i have made no payments on any of these cards and ignored all letters & numerous phonecalls.

mbna 6500 have given me a ccj very recently which i have offered £50 per month as im only on £110 per week.

but recenctly a family member has offered to help clear my debt due to inheritance of from a relative.

apart from the CCJ the is around 20K outstanding.

as you could imagine none of the original creditors now own these debts and receiveing letters of numerous companies wanting money.

would i be right in asking the current companies writing to me for a copy of my CCA??

My idea is to pay these debtors off with around 20% or 4K of the 20k but dont want to part if i dont have to.

next question will this make them sweat (asking for CCA) and accept an offer as little as 20% for full & final settlement???

any info will be greatly appreciated because after 4 years im getting sleepless night with the threat of bailiffs and currently being treated for stress off my doctor.

thanks in advance

Legs_11

Hi there,

I'm a reasonably recent Graduate of 24 who has racked up some superficial debt over the past couple of years just living beyond my means.

Student loan aside as I'm not concerned about that, I have an overdraft of £1,250 which I live in, credit card debts of £1,000 and am running round in circles using multiple Pay Day lenders here and there as my job barely gives me enough money to live on after rent, repayments and charges.

I decided to apply for a Natwest Graduate FlexiLoan with the hope that they will help me consolidate my debt and pay everything off to a manageable capacity month by month over the next year and a half. With my recently retired parents unable to bail me out any more, I'm already stressed and worried that things will get worse and spiral out of control as the industry I' work in means I'm not likely to earn much more for a good few years.

My question is, that if I don't get accepted for this Graduate loan what are my other options? Who do you turn to when you should be old enough to know better but don't?

DaveK1971

StepChange_James wrote: »

Hi Dave,

Thanks for posting.

Creditors all react slightly differently to DMP offers and some can take a while to process the offers, things tend to settle down fairly quickly though. Any creditors that don't accept the offer may continue to contact you but you can just tell them to speak to us if they've got a problem.

You're spot on about the wonga request for income and expenditure, you don't need to fill it in as we've already sent them all that information as part of your payment proposal.

It can sometimes work out that payments on our DMPs are more than the contractual payment for a debt, which means interest is often not stopped. Because the payment is higher you should still be able to see the debt going down even when interest is being charged.

There's no harm at all in contacting your creditors to find out what's going on. You may find that it's hard to get a clear picture while you're in the early stages but after a while your creditors should all have had a look at the payment offers, made a decision and you'll know where you stand.

All the best with your plan.

James

Bit of a delayed response but..... Thanks James.

DaveK1971

Legs_11 wrote: »

Hi there,

I'm a reasonably recent Graduate of 24 who has racked up some superficial debt over the past couple of years just living beyond my means.

Student loan aside as I'm not concerned about that, I have an overdraft of £1,250 which I live in, credit card debts of £1,000 and am running round in circles using multiple Pay Day lenders here and there as my job barely gives me enough money to live on after rent, repayments and charges.

I decided to apply for a Natwest Graduate FlexiLoan with the hope that they will help me consolidate my debt and pay everything off to a manageable capacity month by month over the next year and a half. With my recently retired parents unable to bail me out any more, I'm already stressed and worried that things will get worse and spiral out of control as the industry I' work in means I'm not likely to earn much more for a good few years.

My question is, that if I don't get accepted for this Graduate loan what are my other options? Who do you turn to when you should be old enough to know better but don't?

Hi,

You mainstream debts don't sound too bad so my guess is you could get them down fairly easily if you could get shut of the payday loans?

For the payday loans, do not roll them over! Contact them and ask for a repayment plan to be set up. Some lenders may insist that you default first so you might want to set up a new basic bank account aswell.