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indeks

Hi all,

I hope someone is able to offer me some advice. I'm in a very anxiety-fuelled situation in my life/finances.

For the last 8 or so years I've been very reckless with my spending. At the age of 19 I had about 5 credit cards across 5 different companies, each of which would bump the credit limit up very often. After a few years I also had a substantial bank loan to buy a car - and now my debt with creditors has reached close to £50,000 in the form of bank loans / credit cards. At the time I didn’t think about (or probably didn’t want to think about) the consequences of spending so much money I had borrowed, but it has finally caught up with me and I realise how well and truly stupid I was. My mum blamed the banks for reckless lending at my (then) young age but I realise it’s more my fault than theirs for being so reckless and having a naive ‘living in the moment’ type personalities. My parents have lent me a little money also as one month I could not afford my rent (FYI my rent is £900/month).

I'm male, 27 years old, single, no kids. I have bought a flat with a friend that we rent out as an investment 50/50 (this was when my credit was in very good shape). I rent a separate 1 bedroom flat a bit closer to the city and my work and live by myself.

My problem is, I am at the stage of being unable to pay even the minimum amounts back creditors. In fact, even though I earn £30k a year, due to paying back council tax arrears I can just about pay back my priority bills, and have a little bit left over for food for the month. I have defaulted on all my credit cards / loan as of about 6 months ago. Thankfully, the investment in the flat is completely separate and I have a joint account with my friend and that runs like clockwork.

This actually started a year ago. I approached a debt management company (a lesser known one) and as thankful as I am for their support, it was a very slow painstaking process because as a volunteer he would only work for 1 hour every week on a Thursday after his main job (and that's for all his clients). After a year of back and forth with them trying to collect all my paperwork, them mislaying, me having to resend things because things became out of date, I received a letter yesterday saying that they had closed the account due to not having receiving all the paperwork. He was not allowed to give me advice, this would only happen when all documentation was collated so I still don’t really know where I am with it all.

My problem is, however, even if a debt management agency were to assist me and provide me with budgets, given that nearly everything I get paid from my job goes on bills and essentials every month, how on earth will they be able to communicate with creditors in a positive way, given they I have next to no money I can afford to pay them?

As I understand it, a default will stay on my credit file for 6 years. I accept that. I have a few main questions I would appreciate any information or advice on:

· What happens after the 6 year period is up, and I have not paid back all or any of my debt on any given loan or credit card?
· Will my creditors take me to court if I still cannot maintain any payments?
· Will I have to sell off my 50% share of the property I own with my friend in order to pay creditors back some of the money? (I only invested in this 2 and a half years ago so I’m not even sure I would make any / much money from the price increase anyway – I may even lose out after closure fees).
· Given the above circumstances I have described, is bankruptcy my only true option to get out of this situation, if so, how long of a process is this, and how daunting is it?

I’d love to keep the flat investment with my friend going as it’s almost like a safety net for me, purely down to the fact that I had really good credit when I got the mortgage, and I know in future if I was ever in a position to buy again, my credit history will have all these red marks on it raising alarm bells. My parents will be very unhappy with me if I told them I didn’t have my own property anymore, even if it is just half (they are very anti-rent).

I really could do with some advice here as after receiving that letter from the debt management company yesterday saying they closed my account I feel like I’m all on my own again. I never actually received advice from them but at least in the back of my mind I knew I had the support.

I’m scared!

Any help with my above points will be much appreciated.

Former_StepChange_Laura

indeks wrote: »

Hi all,

I hope someone is able to offer me some advice. I'm in a very anxiety-fuelled situation in my life/finances.

For the last 8 or so years I've been very reckless with my spending. At the age of 19 I had about 5 credit cards across 5 different companies, each of which would bump the credit limit up very often. After a few years I also had a substantial bank loan to buy a car - and now my debt with creditors has reached close to £50,000 in the form of bank loans / credit cards. At the time I didn’t think about (or probably didn’t want to think about) the consequences of spending so much money I had borrowed, but it has finally caught up with me and I realise how well and truly stupid I was. My mum blamed the banks for reckless lending at my (then) young age but I realise it’s more my fault than theirs for being so reckless and having a naive ‘living in the moment’ type personalities. My parents have lent me a little money also as one month I could not afford my rent (FYI my rent is £900/month).

I'm male, 27 years old, single, no kids. I have bought a flat with a friend that we rent out as an investment 50/50 (this was when my credit was in very good shape). I rent a separate 1 bedroom flat a bit closer to the city and my work and live by myself.

My problem is, I am at the stage of being unable to pay even the minimum amounts back creditors. In fact, even though I earn £30k a year, due to paying back council tax arrears I can just about pay back my priority bills, and have a little bit left over for food for the month. I have defaulted on all my credit cards / loan as of about 6 months ago. Thankfully, the investment in the flat is completely separate and I have a joint account with my friend and that runs like clockwork.

This actually started a year ago. I approached a debt management company (a lesser known one) and as thankful as I am for their support, it was a very slow painstaking process because as a volunteer he would only work for 1 hour every week on a Thursday after his main job (and that's for all his clients). After a year of back and forth with them trying to collect all my paperwork, them mislaying, me having to resend things because things became out of date, I received a letter yesterday saying that they had closed the account due to not having receiving all the paperwork. He was not allowed to give me advice, this would only happen when all documentation was collated so I still don’t really know where I am with it all.

My problem is, however, even if a debt management agency were to assist me and provide me with budgets, given that nearly everything I get paid from my job goes on bills and essentials every month, how on earth will they be able to communicate with creditors in a positive way, given they I have next to no money I can afford to pay them?

As I understand it, a default will stay on my credit file for 6 years. I accept that. I have a few main questions I would appreciate any information or advice on:

· What happens after the 6 year period is up, and I have not paid back all or any of my debt on any given loan or credit card?
· Will my creditors take me to court if I still cannot maintain any payments?
· Will I have to sell off my 50% share of the property I own with my friend in order to pay creditors back some of the money? (I only invested in this 2 and a half years ago so I’m not even sure I would make any / much money from the price increase anyway – I may even lose out after closure fees).
· Given the above circumstances I have described, is bankruptcy my only true option to get out of this situation, if so, how long of a process is this, and how daunting is it?

I’d love to keep the flat investment with my friend going as it’s almost like a safety net for me, purely down to the fact that I had really good credit when I got the mortgage, and I know in future if I was ever in a position to buy again, my credit history will have all these red marks on it raising alarm bells. My parents will be very unhappy with me if I told them I didn’t have my own property anymore, even if it is just half (they are very anti-rent).

I really could do with some advice here as after receiving that letter from the debt management company yesterday saying they closed my account I feel like I’m all on my own again. I never actually received advice from them but at least in the back of my mind I knew I had the support.

I’m scared!

Any help with my above points will be much appreciated.

Hi indeks,

Thanks for your message and I’m sorry to hear about your situation. The important thing to remember is that this can be dealt with and it’s not something you face alone.

To answer some of your questions, if you don’t pay back the debt on unsecured debt like loans and credit cards, it’s likely your creditors will take further action to recover the money, such as issuing a County Court judgment against you. However as you have already acknowledged that there’s a problem, there’s no need for it to reach that point.

You mention that even though you’d sought help from the debt management company, you never received any advice from them. I’d suggest you get in touch with us – we give free advice and offer a range of debt solutions that you can read about here: http://www.stepchange.org/Howwecanhelpyou.aspx

We’ll be able to go through your situation in more detail and recommend the best ways for you to deal with your debt, which may or may not include bankruptcy. Whatever solution we recommend, an advisor will be on hand to answer any questions you may have, for example regarding your property.

If you’d like to speak to someone about this, I’d suggest you give our helpline a call on 0800 138 1111 to speak to an advisor. It’s free to call from landlines and most mobiles, and is open from Monday to Friday from 8am until 8pm and Saturdays from 8am until 4pm.

Alternatively you could go through our debt advice process online using our Debt Remedy tool: http://www.stepchange.org/debtremedy.aspx

I know it’s easier said than done, but please try not to worry too much about this. By acknowledging the problem you’ve taken an important step towards dealing with it, and this is something we can support you with.

I hope this helps.

Kind regards,

Laura

indeks

StepChange_Laura wrote: »

Hi indeks,

Thanks for your message and I’m sorry to hear about your situation. The important thing to remember is that this can be dealt with and it’s not something you face alone.

To answer some of your questions, if you don’t pay back the debt on unsecured debt like loans and credit cards, it’s likely your creditors will take further action to recover the money, such as issuing a County Court judgment against you. However as you have already acknowledged that there’s a problem, there’s no need for it to reach that point.

You mention that even though you’d sought help from the debt management company, you never received any advice from them. I’d suggest you get in touch with us – we give free advice and offer a range of debt solutions that you can read about here:

We’ll be able to go through your situation in more detail and recommend the best ways for you to deal with your debt, which may or may not include bankruptcy. Whatever solution we recommend, an advisor will be on hand to answer any questions you may have, for example regarding your property.

If you’d like to speak to someone about this, I’d suggest you give our helpline a call on 0800 138 1111 to speak to an advisor. It’s free to call from landlines and most mobiles, and is open from Monday to Friday from 8am until 8pm and Saturdays from 8am until 4pm.

Alternatively you could go through our debt advice process online using our Debt Remedy tool:

I know it’s easier said than done, but please try not to worry too much about this. By acknowledging the problem you’ve taken an important step towards dealing with it, and this is something we can support you with.

I hope this helps.

Kind regards,

Laura

Thank you very much for your reply, it's all very helpful. I will give StepChange a call tomorrow to discuss further.

Thanks again.

MSE_David_M

I would always recommend going to someone for help!

tom5431

Hi,

Looking for some advice re which debts to prioritise with a lump sum; specifically with aim of then reorganising the remaining debt via a 0% balance transfer card / or an affordable loan.

Brief background: During the recession I ran up approximately £30K worth of credit card debt. I have always met at least the minimum payment on all cards, not once missed a payment, so my Noddle Credit File is showing as "3/5 caution" as opposed to a bad score.

The debt is split over 7 credit cards, two have substantial sums on, the other 5 cards have lesser amounts owing on them.

In the near future, I will have approx £18K to pay off a substantial portion of the debts, & I hope to reorganise the rest of the debts in either 0% balance transfer &/or an affordable consolidation loan.

I appreciate the usual advice would be to pay off the highest APR first which I will do (it is one of the cards carrying a substantial sum).

My question is would I then be better to pay off just about all of the other cards, leaving one substantial sum with a single lender to then deal with - or should I pay off the majority of the 2nd substantial sum instead of the other cards, leaving me with 5 cards still in debt?

I do not know whether I'll get more credit with the reference agencies / lender decisions by (i) paying off two large(ish) debts (with 5 smaller amounts owing on other cards), or (ii) by paying off one large(ish) debt and all the other cards carrying lower levels of debt (leaving one large debt with a single credit card).

If I am better with option (ii) should I then close the card accounts to improve my score, or would I score higher leaving them open but with zero balances?

The final thing to point out is that if I chose option (ii) leaving me with one large debt with a single lender, do you think that lender might let me convert that debt into a personal loan (nb they do personal loans; indeed I have had one from them previously which I paid off successfully (never missing &/ or being late with a payment in that instance; as is the same now with their monthly credit card payments).

Hope the above makes sense; any advice would be much appreciated.

Thank you,

Tom

MNB

hi new to site, so please bare with me if question is in wrong thread etc. I am determined to rid myself of credit card debt asap as I'm just getting no where with paying it off and am beginning to struggle as balance is not going down! Any help would be greatly appreciated. Currently owe approx 17k between 2 cards!

StepChange_Jen

M/N/B wrote: »

hi new to site, so please bare with me if question is in wrong thread etc. I am determined to rid myself of credit card debt asap as I'm just getting no where with paying it off and am beginning to struggle as balance is not going down! Any help would be greatly appreciated. Currently owe approx 17k between 2 cards!

Hi M/N/B,

I’m sorry to hear your struggling with debt at the moment, it can be a stressful time but please know you don’t have to do this alone.
The good news is, there’s always a way to deal with your debt and we’re here to help every step of the way.

At StepChange, we offer free, impartial debt advice and there are a few ways you can contact us for help.


You can give one of our advisors a call who will be happy to have a chat about your situation and recommend a way to deal with the debt.
You can find out how to contact us here:

http://www.stepchange.org/Contactus.aspx

Alternatively, you can use our free online tool, Debt Remedy. Debt Remedy will take details of your income, budget and debt to help
put together a personal action plan that suits your situation.

http://www.stepchange.org/Debtremedy.aspx

Whether you contact us or use Debt Remedy online, you’ll receive support, reassurance and a clear idea about how you can start
to work towards being debt free.

I hope this helps and if you’ve got any questions you know where we are.

Jen

Former_StepChange_Rachel

tom5431 wrote: »

Hi,

Looking for some advice re which debts to prioritise with a lump sum; specifically with aim of then reorganising the remaining debt via a 0% balance transfer card / or an affordable loan.

Brief background: During the recession I ran up approximately £30K worth of credit card debt. I have always met at least the minimum payment on all cards, not once missed a payment, so my Noddle Credit File is showing as "3/5 caution" as opposed to a bad score.

The debt is split over 7 credit cards, two have substantial sums on, the other 5 cards have lesser amounts owing on them.

In the near future, I will have approx £18K to pay off a substantial portion of the debts, & I hope to reorganise the rest of the debts in either 0% balance transfer &/or an affordable consolidation loan.

I appreciate the usual advice would be to pay off the highest APR first which I will do (it is one of the cards carrying a substantial sum).

My question is would I then be better to pay off just about all of the other cards, leaving one substantial sum with a single lender to then deal with - or should I pay off the majority of the 2nd substantial sum instead of the other cards, leaving me with 5 cards still in debt?

I do not know whether I'll get more credit with the reference agencies / lender decisions by (i) paying off two large(ish) debts (with 5 smaller amounts owing on other cards), or (ii) by paying off one large(ish) debt and all the other cards carrying lower levels of debt (leaving one large debt with a single credit card).

If I am better with option (ii) should I then close the card accounts to improve my score, or would I score higher leaving them open but with zero balances?

The final thing to point out is that if I chose option (ii) leaving me with one large debt with a single lender, do you think that lender might let me convert that debt into a personal loan (nb they do personal loans; indeed I have had one from them previously which I paid off successfully (never missing &/ or being late with a payment in that instance; as is the same now with their monthly credit card payments).

Hope the above makes sense; any advice would be much appreciated.

Thank you,

Tom

Hi there Tom,

Your credit score will be improving all the while as you make regular payments on your debts. They will however remain on your file for 6 years after the day you pay them off. We would advise that the wisest thing to do would be to stop relying on credit altogether, as doing so can often make your situation more difficult.

If you’re considering making full and final settlements on your debts, we would advise that you do so in a way that’s equal to all the balances you owe at the moment. If you settle with only one or a couple of your creditors, your remaining creditors will be able to see these settlements logged on your credit file. Not settling with them in turn may encourage further action from them as they may view this as ‘preferential treatment’ which is considered unfair.

We at StepChange Debt Charity have a settlements team who can advise you on the fairest, most straightforward way to settle these balances. You can read more about our settlements team on our blog: http://moneyaware.co.uk/2012/09/full-and-final-satisfaction-from-stepchange-debt-charity/

Hope this helps

Best regards

Rachel

Chicken0105

I have been doing so well to repay the debts that I was left with after my divorce. I knew that the legal aid that I used whilst going through my court case would result in a charge against my property. I was finally notified that this was done in November. I wasn't advised how I could start to repay the charge so I chased them up and finally got a letter over the weekend to say I can set up a standing order.
What I didn't know was that the charge was approx. £25K and accrues interest at £5 per day.
I can't add this onto my mortgage as my salary wouldn't cover the mortage I have now - my ex pays nothing towards it, or any child maintenance.
I know I have to pay but I can't see it ever being paid off, sleepless nights and so depressed about this.....:(

Mum4three

Hi, not sure if this is the right way to do this, never posted to a forum before.

My husband and I have a debt management plan, but they charge 38% to run it and I think that is wrong. Our account has been sold down the line a couple of times and I think it was about 17% when we signed up with the first company. So I have been looking at taking it on myself to manage so I want to be able to know the 'lay of the land' so to speak. All of our debt is very old. Some overdrafts, some credit cards, some loans. All around 2006-2008. We had just moved to America at the time and just couldn't make ends meet and pay these payments, especially with exchange rates. We struggled and tried but all went into default so that we could support ourselves there. We finally moved back to the UK and are trying to get this all figured out. Which means we have to live rented as our credit rating is less than poor.

So I have some basic questions. I really don't mean to ask a stupid question, but on the credit cards and loans, if we had PPI on them, wouldn't the PPI have paid them off or paid on them when we defaulted? I started thinking about this from the PPI reclaim information that is going around. No PPI 'kicked in' when we defaulted, so would that mean we didn't have any? Plus since it is over 6 years old, the banks wouldn't even have any information, right? Would be 'manna' if a claim could pay off some of this debt.

Thanks!