Struggling with debt? Ask a debt advisor a question

Former_StepChange_Laura

braavosi wrote: »

Hello,

Some advice would be really appreciated as I am in a serious bind.

I was out of work for several months with a serious illness from the beginning of the year up until recently. My workplace allows for four weeks worth of sick pay and aside from that I received statutory sick. To my horror, I have ended up in serious debt with a loan (£863 outstanding) and an overdraft of £950, both with Halifax, and my HSBC credit card, which I previously only used to purchase small items, is now nearly maxed out with £980 worth of debt. I owe £285 to my partner's family (I do not have a family to ask for help) and £168 to a friend (I'm paying this back at £42 per month currently)

I've never been in debt before this and my credit score has now plummeted to 506. I have absolutely no idea how to claw myself out of it. I'm back at work now and after tax I take home roughly £1130 if I'm lucky enough to not miss a day or two due to the fact that I am still sick. My partner and I secured our house on a rent to buy scheme, in which our housing agency will give us back the first year of our rent after three years so that we can get a mortgage. We are currently halfway through this arrangement and I'm terrified that my credit score is going to hold us back.

My monthly expenses are all essentials as I have cut down on pretty much everything that I don't absolutely have to pay for, aside from the gym which I feel to me is essential considering the state of my health and the benefits of weight loss. These expenses come to £780.00 per month - roughly £100 of this is medication that I am sadly no exempt from paying. That does not include my monthly payment of £40.53 to Halifax and the £33 per month they charge my for the overdraft. I doubt that I would qualify for a loan and even if I did I do not want to get one as I know I will be offered a ridiculously high APR.

Any help, support or suggestions would be greatly appreciated.

Hi there Braavosi,

Thanks for your message and I’m sorry to hear about your illness. Illness and a reduced income are two of the big reasons people give when they come to us for debt advice, so please know you’re not alone in what you’re dealing with. However it’s also important to know that debt isn’t something you have to cope with alone.

You mention you’ve considered taking out an additional loan to cover the cost of existing credit commitments, but don’t think you would qualify. In general, consolidating debt by taking out more credit isn’t something we advise people to do. You can read a bit more about the pros and cons of consolidating debt in this way on our blog: http://moneyaware.co.uk/2013/01/to-debt-consolidate-or-not-to-debt-consolidate/

From what you tell me about your situation, it sounds as though you’d benefit from some free and impartial debt advice. I’d suggest you get in touch with us – we can talk to you in more depth about your financial circumstances, put together a budget and recommend the best way for you to deal with your debt. We have over 20 years of experience helping people in similar situations to you, and offer a range of debt solutions to help make your situation more manageable: http://www.stepchange.org/Howwecanhelpyou.aspx

You mention you’re concerned about the impact your debt is having on your credit file. We would usually recommend you take steps to deal with your debt first and then look at ways to build your credit file up, but this is something you can discuss in more depth with one of our advisors. You can find out how to contact us here: http://www.stepchange.org/Contactus.aspx

You also mention you’re paying around £100 a month on medication. You can buy pre-paid prescription certificates which can reduce the cost of prescription medicine, so it might be worth researching this to see if it’s suitable for your situation. You can find out more information about this and other ways to save money on your medicines in this article: http://moneyaware.co.uk/2015/06/7-ways-to-cut-your-medicine-costs/

I hope this helps.

Kind regards,
Laura

mikaj

hi, id like some advise, my sone is 20 hes been in education since 16 hes now at collage in usa, hes has two debts from bank account charges he allowed to lapse as he had no income other than mom and pop. one is halifax who he owes £190 this is in hands of wescott they are saying they will accept £130 as settlemnt but if does not pay the £190 his credit score will reflect for 6 years, what is best for his credit score, as i will have to pay this debt, i just want him to come back from usa and have a chance of getting credit if he finds employment.
and the other debt is santander who have given him a overdraft after he left halifax, then becouse he did not cancel his gym membership with fitness first in time he got slammed for failed direct debit charges and on and on. now i have asked the baniking ombudsman to look at this still waiting for answer however banking obudsman has said bank are within there rights to charge him.
many thanks
mikaj

StepChange_James

mikaj wrote: »

hi, id like some advise, my sone is 20 hes been in education since 16 hes now at collage in usa, hes has two debts from bank account charges he allowed to lapse as he had no income other than mom and pop. one is halifax who he owes £190 this is in hands of wescott they are saying they will accept £130 as settlemnt but if does not pay the £190 his credit score will reflect for 6 years, what is best for his credit score, as i will have to pay this debt, i just want him to come back from usa and have a chance of getting credit if he finds employment.
and the other debt is santander who have given him a overdraft after he left halifax, then becouse he did not cancel his gym membership with fitness first in time he got slammed for failed direct debit charges and on and on. now i have asked the baniking ombudsman to look at this still waiting for answer however banking obudsman has said bank are within there rights to charge him.
many thanks
mikaj

Hi Mikaj,

Thanks for your question.

However you pay back these debts it's likely they'll still have an impact on your son's credit file. It's likely that there will be a default for each of these debts on his credit history which will stay there for six years from the day it was entered.

Paying back debts usually improves a person's ability to get further credit, as lenders will see it as a problem in the past rather than an ongoing problem.

It's debateable whether settling this debt for a lower amount will be worse for your son's credit file than paying it back in full. It would depend on how the bank reports this onto his credit file and also how this information is treated by future lenders when your son applies for credit.

A lot depends on the circumstances. I couldn't say whether it's worth paying an extra £60 to clear the debt in full as it's hard to know if there will be a significant improvement in credit worthiness. It's likely that your son's credit file has already got some negative information about these debts anyway.

Having negative information on his credit file might not mean your son isn't able to pass credit checks when he returns. It may just mean that it's hard to pass the stricter checks.

There's an excellent article on the main MSE site about improving your credit history here: http://www.moneysavingexpert.com/loans/credit-rating-credit-score#boost. There's no magic solutions but there are some small changes that can help.

Kind regards

James

Tims

Hi,

I need some advise and I simply don't know which way to turn.

I am in my late 40s, have a good job earning a fair salary.

Have a lovely family, 2 kids, a dog and an adoring wife.

But I'm drowning in debt, every month ALL of my money goes on servicing my debts, I've not been particularly frivolous, but things have mounted up over the years, using cards to pay for everyday life. All the money I owe is on CCards. I have no loans or CCJs, am not in arrears on my mortgage, neither have I ever defaulted on any payments.

I suffer from clinical depression and have been on anti-depressants for many years. The main cause of this, is without doubt, the worry of money and debt.

I have around £30K of unsecured debt.

I am terrified of being turned away for any kind of financial assistance from the bank, and ashamed of my situation. So haven't perused these options.

It's been going on for way too many years, I want my life back, to laugh and feel happy, something that's been lacking for a very long time. I don't want to die of a heart attack before I hit 50!

Please can someone give me some direction.

T

CESLBS

Good morning,

I have recently received a letter from Wescot debt collection agency on behalf of RBS regarding payment of a student overdraft that I had at a previous address while at university. The end of the letter reads as follows - "It is essential you contact us within the next 10 days to resolve this matter and prevent further recovery action as detailed in the box above. You can do this using the details at the top of this letter."

The account is around 7/8 years old, I stopped using it 3/4 years ago and stupidly forgot about it (out of sight, out of mind) and the account does not currently appear on my credit report.

I have recently bought a house and last week received my formal mortgage offer, the completion date is in around 5 weeks and I am panicking that this will suddenly appear on my credit report and somehow cause the mortgage provider to withdraw their offer.

I have no problem in accepting that the debt is mine and have the cash available to settle it, however my fear is that if I respond to their letter and satisfy the debt that it will appear on my credit file and again it will affect my mortgage.

Does anyone have any advice on how to proceed? :S

Many Thanks

tonylakeman

Hi I have amassed £25k of debt on credit cards, and am going to struggle to make the minimum payments this month. I am assuming I will not be able to get a loan to clear the debts as I trade binary options for a living and this is tax free and therefore no wage slips etc. If I was to speak to the 6 credit card companies that I own money to are they likely to give me a couple of months grace to hopefully get back on track? Or do i need to be looking at an IVA, which I don't want to do, but it looks like it may be my only hope.

Do the credit card companies generally try to help at all before getting as far as an IVA?
Any advice you can give would be greatly appreciated.

Former_StepChange_Rachel

Tims wrote: »

Hi,

I need some advise and I simply don't know which way to turn.

I am in my late 40s, have a good job earning a fair salary.

Have a lovely family, 2 kids, a dog and an adoring wife.

But I'm drowning in debt, every month ALL of my money goes on servicing my debts, I've not been particularly frivolous, but things have mounted up over the years, using cards to pay for everyday life. All the money I owe is on CCards. I have no loans or CCJs, am not in arrears on my mortgage, neither have I ever defaulted on any payments.

I suffer from clinical depression and have been on anti-depressants for many years. The main cause of this, is without doubt, the worry of money and debt.

I have around £30K of unsecured debt.

I am terrified of being turned away for any kind of financial assistance from the bank, and ashamed of my situation. So haven't perused these options.

It's been going on for way too many years, I want my life back, to laugh and feel happy, something that's been lacking for a very long time. I don't want to die of a heart attack before I hit 50!

Please can someone give me some direction.

T

Hi there Tims, thanks for getting in touch.

I’m very sorry to hear of the stressful situation you’ve been dealing with. Suffering from clinical depression has no doubt made things more difficult, and many people would be able to relate to the feelings you’ve described.

Even if you’re on top of your credit card payments at present, it sounds like you may struggle to stay on top of everything if you had to deal with an unexpected expense or a drop in income. From what you’ve told us, it may be a good idea to get in touch so we can have a look at your budget. We can look into any debt solutions that you may want to consider and give you any advice and support you need.

Our online advice tool Debt Remedy can help you put together a personal action plan in 20 minutes: http://www.stepchange.org/debtremedy.aspx

Visit our contact us page to speak to our Helpline: http://www.stepchange.org/Contactus.aspx

You’ve taken a big step by speaking out about your debt worries. Please know that we help thousands of people every day, and we’ll do everything we can to help you too.

Kind regards

Rachel

Former_StepChange_Rory

CESLBS wrote: »

Good morning,

I have recently received a letter from Wescot debt collection agency on behalf of RBS regarding payment of a student overdraft that I had at a previous address while at university. The end of the letter reads as follows - "It is essential you contact us within the next 10 days to resolve this matter and prevent further recovery action as detailed in the box above. You can do this using the details at the top of this letter."

The account is around 7/8 years old, I stopped using it 3/4 years ago and stupidly forgot about it (out of sight, out of mind) and the account does not currently appear on my credit report.

I have recently bought a house and last week received my formal mortgage offer, the completion date is in around 5 weeks and I am panicking that this will suddenly appear on my credit report and somehow cause the mortgage provider to withdraw their offer.

I have no problem in accepting that the debt is mine and have the cash available to settle it, however my fear is that if I respond to their letter and satisfy the debt that it will appear on my credit file and again it will affect my mortgage.

Does anyone have any advice on how to proceed? :S

Many Thanks

Hi there,

This is quite a tricky situation, and I can understand the concerns you have around what to do next. It might be best for us explain what could happen in either situation, so that you can make a decision on how to deal with the debt.

If you’ve used the account to make payments or acknowledged the debt within the last 6 years, that almost certainly means that you’re liable for the debt, even if doesn’t show on your credit file anymore.

If you ignore the debt there’s a chance that the creditor will take further action, such as a county court judgment (CCJ). Although this doesn’t happen in every case, a CCJ will show on your credit report and will affect your credit for some time.

If you decide to respond with an offer of payment or to settle the debt, the creditor might add this to your credit report. You could ask the creditor not to do this, but it’s a decision that only the creditor can make. However, a settlement showing on your credit file showing a debt has been repaid in full would have less of a negative impact than a CCJ. You can also add a notice of correction through a credit reference agency which allows you to briefly explain what happened.

Our ethos is always one of repaying what you owe, if you’re liable for a debt. I can understand your issue with your mortgage, but it’s important to deal with things as early as possible to prevent further action which may affect you in the longer-term.

I hope this helps, and I wish you all the best with your mortgage.

Rory

han78

Hiya, I am really worried by the letter I received (re-directed mail from my previous address) yesterday from Rossendales, I have a bill £320 for Council tax from last year. I feel it's very unfair when I could have been contacted easily at any time. They have added charges of £310 according to the letter

I only learnt of the referral to Rossendales and the amount owing being overdue yesterday when I received a letter redirected from my previous address,

There had been many problems with the Council tax bills not helped by the fact my house mate was a student for part of that time in the property, although the council were informed (by email so there was luckily proof) the student reduction was not taken into account resulting in problems, we managed to get these sorts out and a payment plan arranged, I sorted out my online account which took rather a long time as there was also problems doing that!

I called the Council office and sought advice before moving out as I was unsure how and when to inform them. I was advised to email the contact centre once I had moved out as it would cause complications if I tried to do it via the online portal. I did not have a new address at that stage as was staying with family until my relocation to another part of the country was sorted, so I could not give a forwarding address which I explained to the council when I spoke with them but as all my bills were dealt with via the portal and (I was claiming Housing Benefit and ESA) and I had been advised to email them with my change in circumstances I assumed, perhaps stupidly that they would contact me with my final bill, I suffer with mental health problems that the Council were aware of (I was receiving a Council tax reduction from them.

I have now appealed to the Council that they shouldn't have referred the matter to Rossendales, they could have taken payment straight out of my benefits at any time, my mobile number and email is the same and the online portal could of still been used to give me my final bill.

I'm really scared about the Rossendales letter, I don't want to call them and have them bully me or tell me the wrong information but I'm also really frightened they might turn up......what should I do please?

StepChange_Jen

han78 wrote: »

Hiya, I am really worried by the letter I received (re-directed mail from my previous address) yesterday from Rossendales, I have a bill £320 for Council tax from last year. I feel it's very unfair when I could have been contacted easily at any time. They have added charges of £310 according to the letter

I only learnt of the referral to Rossendales and the amount owing being overdue yesterday when I received a letter redirected from my previous address,

There had been many problems with the Council tax bills not helped by the fact my house mate was a student for part of that time in the property, although the council were informed (by email so there was luckily proof) the student reduction was not taken into account resulting in problems, we managed to get these sorts out and a payment plan arranged, I sorted out my online account which took rather a long time as there was also problems doing that!

I called the Council office and sought advice before moving out as I was unsure how and when to inform them. I was advised to email the contact centre once I had moved out as it would cause complications if I tried to do it via the online portal. I did not have a new address at that stage as was staying with family until my relocation to another part of the country was sorted, so I could not give a forwarding address which I explained to the council when I spoke with them but as all my bills were dealt with via the portal and (I was claiming Housing Benefit and ESA) and I had been advised to email them with my change in circumstances I assumed, perhaps stupidly that they would contact me with my final bill, I suffer with mental health problems that the Council were aware of (I was receiving a Council tax reduction from them.

I have now appealed to the Council that they shouldn't have referred the matter to Rossendales, they could have taken payment straight out of my benefits at any time, my mobile number and email is the same and the online portal could of still been used to give me my final bill.

I'm really scared about the Rossendales letter, I don't want to call them and have them bully me or tell me the wrong information but I'm also really frightened they might turn up......what should I do please?

Hi there,

Thanks for posting.

I’m sorry to hear you have to deal with this at the moment.

You mentioned that you’ve appealed against the Council’s decision to refer your debt to Rossendales. If you’re also unhappy with the way the Council have dealt with your case in general, you could make a complaint to them. If you decide to do this, we’d suggest doing so in writing and keeping records of everything you send. You can find out how to make a complaint about the Council here:

http://www.lgo.org.uk/

Council Tax is a priority bill because of the actions the Council can take to retrieve the debt. Due to this we’d suggest you talk with Rossendales so they don’t think you’re avoiding the debt.

If you do talk with Rossendales, it might be worth mentioning to them that you’re experiencing mental health issues as there are some extra guidelines for creditors to follow when dealing with vulnerable customers. Although it’s worth noting that you may have to provide them with evidence such as a letter from your GP.

If you’re worried about dealing with them and the impact paying the debt back may have on your finances, this is where we can help.

If you’d like to give our Helpline a call, one of our advisors will be happy to help. They’ll be able to talk through your situation with you and use information about your income, debts and budgets to recommend any debt solutions that may be available to you.

They’ll also be able to offer you more specific advice about the council tax and how you can deal with Rossendales.

You can find out how to get in touch with us here: http://www.stepchange.org/Contactus.aspx

I hope this helps,

Jen