Struggling with debt? Ask a debt advisor a question

Former_StepChange_Richard

balood wrote: »

Hi

I defaulted on a Welcome Finance Loan many years back. I later claimed back the PPI and it reduced the figure I owed to £2051.91. The debt was sold on to Arvato financial solutions. They have not every contacted me for payment even though they have all my details, as I am paying off another loan via them. The debt has previously appeared on my credit history with noddle but it has now dropped off.

I want to buy a house via the co-ownership scheme here in Northern Ireland. To do this I need 1 year clear credit history, no defaults etc. I am planning to borrow a lump sum from a family member that will allow me to pay all my debts. I will be paying my family member off over 2 years with interest.

The question why should I borrow money of them to pay Arvato if they are not chasing me for payment and if it does not appear on my credit history.

Can anyone explain to me why I am not being hounded by Avrato for the debt???

Thanks
Dave

Hi Dave,

Thanks for your message and contacting us.

You may already know that there are several credit report companies out there, the big three being Call Credit (who run the Noddle website), Experian and Equifax. I can't say for certain of course, but Arvato may have listed this debt with one of these other companies and not Call Credit. They have no obligation to register their information with them.

As for why they are not contacting you about the debt now, again it's very hard to say without knowing more. Firstly, they may not have tried yet. They may plan to, but for some reason they have not acted so far. They may have tried to contact you, but have the incorrect contact details. They could have decided to sell the debt on to another collection agency.

I can't say if the co-ownership company you apply to will or won't discover this debt, but being a housing company I would imagine they will do a thorough check. I would expect that if they look hard enough, they will find it.

Our advice is always to try to pay your debts back where possible. It would be a shame to go through the process for your house only for this debt to come up at the final hurdle. Worse could be if the debt gets taken to the court which complicates matters further.

If you want to discuss this further or get any advice on how to deal with it, you can contact us here.

I hope this has been useful.

Many thanks,
Richard

NorthernSoul89

Hi, I'm 26 and want to get debt under control while it's relatively low, but unsure what to prioritise.

Personal loan currently at £2776 with 14 months left on repayments at £198 per month
Credit Card Debt £1800~
Money borrowed from family member £1100
No savings

I lost my job beginning of March, so the £2000 savings I had then got me through the couple of months until I started my new job, which was the end of April.

Now I have the new job, I want to get debt under control and start clearing it down, so I can then focus on saving for future things like potentially a mortgage etc, but unsure where to start.

The credit card is zero interest until June 2017, and the money borrowed from a family member is very relaxed as I can pay back as little as I want to, so paying back £50 in a month wouldn't be a problem with them, so I'm not too worried about this for now.

The monthly personal loan repayment gets paid no problem and no payments have been missed since I took it out, and should be paid off in August 2017.

Not sure what my plan should be. Should I either:

A: Focus on getting rid of the personal loan first, then once that's paid off focus on paying off the credit card and then start saving with zero debt

B: Focus on credit card and then start saving once it's paid off, leaving the monthly repayments as they are.

C: Focus on saving whilst the credit card is zero interest until next summer and then pay off the credit card while I have savings behind me

My current thinking is maybe get the credit card paid off despite being zero interest? Then it's out the way then, and I can focus on saving still. I can afford the monthly payments no problem on the personal loan, so can keep chipping away at that each month as I am doing.

Former_StepChange_Matthew

Hi, I'm 26 and want to get debt under control while it's relatively low, but unsure what to prioritise.

Personal loan currently at £2776 with 14 months left on repayments at £198 per month
Credit Card Debt £1800~
Money borrowed from family member £1100
No savings

I lost my job beginning of March, so the £2000 savings I had then got me through the couple of months until I started my new job, which was the end of April.

Now I have the new job, I want to get debt under control and start clearing it down, so I can then focus on saving for future things like potentially a mortgage etc, but unsure where to start.

The credit card is zero interest until June 2017, and the money borrowed from a family member is very relaxed as I can pay back as little as I want to, so paying back £50 in a month wouldn't be a problem with them, so I'm not too worried about this for now.

The monthly personal loan repayment gets paid no problem and no payments have been missed since I took it out, and should be paid off in August 2017.

Not sure what my plan should be. Should I either:

A: Focus on getting rid of the personal loan first, then once that's paid off focus on paying off the credit card and then start saving with zero debt

B: Focus on credit card and then start saving once it's paid off, leaving the monthly repayments as they are.

C: Focus on saving whilst the credit card is zero interest until next summer and then pay off the credit card while I have savings behind me

My current thinking is maybe get the credit card paid off despite being zero interest? Then it's out the way then, and I can focus on saving still. I can afford the monthly payments no problem on the personal loan, so can keep chipping away at that each month as I am doing.

Hi there,

Thanks for your post.

It's good to hear that you're back in work and able to cover your repayments to your debts.

As a general rule of thumb, you should always aim to clear off debt first before saving. This is because debts usually cost more than your savings will earn in interest. MoneySavingExpert has a useful guide here which covers this in more detail and also explains some exceptions to this rule.

With 0% credit cards, you ideally want to clear these off before the 0% period ends, as the interest will shoot up after making the debt increasingly difficult (and costly) to clear. If you can clear the credit card within the 0% term, meet your loan repayments and your family loan then I'd recommend that you focus on this and then look at saving once you are debt free.

If you will struggle to clear the credit card within the 0% period, you could look at a balance transfer to extend the 0% period for longer. There is usually a fee with this and you will need a good credit rating to be considered however, the fee is likely to be cheaper than the amount you will be paying in interest when the 0% term ends on your current credit card. There is a handy guide on MoneySavingExpert that covers this here.

If you're struggling to cover the minimum payments on your debts, it may be worth seeking debt advice to see what your options are.

Here at StepChange, we help people struggling with the repayment of debt. We have a look at your circumstances to work out a suitable solution for you. The advice is impartial and free of charge.

You can use our online Debt Remedy tool here which you can access 24 hours a day, 7 days a week.

If you would prefer have a chat with someone over the phone, you can call our Helpline and their contact details are here.

I hope this helps
Matthew

SHEILA54

Hi

My son in law walked out on my daughter last September. He got her to sign papers for a loan and a credit card a few months before he left as he told her that he couldn't take out any more debt against his name and they needed the money. She only earns £7300pa so I don't quite know why it was allowed but anyway, she now has over £10,000 against her name. He will not speak to her and their children do not wish to see him. He doesn't seem bothered anyway .. He does pay £400 pm for maintenance, agreed when they first split up.

She works 16 hours a week and hopes to increase her hours when the youngest goes to secondary school. He has left behind other problems, not just monetary,and both children are being counselled to help with their problems.

There are 2 main debts, a credit card at 28.9% with £4500 outstanding and a loan with around £5000 left to pay.

She is paying off the loan each month whilst I am paying for the credit card but we would like to transfer to a lower rate as it is mostly interest being paid at the moment.

Is this possible as her working income is only £7552pa?

She has already suffered in many ways and is unwilling to be degraded further by going bankrupt.

HarrysGal

Hi

Id like some advice please. I have been on a dmp with stepchange since 2007. I owe roughly 22934 to capquest from an original debt with Natwest.
I have recently received an offer of 19000 from Natwest after I made a ppi complaint.

I am unsure if Natwest will give this money to capquest or if they will give it to me so that I can make a full and final settlement offer.

Can you advise?

Thanks

Former_StepChange_Matthew

Hi

My son in law walked out on my daughter last September. He got her to sign papers for a loan and a credit card a few months before he left as he told her that he couldn't take out any more debt against his name and they needed the money. She only earns £7300pa so I don't quite know why it was allowed but anyway, she now has over £10,000 against her name. He will not speak to her and their children do not wish to see him. He doesn't seem bothered anyway .. He does pay £400 pm for maintenance, agreed when they first split up.

She works 16 hours a week and hopes to increase her hours when the youngest goes to secondary school. He has left behind other problems, not just monetary,and both children are being counselled to help with their problems.

There are 2 main debts, a credit card at 28.9% with £4500 outstanding and a loan with around £5000 left to pay.

She is paying off the loan each month whilst I am paying for the credit card but we would like to transfer to a lower rate as it is mostly interest being paid at the moment.

Is this possible as her working income is only £7552pa?

She has already suffered in many ways and is unwilling to be degraded further by going bankrupt.

Hi there,

Thanks for getting in touch.

I'm sorry to hear about the difficulties your daughter is facing when it comes to the repayment of debt.

When applying for credit a lender will look at the amount you earn but they will also look at your credit score to identify how much they lend to you and what product they offer is suitable. The lender will then use all of this to work out how much they will lend to you and what interest rate they will charge. Lower interest credit cards usually require a better credit rating to obtain so this is something you will need to consider.

It sounds like your daughter is struggling to cover these debts on her own so it may be worth exploring what options are out there to help manage the repayment of her debts. Bankruptcy is just one of many ways to manage debts and it isn't always suitable. We can help her find the right way to manage her debts going forward.

You can use our online Debt Remedy tool here which is anonymous and available 24 hours a day. This will use your income and expenditure to advise you on ways to get the debts under control.

If you would prefer to have a chat over the phone, you can get in touch with our Helpline who can help you. You can find their contact details here.

I hope this helps.
Matthew

Former_StepChange_Matthew

Hi

Id like some advice please. I have been on a dmp with stepchange since 2007. I owe roughly 22934 to capquest from an original debt with Natwest.
I have recently received an offer of 19000 from Natwest after I made a ppi complaint.

I am unsure if Natwest will give this money to capquest or if they will give it to me so that I can make a full and final settlement offer.

Can you advise?

Thanks

Hi there,

Thanks for getting in touch.

Usually, a PPI refund is paid to the debt directly and you will receive the remainder after the debt has been cleared. There are cases however where the money is paid in full to you directly so this may happen to you. I'd recommend speaking to Natwest directly to find out how you will receive your refund.

If you come into a sum of money and wish to clear your debt in full and final settlement, it's worth speaking to the Aftercare team who are looking after your plan and they can provide you some guidance around this.

I hope this helps
Matthew

RichB83

Hi, I'm wondering if you could help by giving me some guidance with my debt. My wife and I are in a combined debt of around £15000. We can afford the repayments but the debt is scattered over various cards and loans and to be honest is getting a bit of headache keeping track. I can go into more detail if needed but I'm just not sure what information I need to provide. I would like to pay this off as soon as I can and have no worries about debt. I hope you can help.

Many thanks

Rich

luke5121

Hi advisor's - hoping I'm posting the correct section and would appreciate some insights.

I have a default on my account, which was last updated this month on my report:
Account start date 24/09/2011
Opening balance £ 167
Repayment frequency Monthly
Date of default 20/06/2012
Default balance £ 167

I had disputed the debt, following advised steps, asking for evidence etc. Long story short the outcome was this:
Following receipt of your complaint, attempts have been made to obtain further information from you to understand why you believe you are not liable for the above account, which you have confirmed you do not wish to discuss. Therefore, given the circumstances, and with a view to resolving this matter without further delay, I have decided to close your account and confirm that we will take no further action to recover the debt. This is done without any admission of liability or wrongdoing.

So they won't clear the debt, but they will stop chasing me basically. I have gone through the financial ombudsman but they are happy with this resolution. Regardless, my credit score sucks with this on - currently a 549 (noodle) (1/5).

My questions are:
1) Will this drop off my report in 2018? Will my credit score then be improved? I read notes about it still being somewhat visible?
2) I pay all my bills on time, this is the only default on my account - is this the sole reason my credit is so poor?
3) What happens to my credit score if I set up a plan to pay it/ is it worth doing so? For the sake of what's now £328

Thanks in advance MSE!

StepChange_Rachael

Hi Rich

Welcome to the forum and thanks for posting.

When it comes to being able to afford repaying your creditors the contractual amount this is always the best way forward. Making the contractual payments to the creditors stops them being able to take any further action to collect the debt and won’t negatively impact your credit file.

If you set up direct debits to your creditors of the minimum monthly payments then this is a good way to make sure they are always paid on time to avoid missed payments.

If there’s anything left over at the end of the month after you’ve covered your essential living costs then this could be used as an extra payment to the creditors to reduce the repayment period and pay the debt off sooner.

If you’re able to keep up with the repayments and aren’t struggling financially then an option to consider is finding credit that has a lower interest rate and transferring it over so that you’d pay the debt back sooner.

Moneysavingexpert.com has a page of information and advice on cutting existing debt costs that you might find useful and you can find that link here.

Thanks

Rachael

RichB83 wrote: »

Hi, I'm wondering if you could help by giving me some guidance with my debt. My wife and I are in a combined debt of around £15000. We can afford the repayments but the debt is scattered over various cards and loans and to be honest is getting a bit of headache keeping track. I can go into more detail if needed but I'm just not sure what information I need to provide. I would like to pay this off as soon as I can and have no worries about debt. I hope you can help.

Many thanks

Rich