Struggling with debt? Ask a debt advisor a question

jkelly90

Hi there,

I currently have £1,600 worth of debt on a credit card and an overdraft, both of which are with Barclays. When I was in the bank the other day one of the advisors told me they could offer me a loan to clear my debts so that I'd pay it off in monthly installments.

I'm currently in my final year of uni and work full time alongside my studies. I get my final maintenance loan installment in April, and whilst a lot of it is already earmarked for other things, I was hoping to use some of it to pay off around £500 of my debt.

Back in October I had to move unexpectedly (which is how I ran up most of the debt) which has added an extra £70 onto my monthly outgoings for commuting. My plan had been to finish my studies in May and find another job, hopefully with better pay, and closer to home (although I have been searching since December and there's so little out there so I'm a bit disheartened at the moment!) so that I would have some extra income, and then open a current account (with no overdraft!) for daily living and pay the extra income into my overdraft.

However, when the bank suggested the loan to me I was tempted. Now I know that getting into more debt to pay off debt is not a good idea and normally I would have ignored it but it did appeal to me because I know what I'm like, and whilst I'm on the whole quite good with money, if I have extra left at the end of the month I'm more inclined to spend it than do something sensible with it, so the idea of strict monthly payments appeals to me because at least that way I am forced to pay it back.

But of course I don't want to take out the loan and find that I'm in a worse situation. Also, I know I have a bad credit score, so what is the likelihood they would actually accept me for a loan? The man in the bank seemed to think that as long as I could prove my income there would be no problem.

Sorry for the wall of text! Any advice would be greatly appreciated.

Anondebtadvisor

I guess much depends on how much your are paying on your credit card and how much the loan would cost you?

If you are paying the minimum of the credit card it is likely to take many years to clear at least with the loan it will have an end date.

Do you trust yourself to pay off the credit card with the loan and not use the card again? the mistake people make is paying off the card and then continuing the use the card again

StepChange_James

Jo1507 wrote: »

Hi,
I have recently cleared all of my debts :j I did so using a debt management company so also ended up paying a lower amount on a loan that I had 6 years ago. The loan that I took out also included PPI which I wasn't aware of at the time so I think I am entitled to reclaim the PPI that was included but my debt management company has advised me not to put a claim in as the bank will argue that they have given me a reduced settlement figure so that will cover any PPI that I could claim. Just looking for some advise as to whether I should bother pursuing it or just be happy that I am finally debt free???

Hi Jo,

If the company agreed to write off the remaining balance of your debt following the settlement then I would expect any PPI refund to go directly to you as the debt doesn't exist.

I'd recommend putting the claim in anyway. From what you've said it sounds like you should be entitled to the money but even if you weren't you wouldn't lose anything about from the time it takes to send out the template letters.

As I'm sure you're aware if you're on this forum, make sure you use the free stuff you can get from here: http://www.moneysavingexpert.com/reclaim/ppi-loan-insurance-vwo002 rather than using a claims management company.

All the best.

James

StepChange_James

jkelly90 wrote: »

Hi there,

I currently have £1,600 worth of debt on a credit card and an overdraft, both of which are with Barclays. When I was in the bank the other day one of the advisors told me they could offer me a loan to clear my debts so that I'd pay it off in monthly installments.

I'm currently in my final year of uni and work full time alongside my studies. I get my final maintenance loan installment in April, and whilst a lot of it is already earmarked for other things, I was hoping to use some of it to pay off around £500 of my debt.

Back in October I had to move unexpectedly (which is how I ran up most of the debt) which has added an extra £70 onto my monthly outgoings for commuting. My plan had been to finish my studies in May and find another job, hopefully with better pay, and closer to home (although I have been searching since December and there's so little out there so I'm a bit disheartened at the moment!) so that I would have some extra income, and then open a current account (with no overdraft!) for daily living and pay the extra income into my overdraft.

However, when the bank suggested the loan to me I was tempted. Now I know that getting into more debt to pay off debt is not a good idea and normally I would have ignored it but it did appeal to me because I know what I'm like, and whilst I'm on the whole quite good with money, if I have extra left at the end of the month I'm more inclined to spend it than do something sensible with it, so the idea of strict monthly payments appeals to me because at least that way I am forced to pay it back.

But of course I don't want to take out the loan and find that I'm in a worse situation. Also, I know I have a bad credit score, so what is the likelihood they would actually accept me for a loan? The man in the bank seemed to think that as long as I could prove my income there would be no problem.

Sorry for the wall of text! Any advice would be greatly appreciated.

The advice on these sorts of decisions on MSE will usually be to weigh up the costs of all your options and chose the one which will cost you least in terms of interest.

If you were to follow this line of thinking I'd expect (but can't be sure) that keeping the debts where they are and just paying as much as you possibly can will work out cheaper than taking out a loan as you'll be able to get them paid back quicker.

It sounds like looking for the cheapest option isn't the only concern here though. Finding a way to pay back your debts in a way you can stick to, which doesn't require too much will power is a factor too.

While a loan will give you a fixed monthly amount to find, so would setting up standing orders to each of these debts from the new account you set up.

There's nothing to stop you moving to a bank account with no overdraft now, which will help you to separate the overdraft debt from your income and make it clearer where you stand with that debt and hopefully make it easier to live to your means.

Another thing that will help would be to put together an income and expenditure budget to plan out your money and work out exactly how much you can pay off these debts every month (obviously I'd recommend paying as much as you possibly can).

From what you've said it doesn't sound like you're struggling to keep up with payments on these debts, but if you are then please get in touch with us (contact details are in my signature).

Kind regards

James

Gr8st33t

Hi,

Before I saw this thread, I posted this query elsewhere. If you don't mind, I'll repost this here, in the hope of receiving an authoritative reply:

Overpayment by a US agency - can I be sued in the UK for it? Hi,

I'm self-employed and work freelance with various agencies, including one which is based in the US. This agency pays me by BACS transfer to my UK bank. It turns out that they paid me twice by mistake. I received a letter from my UK bank (Santander), as follows:

"On 02/02/2013 an amount of 1293.22GBP was paid in to your account in error...

We have received instructions from the remitting bank that they wish to recall the payment.

If you consent to a debit being made to your account for this amount, please sign and return this letter as your authority to return the funds.

Alternatively, you may prefer to settle this yourself. If so, I can provide the address of the remitting bank's legal department, who are pursuing the matter. If you prefer this option then please contact me at the above address."

I've decided to go with the second option - i.e, write to the bank to ask them for this "remitting bank's" address, partly because I want to find out which bank this is, and also to give me a bit of time to find out what my legal position is.

So my questions are :

1) Can either this US agency and/or US bank sue me here in the UK for this money, if I choose to ignore this notice?

2) What happens if I've already spent the money and can't pay back this amount?

3) Can this US agency and/or US bank file a report about this on a UK credit reference agency such as Experian etc?

4) Am I right that Santander itself won't pursue me for this, either through the courts of through credit reference agencies?

Many thanks for your help!

PS: I didn't notice the error myself until I received this letter and checked my bank statement, as this was only last month and this agency has a poor record of late payments. I assumed (wrongly it turned out) that the extra money was from previous, and as yet, unpaid invoices.

StepChange_James

Gr8st33t wrote: »

Hi,

Before I saw this thread, I posted this query elsewhere. If you don't mind, I'll repost this here, in the hope of receiving an authoritative reply:

Overpayment by a US agency - can I be sued in the UK for it? Hi,

I'm self-employed and work freelance with various agencies, including one which is based in the US. This agency pays me by BACS transfer to my UK bank. It turns out that they paid me twice by mistake. I received a letter from my UK bank (Santander), as follows:

"On 02/02/2013 an amount of 1293.22GBP was paid in to your account in error...

We have received instructions from the remitting bank that they wish to recall the payment.

If you consent to a debit being made to your account for this amount, please sign and return this letter as your authority to return the funds.

Alternatively, you may prefer to settle this yourself. If so, I can provide the address of the remitting bank's legal department, who are pursuing the matter. If you prefer this option then please contact me at the above address."

I've decided to go with the second option - i.e, write to the bank to ask them for this "remitting bank's" address, partly because I want to find out which bank this is, and also to give me a bit of time to find out what my legal position is.

So my questions are :

1) Can either this US agency and/or US bank sue me here in the UK for this money, if I choose to ignore this notice?

2) What happens if I've already spent the money and can't pay back this amount?

3) Can this US agency and/or US bank file a report about this on a UK credit reference agency such as Experian etc?

4) Am I right that Santander itself won't pursue me for this, either through the courts of through credit reference agencies?

Many thanks for your help!

PS: I didn't notice the error myself until I received this letter and checked my bank statement, as this was only last month and this agency has a poor record of late payments. I assumed (wrongly it turned out) that the extra money was from previous, and as yet, unpaid invoices.

Hello,

Thanks for getting in touch. I'll respond using the same numbers:

1. In theory, yes. We've got reciprocal agreements with many countries, including USA, that basically mean that they can use our legal system to pursue a debt accrued in America and vice versa. I'm not a legal expert, so there may well be issues and complications with this.
   
2. If you've spent the money and can't pay it back then (assuming they've the right to use our court system) they'd be able to obtain a County Court Judgment (CCJ) and the courts could set up a monthly installment for you.
   
3. I can't think of any way that an American company could enter information on your credit file in the UK about this debt. They may be able to enter information onto the credit rating system in the US but I'm not sure if they'd even be able to do that.
   
4. You don't currently owe any money to Santander by the sounds of it. The only way you could end up in debt to them would be if they sent the money back to America and pursued you for the money they've sent. It sounds like they've no interest in doing this, so you should be fine.

Hope this helps.

James

Gr8st33t

StepChange_James wrote: »

Hello,

Thanks for getting in touch. I'll respond using the same numbers:

1. In theory, yes. We've got reciprocal agreements with many countries, including USA, that basically mean that they can use our legal system to pursue a debt accrued in America and vice versa. I'm not a legal expert, so there may well be issues and complications with this.
2. If you've spent the money and can't pay it back then (assuming they've the right to use our court system) they'd be able to obtain a County Court Judgment (CCJ) and the courts could set up a monthly installment for you.
3. I can't think of any way that an American company could enter information on your credit file in the UK about this debt. They may be able to enter information onto the credit rating system in the US but I'm not sure if they'd even be able to do that.
4. You don't currently owe any money to Santander by the sounds of it. The only way you could end up in debt to them would be if they sent the money back to America and pursued you for the money they've sent. It sounds like they've no interest in doing this, so you should be fine.

Hope this helps.

James

Thanks James for your prompt response. I did wonder whether the scenario under no.1 and 2 is purely/mainly theoretical, or whether this does actually happen in practice, especially for such a small amount (just over £1,200).

mum2one

Hope u dont mind me asking a quick question, my standing order was due to come out 1st to stepchange - but didnt go through as I had an incoming on same day which would have paid the instalement - only just found out 2day - would stepchange apply automatically or the money on the 11th or do I need to ring to arranage a manual payment

Thank you in advance x

StepChange_James

Gr8st33t wrote: »

Thanks James for your prompt response. I did wonder whether the scenario under no.1 and 2 is purely/mainly theoretical, or whether this does actually happen in practice, especially for such a small amount (just over £1,200).

I'm afraid I couldn't really say. Community Legal Advice are a good place to go for help with legal type issues. Here's a link: https://www.gov.uk/community-legal-advice.

I don't know if you're still doing work for these people but bear in mind they could just dock the money out of future earnings too.

Kind regards

James

StepChange_James

mum2one wrote: »

Hope u dont mind me asking a quick question, my standing order was due to come out 1st to stepchange - but didnt go through as I had an incoming on same day which would have paid the instalement - only just found out 2day - would stepchange apply automatically or the money on the 11th or do I need to ring to arranage a manual payment

Thank you in advance x

Hi Mum2one,

Standing orders aren't within our control, it's something that is arranged directly between you and your bank. So you can contact your bank and adjust it yourself.

If it's Direct Debit that you usually pay by then I'd suggest getting in touch with us and see if they can fit you in for the 11th. If not we'll be able to arrange an alternative method of payment for this month (like payment slip or something similar).

Hope this helps.

James