Struggling with debt? Ask a debt advisor a question

hairspray69

Hi. I have -£2500 overdraft on my LLoyds TSB current account. There is I think interest 19% and £6 monthly use fee. Anyway.. I need to pay about £40 every month for keeping that overdraft. Can you tell me what I should do to pay it off. What is the best way to do that. My earnings are about £14k per year and LLoyds offered me credit card for £750 only but I don't want it. I'm afraid debt will be bigger when I will start use it.
Is there any easy way to start repaying that overdraft but stop paying that bank fees?
Thank you.

Regards.
Chris

Former_StepChange_Rachel

Cant_do_right_for_wrong wrote: »

I'm in a DMP and so far its been good. I owe £36000 to 6 creditors and i'm paying it off at £325 per month.
I'm currently considering an IVA but this seems very intrusive and it doesn't seem i'm not allowed to have any form of savings (in case my 12 year old car explodes etc)
I am more than happy to pay my debts in full without having the cost slashed but this seems more difficult than you'd think.
I can pay off one of my creditors within 2 months BUT this might be seen as preferential treatment by the others, so I cant do that.
WHY?
I am trying to do the right thing by paying them off as quickly as possible, in full, but it seems this isn't allowed.
So I either have the IVA, where any overtime or pathetic payrise has to be declared and no savings.
Or
I stick to paying £325 pm and it taking me at least 15 years to finish.
THIS MAKES NO SENSE TO ME!!!

Hi there,

I can certainly appreciate where you're coming from as far as wanting rid of the debt as quickly as possible. If you decide to settle with any particular creditors, this is your prerogative and no one can stop you from negotiating a settlement figure. We only want to make you aware of the possibility that some creditors might react adversely to it.

We would also advise that you ALWAYS get an agreed settlement amount from the creditor in writing before you pay the lump sum. If you don't do this, it's very hard to prove that any figure was agreed upon.


Creditors usually accept reduced payment on the grounds that you're in financial difficulty and therefore cannot afford contractual payments to anyone you have a debt with at present. If you were to settle outright on a couple of debts, this will be reflected on your credit file (which all of your creditors can see) and they could interpret that as you having the means to pay them what they ideally want.

IVA's can be quite strict with their criteria but they can be flexible, depending on your circumstances. The other point about a DMP is that your current term is not set in stone. Even though it stands at 15 years now, this will reduce should your income rise and debts are paid off as the plan moves forward.

The best way to determine what kind of solution is right for you - be it a DMP, IVA or something else - is to have a proper look at your budget. If you're not already a client of ours, we can give you a second opinion on what can be done. You can have a solution to your debts in just 20 minutes by using our online advice tool Debt Remedy.

If you are a StepChange client, please know that we're here to support you and look at any options available to you.

Hope this helps

Best regards

Rachel

Former_StepChange_Rachel

sbsj2 wrote: »

My Gaughter has just received a letter stating her overdraft is being withdrawn and rather than the £2 a day the Halifax has been charging she will now have to pay £5 per day. As, due to her bipolar health problems she is unemployed and receiving ESA she cannot afford this amount and is unable to deal with the stress of changes like this what are her options in handling this change ? She tried to talk to the bank (phone) today but they would not as she struggled with some of the back up security questions so they would not discuss her account.

Regards

Steve

Hi there Steve

Thank you for getting in touch with us.

I want to reassure you that there's help available for your daughter. We can give her free and impartial debt advice and work out a plan to stop this overdraft from getting out of hand.

I would advise that your daughter considers getting a basic bank account with a bank she has no financial connection to. The banks have something called The Right of Offset. This means that if she continued to bank with Halifax then they would have the right to deduct more money from her account to pay this overdraft. Likewise, if she banked with Lloyds, Halifax would still have access to this money because these two banks are connected. if she walks into a bank and asks who they're connected to, they will tell her and she'll be able to work out from there who is safe to get a new bank account with.

In order to sort out this debt once and for all, it would be a good idea to get in touch with us and go through your daughter's budget. we'll advise on all the debts she may be dealing with and look at her long-term options.

She can do this in two ways:

Call our Helpline on 0800 138 1111 and go through a budget over the phone with one of our friendly advisors (she can nominate a third party to do this for her if it's going to be too stressful, but she must be present during the initial phone call to authorise this)

or

Use our online advice too Debt Remedy that can provide a solution in just 20 minutes.

Please reassure your daughter that we help thousands of people every week and we'll do all we can to support her.

Hope this helps

Best regards

Rachel

Former_StepChange_Rachel

hairspray69 wrote: »

Hi. I have -£2500 overdraft on my LLoyds TSB current account. There is I think interest 19% and £6 monthly use fee. Anyway.. I need to pay about £40 every month for keeping that overdraft. Can you tell me what I should do to pay it off. What is the best way to do that. My earnings are about £14k per year and LLoyds offered me credit card for £750 only but I don't want it. I'm afraid debt will be bigger when I will start use it.
Is there any easy way to start repaying that overdraft but stop paying that bank fees?
Thank you.

Regards.
Chris

Hi there Chris,

When it comes to overdrafts, you will need to pay a fee each month that you use it or find yourself going into it. You're quite right about the risk of getting into further debt by taking out a credit card and it's not something we would advise as it could make your situation more stressful.

If you feel that the overdraft is just becoming too much to bear, you could ultimately go get a basic bank account with a bank you're not connected to in any way. Once you're moved away from the Halifax, you could then pay an agreed amount each month to chip away at it.

If you're just looking for ways to improve your budget or make a little more income, you're certainly in the right place. Take a look around MoneySavingExpert.com, there's lots of clever suggestions for getting a bit more extra cash in.

We ourselves have a blog called MoneyAware that's packed with lots of useful tips.

A great way of knowing what you could afford to pay to this overdraft each month is to have a good look at your budget along with any other debts you may have. You can do this by using our online budgeting tool Debt Remedy.

Hope this helps,

Best regards

Rachel

readytoend

Hello,

I have a question which has a bit of a back ground as follows.

Some eight years ago I started training for my current job and during the three year training period I took out a number (approximately 10) of loans/credit accounts/credit cards which unfortunately went very bad. I missed a large number of payments and basically as a result all the debt has gone bad. My current bad debt stands at approximately £4000.

Over the following years my wife and I made attempts to pay the debts off, as well as successfully following an extremely strict "no credit" policy, whereby we do not get credit for anything, instead anything purchased by us is cash (with the exception that I have just taken out a £200 credit card in an effort to try to raise my credit score from "very poor").

However very recently I have come in to a (small) amount of money, which equals around half of my personal debt. Some one I know has suggested making some final settlement offers to my creditors.

What I would like to know is if this would be a recommended course of action. I fully understand that I did borrow a certain amount of money, and by making these offers I may be seen as trying to get away with not paying it all back, however I would rather try and give back everything I can afford and at the same time try to leave my family in a more comfortable position.

Alternatively would it not be a good idea to try to do this as then some of the creditors will assume that I hold enough money to pay them back in full and then the whole cycle restarts?

Would be great to get some expert advice either way on the idea of making final settlements.

Best regards,


Greg

mistygrant

Debt often starts small but slowly accumulates over time. It is easy to overspend one month thinking the money will be available the next. Eventually, debt can practically consume an individual's financial position. Financial help is always available, but measures such as bankruptcy may be an option.

StepChange_James

readytoend wrote: »

Hello,

I have a question which has a bit of a back ground as follows.

Some eight years ago I started training for my current job and during the three year training period I took out a number (approximately 10) of loans/credit accounts/credit cards which unfortunately went very bad. I missed a large number of payments and basically as a result all the debt has gone bad. My current bad debt stands at approximately £4000.

Over the following years my wife and I made attempts to pay the debts off, as well as successfully following an extremely strict "no credit" policy, whereby we do not get credit for anything, instead anything purchased by us is cash (with the exception that I have just taken out a £200 credit card in an effort to try to raise my credit score from "very poor").

However very recently I have come in to a (small) amount of money, which equals around half of my personal debt. Some one I know has suggested making some final settlement offers to my creditors.

What I would like to know is if this would be a recommended course of action. I fully understand that I did borrow a certain amount of money, and by making these offers I may be seen as trying to get away with not paying it all back, however I would rather try and give back everything I can afford and at the same time try to leave my family in a more comfortable position.

Alternatively would it not be a good idea to try to do this as then some of the creditors will assume that I hold enough money to pay them back in full and then the whole cycle restarts?

Would be great to get some expert advice either way on the idea of making final settlements.

Best regards,


Greg

Hi Greg,

Full and final settlements are a common strategy to deal with debts. I suppose some people may feel a personal commitment to repay their debts in full but personally I can't see a problem with it.

When debts are passed from one debt collector to another they are often sold for a percentage of the amount owed, so a full and final settlement with you is a similar transaction from the point of view of a debt collector.

Ultimately it's down to your creditors to decide if your lump sum offer is enough to justify writing the rest of the debt off, so it's up to them to decide.

Many full and final offers are made by people in the situation where the money will only be given if settlements are accepted. So creditors aren't always aware if the money really will be there if they reject the offer - or it may all go to other, more obliging, creditors. So I wouldn't expect too much bother from creditors.

The important thing to remember is to get written confirmation of any settlement offer before sending any money. This should then cover you if ever a company starts chasing you for the balance that they agreed to write off.

You can read more about settlement offers on our website: http://www.stepchange.org/Debtinformationandadvice/Debtsolutions/Settlementoffers.aspx.

Kind regards

James

readytoend

James,

Thank you for your reply. Your advice is more than appreciated. I have had a good read of the information you have provided and I have decided to try to get some agreements on settlements from my creditors.

Thanks once again,


Greg

matty2712

Hi

I need some advice pretty quickly. I have lost my job today following a recent spate of warnings for illness and ill health. I have been with the company for 4 years and because I have been dismissed I am not entitled to anything from the company. which is obvious i suppose.

I am with stepchange and between my partner and myself we pay £1180 a month to pay off creditors. This is now going to be a huge struggle for us to pay. my partner still works, so would paying half the amount back for the coming months be a problem? I dont intend to be out of work for too long, as my illnesses have been treated and am back to my old self.

Any advice is greatly appreciated at this worrying time

StepChange_James

matty2712 wrote: »

Hi

I need some advice pretty quickly. I have lost my job today following a recent spate of warnings for illness and ill health. I have been with the company for 4 years and because I have been dismissed I am not entitled to anything from the company. which is obvious i suppose.

I am with stepchange and between my partner and myself we pay £1180 a month to pay off creditors. This is now going to be a huge struggle for us to pay. my partner still works, so would paying half the amount back for the coming months be a problem? I dont intend to be out of work for too long, as my illnesses have been treated and am back to my old self.

Any advice is greatly appreciated at this worrying time

Hi Matty,

Sorry to hear about your job, I hope something better comes along soon.

There should be no problem changing your DMP. If you give us a call and explain your circumstances we'll update your budget, work out what surplus income you'll have with the reduced household income and from there work out the next steps.

Provided there is still some money left for unsecured debts we can then reduce the payment on your plan to what you'll be able to afford while out of work and write to your creditors with the updated budget to show them why payments are being reduced.

Like your initial payment offers, your creditors don't have to accept the offers we make but as long as the payment is as much as you can afford at that point in time then they will hopefully agree.

All the best.

James