Token £1 payment- no hope

lb43

we have approximately £10k in credit card debts to 6 different cards
after filling out the surestep financial statement 2 or 3 years ago we have been paying token £1 per month to each card.
All these debts have been transferred to collection agencies who are also accepting the token payments

This will probably never change? How ccan we ever manage to pay these off?
A friend suggested that the debt can be written off after 5 years. Is there any truth in this?

Obviously £1 per month is never going to be enough and there is no chance of anymore money coming in.
Any advice
Thank you

matttye

If you have under £300 in assets a DRO may be in order.

Otherwise have you considered bankruptcy?

Your friend may be talking about debts becoming statute barred, but that's only the case if you don't pay anything towards them, and it's 5 years in Scotland, 6 in England and Wales.

Powered_By_Pies

Have you done a Statement Of Affairs to see what your monthly incomings and outgoings are?

I managed to convince the very unhelpful bank that I could only repay 1 quid a month into the three accounts they shut back in 2011 for just over a year when they first defaulted me. Stupidly, I thought that would make the problem go away for a bit, but my wreckless spending didn't stop and although I didn't rack up any more major debt, I didn't feel much better about myself financially as I buried my head about it.

As bad as it will feel initially, it would be worth trying to calculate how much you can afford to pay these creditors each month in realistic terms. It means your monthly budget shrinks, but it also means you chip off more and your debt-free-day moves closer and helps you prioritise things in an attempt to get you living within your means.

I have just under 5k's worth of debt with the unhelpful bank - before doing a SOF and Debt Management Plan, there'd have been no way I could envisage a DFD within my lifetime. Now, my DFD's penciled in to be around this time in 2 years and I'm determined to make it work.

Give your local Citizens' Advice Bureau a visit or call, I went to mine to help me fill out an SOA and give me guidance on doing my own DMP, and they were very helpful.

lb43

I have only filled out the finance statement on step change. They recommended the £1 token payment. If you have say £20 extra some month can you give it to one of the creditors without them expecting it the next month?

Powered_By_Pies

Not really. Usually credit facilitators like having set amounts paid each month by their customers and debtors, long and short of it is it makes it easier for them and their balance sheets.

At the same time, if you managed to save extra at the end of the month, I'd advise at least putting it into an emergency fund or something. Budgeting is key - I've learned that the hard way and being a typical 25-year-old male, I'm still pretty hopeless at it, but even so I'm a lot better at it now than I was a couple of years ago.

So without getting you to go into too much detail over a public forum, are you only earning enough per month that all other necessities like utilities, food, tax etc are just about paid for, leaving you virtually nothing as spare cash?

lb43

Yes thats basically it, nothing spare unless husband maybe gets a travel expense at work which isnt very often. Would you just save any extra yo get until you can eventually pay the lowest off in one go?

matttye

lb43 wrote: »

Yes thats basically it, nothing spare unless husband maybe gets a travel expense at work which isnt very often. Would you just save any extra yo get until you can eventually pay the lowest off in one go?

Yes. Make a full and final settlement offer once you have some money saved. Creditors will usually accept less than the amount owed, if they realise they're unlikely to get the full amount back.

fatbelly

matttye wrote: »

If you have under £300 in assets a DRO may be in order.

lb43 wrote: »

I have only filled out the finance statement on step change. They recommended the £1 token payment.

Token payments are not a very good strategy (unless you've got no other) as it doesn't pay off the debts and doesn't allow them to go statute barred.

So what was the reason not to go for a DRO? Home owner? Car worth over £1000?

lb43

We are home owners and have secured loans on house

fatbelly

lb43 wrote: »

We are home owners and have secured loans on house

That explains that then!

It might have to be token offers with the possibility of full& final settlement somewhere down the line.

Maybe you could do a statement of affairs & see what we can come up with

http://www.stoozing.com/calculator/soa.php


(format for mse, remove links before posting)

Powered_By_Pies

lb43 wrote: »

We are home owners and have secured loans on house

Ah, so you're in that wonderful bracket of having almost too much debt to handle, but can't really do anything about it as you have equity in the house. My parents went through the same issue, stacks of debt mounting up (ridiculously drawn-out court case against former employers that stopped my dads' career dead in its' tracks, long story), but every time they considered something like a DRO or even bankruptcy, the CAB rep would tell them they wouldn't be accepted as they have equity in the house that they can barely finish paying the mortgage on.

It's a toughie. Your house isn't worth selling for a combined 10k's worth of debt, no way. But at the same time, if you're literally living hand-to-mouth every month, it's not making the issue any easier.

Do you know if the collection agencies are still adding interest onto the debts? First port of call would possibly be to write to them and explain that your financial situation isn't getting any better and that you respectfully request that any and all possible interest being added is frozen until you can afford to pay larger chunks back. Some of them may be able to accept a 'corn-feed' payment policy, but their gripe with that will be they won't know how much they'd expect from you from month to month.

It depends largely on who they are. Most DCA's know that when they have your file it's because you've had trouble keeping up with repayments, so they understand that there's no point forcing you to pay what they know you can't. Others though can, unfortunately, be 'orrible gits about it as well.

Absolute best thing to do at the very least is keep yourself updated and in regular contact with Surestep, as it shows the DCA's that you're not trying to shirk the debt but that you're doing what you can. They'd rather see you make a minimal effort than no effort at all.