unsecured loan cant pay.....

teddyboy02

hi mods please feel free to move this question if its in the wrong section.

I took out a 12 yr 15k loan with a major building society in 2005 when I was in full time employment and the monthly payments were affordable approx £180.
Approx 3 years down the line I became very ill and was eventually laid off and sadly ended up on benefits.
I am currently still ill and in receipt of various benefits and have found the loan very difficult to pay but came to an agreement to pay approx 60% of the monthly amount over the past 6 yrs,I have never missed a payment.

Now my benefits are prob being cut and the little savings i had which i was using to help pay my loan etc have gone therefore I can no longer pay the agreed amount,I am just about managing to pay the mortgage and essential living bills.
The possibility of me being well enough to return to work in the near future is very slim and I'm wondering what options do I have with regards to this unsecured loan hanging over me forever apart from offering to pay only what i can afford and would probably take 15yrs!!???(which would now prob be only in region of £10 month and i still owe in region of 10k at this time)

I am seriously considering bankruptcy and have just started looking into the possibility of it.....
Only assets I have is a mortgaged house which is in joint names plus a 14yr old car which is on its last legs......

just need some advice as really struggling due to my on going ill health and financial situation the future is extremely difficult and worrying!

what could happen IF i just stopped paying the loan......?

any positive advice would be greatly appreciated

alastairq

Is there any Equity in the house?

National_Debtline

Hello there,

As Alastairq has already highlighted, the only potential issue with bankruptcy is the property. if there is equity, the official receiver/trustee will want to realise your share of that equity to be distributed amoungst the creditors. This could mean that the house has to be sold. If the vehicle is worth very little it is unlikely to be implicated.

You can find out more about the bankruptcy process via our fact sheet, here's a link: http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=01_bankruptcy

Best wishes,

David @ NDL.

hakefort

When I couldn't make the minimum payments on my credit card a couple of years ago I just stopped paying, and I soon had five 'debt collection' companies writing to me making all sorts of implied threats. I say implied because most of them slipped in the word 'may' so they weren't bound to a course of action, and say things like 'we see you're a house owner, you should consider selling to pay the debt,' but they make it sound like they can force you to do it. Four of them turned out to be the credit card company itself trading under a different name. A lot depends on whether you can keep your cool, but I know people who have just gone to pieces under the onslaught. They can instruct solicitors, which means you could end up getting legal costs added to the debt, they may be able to add additional amounts of interest to the debt, and you may get someone on the doorstep, (it happened to me), in which case, again you're OK as long as you keep your cool, and keep them out of the house. Sooner or later it will probably end up at the County Court, where you might end up with a charging order on the house (they can't force you out, but they can make you pay from the proceeds if you sell up) and will probably have to provide all sorts of financial information to the court who will investigate paying by instalments. In the end my wife started stressing out and I decided to approach a debt management company, which with hindsight I wish I'd done in the first place. They deal with the companies for you, but the first one I tried proved unsatisfactory. Best advice (I obviously can't name the one I'm with) is to go for one that's DEMSA affiliated, and, when they ask you what monthly payment you can manage, don't overestimate it because if you do start on a debt management plan and fail to keep the payments on it, you're back to square one. The debt management company will probably take their fee from your first few monthly payments.

alastairq

Don't forget, if someone in debt engages a commercial debt management company, the company will take their cut from what the debtor pays....

Best bet is to contact a debt charity...such as CAB....arrange an interview with a debt counsellor, and allow them to negotiate on your behalf.

This is a totally free-of-charge service, so what the debtor pays, goes straight to the creditor.

Whatever is decided upon, continue to make token payments...

This can be as little as £1 per month to each creditor.

Pay them, whether they agree to it or not.

Pay via a method that gives the debtor a paper trail.

By making a token payment to each creditor, if..a creditor goes to Court to seek a CCJ [the first Court hurdle, long before a Charge on property is sought].....then that regular token payment demonstrates to the Court that the debtor..intends to pay.

This is important to the Court.

A lack of 'intention' may be construed as 'deliberately avoiding payment'...which can have an adverse effect on the Court's decision.


Some credit card companies [in my experience, Tesco & RBS] actually place the debtor on such a payment system themselves, once they are aware of financial issues.

Others, [such as MBNA?} behave in a totally unsupportive manner.

Either way, token payments.... will provide a breathing space whilst the debtor decides the best way of managing their debts.