I really need some debt advice re proposed repayment

hoggiebear

Hi Guys

My partner and I have combined debts of approx £82,500. This is all on credit cards, loans and overdrafts. Nothing is secured apart from the mortgage.

Before the credit crunch I had a very high paying job which I have unfortunately been made redundant from due to the economic climate. I was only the job a few years on the high salary level and therefore didn;t get a huge payout.

I've been struggling to find other work which pays as well and am currently in employment paying 1/3 of my previous salary.

My partner was recently taken ill with his diabetes and is now on reduced income sickness payments. As his reduction in salary is due to illness as a result of his diabetes our income protection/insurance will not pay out to help with our bills (this was a clause in the contract due to his condition).

We managed to keep up repayments on our debts and reduce the overall figure owed until approx 6 months ago. Since then we have been trying to figure out the best repayment plan going forward.

Selling the house is not an option due to the little equity we have since the downturn so it wouldn't make a difference to the debt.

Our mortgage payment is equivalent to rent in the area so again we would not save money by selling up.

We have approached stepchange who suggested we apply for DAS Scotland, meaning we would pay all of our disposible income to the debt for the next 7.5 years. The repayment was £917 per month. This arrangement would be recorded on a public register but our house would be safe and no debt collection could be taken by the creditors.

Being put on a public register for debt I'm assuming would affect my future job prospects and ability to gain a higher salary? I was of the understanding that only public record information is checked by employers and that the defaulted accounts were therefore not pose a problem. I'm not sure how this would be seen by potential employers. I would of course be upfront and honest should they intend to carry out credit checks before offering me a job, which I would hope would show I'm not trying to hide the situation and am taking steps to repay the debt rather than hide from it.

On the other hand, I was wondering whether or not it would be worthwhile offering each creditor a monthly payment of £20 each (£220 per month) for the next 12 months. Giving myself time to attempt to gain higher paying employment (as the debt would not be registered on any public record), possibly being able to put some money aside for the emergencies and then applying to DAS Scotland to arrange repayment of the debt on the higher salary. I know this way is all about the 'what if's' of me getting a higher salary but I'm just trying to give us the best chance of getting back on our feet. Do you think the creditors would agree to such a low amount?

Anyone with any experience of this or constructive opinion I welcome to give me advice.

thanks

double_mummy

are these debts defaulted?
are they with the original creditors?
do you work in finance or another industry where credit checks are common?

hoggiebear

Hi double mummy

Yes they have defaulted.

Some of the debts are still with the original creditor (or their in house collections teams) and some have been sold on to other debt collection agencies.

I do work in finance but have extensive management experience which can be used in other industries if necessary. I have been looking at local authority jobs as I know they only do PVG checks and not credit checks.

double_mummy

first thing i would do personally is get an income and expenditure done up to send off to creditors to show how much you have left over. the step change one is amazing for this as it has the trigger figures on there. make sure this shows that you only have around £250 per month left over before paying any of your creditors

write to each of the creditors with a quick overview of your situation include with this I&E and advise that you only want to be contacted in writing and that you will be happy to set up the payment plan for £20 per month via a standing order on X date each month once you have received written acceptance of this offer. also include that you are happy for this to be reviewed every 6 months.

starting to pay these off will show as a positive thing on your credit file.

anyone who doesnt accept the £20 you will need to negotiate with them as to something that is acceptable for both parties

the other option is to say okay i have 220 per month debt 1 is 5% of my total debt so they get £11 debt 2 is 10% so they get £22 debt 3 is 50% so they get 110 etc this can satisfy some of the higher balances more than a flat rate as it would be proportional