How best to pay off all these old debts? and help with SoA

saraih

Hi, I am hoping for some help with my OH's budget to pay back some old debts.

Basically my other half had five years off work with undiagnosed MS, once this was identified and medicated/stabilised he went back to work at the same job. In the meantime though he had over £22,000 in debt that he had completely ignored. He has paid off thousands in water and council tax/rent so far and is just about up to date with them and now we need to tackle the 17000 non priority debt that is left. (rounded the figures a bit)

1St Credit Limited --Current account £1,500
Hillesden Securities --Credit card £2,000
Cabot Financial (Uk) --Bank/Store card £1,150
Lowell --Credit card £850
Lowell --Credit card £800
Halifax Plc --Credit card £1,200
1St Credit Limited --Unsecured Loan £7,500
Aktiv Kapital --Credit card £1000
Link Outsourcing --Student Loan £1,300

Through his own ignorance and then this last year trying to pay priority debts my OH ignored these until they became statute barred. None of them took him to court except the student loan company (back in 2002, so it isn't on his credit report but he still owes it even though he's never gone over the earning threshold - just for failing to defer correctly) and he couldn't claim on his PPI.

He has just been paying off big bills slowly, living within his income with no credit, HP, etc. His credit reference files are almost empty and clean as a whistle. But now he wants to pay off these and isn't sure the best way to do it - which he should do first etc. and if he should try to reclaim PPI or try to reduce charges to reduce the amounts. Obviously before he got ill and messed up this was less than half the amount, it doubled with debt collectors and all that PPI must have amounted to a fair bit.

Also HMRC just informed him of a 3500 overpayment. He is going to ring them to query it but this should probably be factored in to any advice. Also although it looks like a lot of spare cash each month, we were hoping to build an emergency fund because due to paying big bills and family loans (all done now) there are no savings whatsoever in case of emergencies or losing his job. My OH needs a new bed as well, we have put this off but it is making him ill.

Thanks for any advice you have for his budget and how best to go about tackling this new mountain.

Statement of Affairs and Personal Balance Sheet

Monthly Income Details

Income from Employment (after tax). . . . 1,046
Working Tax Credit/Child Tax Credits........109 per week
Child Benefit.................................. 84 per 4 weekly
DLA lower care component................86 per four weeks


Monthly Expense Details

In Your Home

Mobile phones. . . . . 37.00 (£16, £15 and £5 a month on contracts for first two, sim only on third, we never go over the limit)
TV licence. . . . . . . . 12.13
Cleaning products/Cleaner . . . . .10.00
Electricity . . . . . . . . . . . . . . . 60.00 (on a prepay meter that I can't switch from)
Gas . . . . . . . . . . . . . 0.00 (but in winter months £80 as OH is ill cold affects him badly)
Water . . . . . . . . . . . . 29.00
Council tax . . . . . . . . .79
Home insurance. . . . . . 8 (contents)
Rent . . . . . . . . . . . . . 308.00 (cheapest around as we've lived here so long)
Food and household shopping . . . . . .240.00 (we ALWAYS go over this, need to get it down)
Buses Taxis Trains . .. . . 60.00 (OH pays a portion of his taxi to work, son's bus pass £43 a month, I walk)
Other travel..........40 (OH has a lot of medical appts, it usually comes out around 40pm unless he's at a hospital, then it can be £80 pm)

Family

Pet food. . . . . . . .15 (44 every three months for a big sack)
Pocket money. . . . 20
Pet insurance . . . 12 (we need this because the cat is unbelievably stupid)

Entertainment

Internet. . . . . . . 62 (this is for internet, cable tv and landline combined, I phoned to cancel everything I could and reduced it to this amount from 95)
Books/Music/Films/Computers . 10.00 (on average so far this year)

Clothes, Health & Beauty

Haircuts. . . . . . 9.00 ( I cut his, my friend does mine, son gets a trim every month)
Work clothes. . . 15.00 (trying to buy one item a month for him to build up a wardrobe for work as he had so long off)
New children's clothes. . . . . . . . .20.00 (son has shot up)
New clothes . . . . . . . . .0.00 (so far this year, we are on a no-new clothes budget)
Birthdays . . . . . 150.00 per year (son gets little spends, so we give him cash - we don't do adults birthdays)
Newspapers and magazines. . . . 2.00 (£28 yearly subscription that we all read)
Regular charity donations . . . . . 10.00 (to MS research & another charity)
Meals at work . . . . . .10.00 (if he forgets his lunch at home)
Smokes. . . . . . . . . . 30 (we both used to smoke but it was too expensive, now we ecig and slowly reducing the nicotine levels)

Total monthly income. . . . . . . . . . . . . 1,702

Total monthly expenses. . . . . . . . . . . 1,155

sourcrates

Hi,
So let me see if I have read this right, all the above unsecured debts are statute barred, is that correct ?

saraih

Hi, yes that's right, except for the student loan which has an old CCJ from 2002 that we weren't aware of.

They still need to be paid though.

sourcrates

saraih wrote: »

Hi, yes that's right, except for the student loan which has an old CCJ from 2002 that we weren't aware of.

They still need to be paid though.

Hi,
Well, no they don't, technically they still exist, but what possible benefit would it be to him now to pay all that debt off, when he doesn't need to ?
Once SB, always SB, so no court action is possible, on the morality side he could offer a really low amount to settle each one, but seriously why bother ?
All have left his credit file, seems pointless to me, may be others will have a different view, but why rock the boat now.


Personally I would count my lucky stars and get on with my life.

saraih

Yes I really do see this point of view, but OH has taken a position of personal responsibility and he doesn't like the idea. Being in debt has depressed him no end (as well as being ill) and he'd like to put it behind him. The companies still send letters even if they never bothered CCJing him.

So if we say the debts aren't going away how much is reasonable to put aside for the debts and also start an emergency fund, or should we get an emergency fund first and set our sights a lot lower for paying it off, or pay one at a time and not worry too much about who gets paid when? or try to lower the amounts first?

Thanks for taking a look.

sourcrates

I can see that he wants to take responsibility, and that is admirable, but given the circumstances, medical condition etc, paying debts you don't need to pay, just does not make any sense, I would just send each one the SB letter, and say don't contact me again.
You see its a difficult situation, you know the debts are SB, and if you tell the DCA/lender that, then the account will likely just be written off.
However, if you start making payments to them, they will expect him to pay off the entire amount, you cant have it both ways here, do you see the catch 22 ?


You could open up a whole shed load of trouble here for yourselves, and be in unnecessary debt for years to come if you start paying these people, were as right now, you hold all the aces, and right now is the time to play them, that's my advice for what its worth.:)

saraih

I see, I didn't know that he could get into another mess by trying to pay it. He has six years worth of never borrowing a thing and now we have spare cash every month it seemed right to make an effort.

I'll just explain the situation and buy a bed for him, maybe a good nights sleep will ease his mind.

If I sent SB letters would they just sell the debts on and we get a cycle of new letters every now and then? or do most people just write it off? and what about the student loans CCJ? they never get SB'd?

sourcrates

If you are 100% sure they are all SB, all you do is send each one a letter stating this.
They may try to say they are not SB, and may produce a "phantom" payment from somewhere, this is not unheard of, you may need to tackle this on a case by case basis if it occured, however the usual approach would be to either write the debt off, or return to original creditor, if any further demands are sent, you would just reply they are SB, and if they don't cease collection activity after been told this they can be reported, as it is considered an unfair practice to pursue a SB debt for payment once informed it is SB.

Unfortunately the student loan will probably have to be re-paid, however, if the CCJ has not been enforced in six years, the creditor would need to go back to court to enforce it, and the court would ask why it has not been enforced, as they have had more than sufficient time to do so, the court could deny them and throw this out too.

saraih

Thanks very much, I will do this. Onwards and upwards and never take another credit agreement out again

I'll have a look at the savings forum and see what the deal is with emergency money.