£40k of unsecured debt - legal action being threatened

helpme69

I have fallen on some really hard times over the last few years health wise (cancer). I lost my job as a result and after using savings to get by, that money soon ran out. My insurance did not cover the type of cancer I had either, so our finances became poor.

We have continued to pay the mortgage, council tax and utilities but stopped paying my unsecured debts 9-18 months ago - this was due to not being able to meet minimum payments but also because none of the companies were being reasonable. I kept offering 'goodwill' payments to allow me time to get back on my feet but my offers kept being rejected.

I became depressed and gave up paying, focusing all my energy on getting better.

Since then, I've been bombarded with the usual debt collection letters, texts and calls - all of which I have also ignored. I really have stuck my head in the sand with all this but now that my health is improving, it's all becoming very real again.

All of the debts are credit cards (4 in total - 3 over £10k and one around £7k) - 3 opened prior to April 2007 and one opened after. I believe they are all now being collected by third party collectors (some may still be working on behalf of the original creditor).

What is concerning me now is that the letters are becoming increasingly more threatening, with credit files being checked and legal action being thrown in.

My questions are:

1) If a bank thought they would be able to successfully take a case to court and acquire a ccj/charging order against the debtor then are they likely to hang on to the debt? or; would they still sell it on, even if this was the case?

2) How serious should I take the threats of legal action? One of the letters mentioned that they were gong to check my credit file to decide on their next steps i.e. legal action. Does this mean that they will see I have a mortgage and attempt to get a charging order or force the sale of my home?

3) Can they obtain a charging order or force a sale if the debt is in a sole name and the mortgage is in joint names?

4) My credit file is wrecked and clearly shows the level of defaulted unsecured debt. Could this put them off attempting to go down the legal route? as it would be clear that they wouldn't get a penny by selling the house or making me bankrupt.

5) Is there any legal action I could take myself to try to write off some of the debt to give me a chance of at least paying back some of it back when I start working again?

6) How long do debt collectors normally wait before taking legal action? i.e. if they have not taken it by now, is it likely to be because they know they wouldn't win?

Any advice on this would be really great as I'm not sure what to do next. I'm starting to fear the telephone, postman and dread the thought of a collector coming to my door.

Tixy

Hi and welcome to the forum

1. Passing on the debt to a debt collector (for them to handle the collection or actually selling it on) isn't an indicator that they don't have the correct paperwork, this does still often happen.

2. I would think court action is fairly likely for that level of debt if you have made no payments, even more so as a homeowner.

2. No they couldn't force a sale, they could (with the correct paperwork and process etc) potentially get a restriction on the house rather than a full charging order. This means in theory that when the house is sold you would have to pay the debt out of your share of any equity.
If they filed for your bankruptcy and there was sufficient equity in the property then it could be at risk.

4). They wouldn't tell from your credit file whether there was an equity in your property or not. Or whether you have any assets, or what your earnings are.

5). Not really. If they take court action there is a chance that you could successfully defend if they happen not to have the correct paperwork for that particular debt.

6). Can be anything from a few months up to 6 years (or sometimes a creditor/debt collector will start court proceedings even after 6years).

I would speak to a debt advice charity to discuss the options available to you based on your circumstances and finances. I wouldn't advise just ignoring the debt collectors.

helpme69

Thanks for your response.

I meant to mention that I live in Scotland, does that make any difference to the way they will deal with my debt?

Angry_Bear

helpme69 wrote: »

Thanks for your response.

I meant to mention that I live in Scotland, does that make any difference to the way they will deal with my debt?

In most cases I believe the process is the same, with a few minor tweaks:

1. The debt collectors only have 5 years (after you stop paying/acknowleding) rather than 6 to take legal action against you or the debt becomes statute barred
2. If the 5 year timer runs out the debt will be wiped out in Scotland (in England, it still exists but is legally unenforceable)
3. Any legal action would be for a decree rather than a CCJ (pretty much the same deal, just different terminology)

Happy to be corrected if something else is significantly different!

sourcrates

My first action would be to CCA all the pre-2007 credit card accounts, if, they cant produce correct paperwork, it would put you in a much better position.


I would do that first, and then see what happens, and proceed from there.

Sazzie23

helpme69 wrote: »

Thanks for your response.

I meant to mention that I live in Scotland, does that make any difference to the way they will deal with my debt?

Sorry to hear about your health, I hope that you are continiung to live as well as you can.

I think the CCA letters advised from Sourcrates is sensible (as always), there will be some templates about somewhere on the site.

I'd also suggest you contact Stepchange(their online debt remedy check is free and anonymous if you wish) or PayPlan debt management charities). I might also suggest that one of the Macmillan advisors might be able to advise you?

Most likely you will be suggested an IVA or DAS, but I think you have some steps to make before this point. Hopefully making progress will reduce a bit of the stress involved.

Oh & I just wanted to say that creditors often 'reject' offers of payment, Stepchange advise to keep going with what you can afford, it makes any CCJ attempt less likely and less likely to stand up in court.