What to do - decision time: bankruptcy or F&F

bennyhill_2

Hi All, great forum - I've been reading up and am at the point of making a decision but would appreciate any input from anyone who's going/gone through similar, or from any experts in the subject matter. Sorry for the long 1st post!

I don't own a home and am not worried about getting on the property ladder, I have no savings other than a pension - worth £48000 apx, but am only 42. Have lived in rented accommodation for the last 11 years, and want to remain in this property - have never paid rent late and get on well with the landlord.

I've made lots of financial mistakes but have ended up with apx £105000 worth of unsecured old debt, when I say old most don't even appear on my credit file anymore (a couple do). In real terms I have nothing to show for this debt, it built up over a number of years, interest on interest etc.

All the creditors have been getting £5 to £7 a month for at least the last 6 years, and the interest is frozen but I could live 3 lifetimes and at this rate the debt would still be there.

I got into the pickle by a combination of living beyond my means, the banks extending my credit line, and the loss of a well paid job. I've advised all the creditors, most of which are now with DCA's that it's decision time and that my options are to approach my parents to see if they can help, or go bankrupt. So far they've all offered 50% to 60% discounts for F&F, ie apx £40000 (way more than what I could feasibly achieve).

I can get up to about £25000 as a gift from my parents, or go the bankruptcy route. Morally/ethically I want to and know I should pay and move on, but appreciate my credit record will stay wrecked for the next 6 years either way. However, it's equally in my best interest to pay as little back as possible.

Should I communicate with the DCA's that a limited sum is available, I have 11 individual creditors in total, the largest being£42000 to lloyds (overdraft, loan, credit card) the smallest just over £3300 to tesco's (credit card). I'm thinking based on the age of the debts and the low monthly payment that they get of offering pro-rata a 10 to 12% of original debt figure...am I being the eternal optimist, or has anyone achieved F&F with such a low percentage?

As far as the DCA's are concerned I borrow apx £500 a month to make ends meet (borrowing from parents), but I have actually got a better paid job - even though the difference in income vs outgoings would mean there's a net +£500 available approximately currently, but I'm not and haven't paid into my pension for years.

Am I right in thinking that if I was to go bankrupt I can include pension payments as a legitimate necessary monthly expense? If so would 10% to 15% of monthly income roughly what you/they would consider reasonable?

Any help gratefully received.

sourcrates

Hi, welcome to MSE.

Before you make any major decisions on these debts, can I ask, have you made CCA. Requests to any of these accounts at all ?

A CCA request is a request for a copy of the original agreement, you can do this at any time the account still has a balance on it.

This applies to loans, credit cards, but not bank accounts, as different legislation applies.

With the debts been fairly old, there is a good chance they won't have the correct paperwork any longer, which would essentially mean, they would not be able to get judgement against you in court, no agreement, in a nutshell, may mean they will be unenforcable.

bennyhill_2

Hi Sourcrates, thanks for the quick reply - I haven't yet mainly because I thought that by making a monthly payment, the DMC's would consider this an acknowledgement of the original debt. Would you recommend I do it regardless of the payments going through?

sourcrates

It makes no difference if you are paying or not, the same consumer credit act, that allows the creditor to ask you for payment of the debt, also allows you, the debtor, certain rights.

One of them being, at any time, whilst the agreement is running, you can make a CCA request.

Now this could benefit you in two ways,

(1) if they don't have this paperwork, then it would put you in a much better position to make F & F offers to them, as they wont be able to go down the legal path, they would likely take much smaller sums to settle.

(2) Your other option would be to walk away and pay them nothing, and there would be nothing they could do about it.

Of course there's always the chance some will be able to provide paperwork, but on older accounts, it gets more and more in your favour.
Remember, you can only do this on loans, credit card, catalogue accounts, not overdrafts or bank accounts.

sourcrates

Template letter here, adapt to your own situation :

Quote:
(Your home address)
Date:
To:

Dear Sir/Madam

Account/Ref No:

With reference to the above agreement, I/we would be grateful if you would send me/us a copy of this credit agreement and a full breakdown of the account including any interest or charges applied.

I/we understand that under the Consumer Credit Act 1974 [sections 77-79], I am/we are entitled to receive a copy of any credit agreement and a statement of account on request.

I/we enclose a payment of £1 which represents the fee payable under the Consumer Credit Act 1974.

I/we understand a copy of any credit agreement along with a statement of account should be supplied within 12 working days.

I/we understand that under the Consumer Credit Act 1974 creditors are unable to enforce an agreement if they fail to comply with the request for a copy of the agreement and statement of account under these sections of the Act.

I/we look forward to hearing from you.

Yours faithfully



Your name.
Print you name rather than use your normal signature, since some DCA's have been known to scan it so they can mock up a fake CCA.

For the same reason, the statutory fee of £1 should be a postal order.

[Deleted User]

If you went bankrupt, then I believe the Official Receiver would have your pension fund. If your creditors aren't hassling you, then I'd keep the status quo.

bennyhill_2

Thank you both - the information is really helpful.

I've got DCA's printed and ready to post recorded delivery tomorrow. I'll await the DMC responses before approaching them with F&F's.

Feel like a weight has been lifted just by talking about it, this has been a long time coming and now there could be light at the end of the tunnel.

Am I right in thinking that if most of the creditors via the DMC's decided to accept F&F's (all which were unsecured loans, credit cards, and 1x overdraft) that any that refused to accept F&F's could not realistically pursue me through the courts, if I could show that the difference between net income and expenditure is negligible?

sourcrates

bennyhill wrote: »

.
Am I right in thinking that if most of the creditors via the DMC's decided to accept F&F's (all which were unsecured loans, credit cards, and 1x overdraft) that any that refused to accept F&F's could not realistically pursue me through the courts, if I could show that the difference between net income and expenditure is negligible?

No, not really, you cant rely on that argument i`m afraid.

They may take your financial situation into account when making such decisions, but you should not rely on it.

I am pretty certain you should be able to negotiate a settlement with each creditor, wait for the outcome of the CCA requests, before you enter into any negotiations.

bennyhill_2

Thanks again, CCA's posted 1st class recorded today - what a faff getting postal orders is lol.

bennyhill_2

Quick update, only Moorcraft have replied so far:

i. to return the PO for the Lloyds a/c advising the PO needs to be made out to them (seems odd if they are the ones chasing) and,

ii. to acknowledge the Barclaycard CCA, "we duly confirm we have requested the relevant documentation from our client and once received will forward the same to you. Meanwhile, we duly confirm that all collection activity on the account has been put on hold and we will not seek to enforce payment of this debt until such time as the documentation has been supplied or we have advised you to the contrary."

They go on to write "In the meantime, however, we believe that it may be of assistance to all parties if we also take this opportunity to ensure that any potential areas of dispute are addressed prior to any possible further action or investigation."

Should I respond to this, or just ignore it?

They use an interesting choice of words, and being the optimist I am, leaves me hopeful.

sourcrates

bennyhill wrote: »

Should I respond to this, or just ignore it?

They use an interesting choice of words, and being the optimist I am, leaves me hopeful.

Hi,
No need to respond, it's now a waiting game until the requested documents are either supplied, or not.
The account is unenforcable in law now (temporarily) until such time as they do supply them, you are not required to make payments, and they are unable to obtain judgement against you.

It may take up to a month, or even longer to obtain them from the OC.