To tell or not to tell!

incidentofficer

Hi One & All,

Apologies if this is in the wrong forum. I have around £50k of debt made up mainly of CC's. I am at the point where I am struggling to pay the minimums, although I have yet to be defaulted (mortgage always paid, on time without fail). I am edging towards an IVA but would prefer to try and work my way through without going down this route if possible. I was wondering if it might be an idea to write to the CC companies and ask for a payment holiday or reduced payments for 3 or 4 months? Would they listen? Would they immediately default me? Both my wife and I suffer from clinical depression which is not helping the situation. I have re-negotiated our mortgage which has helped. Any thoughts? :cool:

mum2one

have you searched any debt management companies, - theres payplan and stepchange - there both charities, - look at them.

If the stress is getting you down, please make sure you speak to a GP xx

Tixy

Hi

Would a payment holiday or reduced payments for a few months actually make a big difference overall? Or would it just delay you defaulting on payments and needing a longer term solution?

Some cards providers may be willing to offer you a short term reduced repayment plan, although they may well mark this on your credit file (typically with an arrangement to pay marker/ though some may register a default). They may be more likely to agree this if there is a short term reason for your financial difficulties which will improve soon.
But such a request may also stop further spending on your cards, and may even increase the interest rate (if they try that you can always opt out of any increase).

Have you worked out how much of a shortfall you have on a monthly basis?
Have you spoken to one of the debt advice charities at all yet? presumably you have spoken to at least one IVA provider, but not all will suggest other possible alternatives to your situation.

incidentofficer

Hi Mum2One,

I have been through the Stepchange system some months ago and that was where the IVA suggestion came from, but i didn't follow it up at the time.

Both my wife and I have been to the GP and are both under treatment, with a review in 4 weeks.

Thanks for your comments.:D

incidentofficer

Hi Tixy,

Thank you for your reply.

The reason I was considering a payment holiday so to speak, was because I have just renegotiated my mortgage payment, reducing it by £185 and my wife has all of a sudden started applying for jobs. So I guess i am hoping I could find a way through.

After all bills are paid we have approx. £450 to live on (allowing for new mortgage payment). There is me, my wife, child @ 18yo and child @ 13yo.

Thanks for your comments, appreciated.

Money_maker

How about doing a SOA? You really need to have a close look at your outgoings and try to get on top of this debt. Renegotiating the mortgage will have helped you regain a feeling of a little bit of control. I noticed that you looked at Stepchange some time ago, its 6 months later now, are you ready to sort it for good?

sourcrates

Hi,
A payment holiday, would, at best, be a temporary solution anyhow.

An IVA can be a good long term solution, it depends on how much you are able to put towards your debts, essentially would this extra £185 a month make any difference to your debt repayments or not.

Would you be better off in an IVA ?

All important questions.

incidentofficer

Hi Money Maker,

Thanks for the reply.
Think an SOA might be interesting, i'll have a look a sticking one up.
You are right, it was 6 months ago since i did a stepchange. I have just done another one and it recommends a DMP this time (probably because I have had a small pay rise and the mortgage payment reduction), although it says 11 years to pay off. This was a combined one for me and the wife, but I think I might run it through as just me and see what it says also.

I do really need to get on top of this this time as it is starting to affect my mental health which is not good.

Thanks again.

Regards

Paul

incidentofficer

Hi Sourcrates,

I am torn between and IVA or DMP which both SEEM to be an option for me at this time, according to Stepchange anyway. Or trying to stave off the creditors until the home situation improves a little more. I guess I am scared of the credit damage (though its' pretty rubbish now!) and not being able to turn to a card for emergencies.

Thanks again.

Regards

Paul

sjw64

Hi
If it helps, I had £64k debt in 2009 (credit cards/loans/me/wife). I decided not to go via stepchange et el and tackle it myself.

I wrote to all of them explaining what has happened, I was full & frank with them all but kept everything in writing (I was petrified at the thought of speaking to them but looking back I wish I had). I asked them all to freeze interest and reduce payments. It’s a complete lottery what might happen as Im convinced it depends who opens your letter. Some of my creditors were brilliant and froze the interest some halved it and one (RBS) refused and increased the APR to %29.9! I even wrote to Barclaycard to complain about their charges (late fee’s/over limit etc) and to my astonishment they wrote back stating they will refund all charges for the last 6 years plus 8% interest! It wrote the debt of with a couple of hundred ££ left over.

The next bit was the hardest. We penny pinched EVERYTHING, We set a budget of £50 per week for everything, food, travel, etc. Anything left over went on the highest %APR, when that went, everything went on the next highest %APR. The first few years were really hard & it looked like nothing was happening, then it literally ‘snowballed’. After 3 yrs the debt was £30k & falling fast. Trust me, it was hard, cycling (car sold) to different shops because their potatoes are 30p cheaper and having no external social life (but Happyish) but its worth it.

I liked the idea of being in control, yes my credit file is trashed but I couldn’t care less. Barclaycard even sent me back my credit card back with £11k limit on it. Do I use it – only for credit file repair.

Although I was extremely fortunate to come into a life changing large sum of money that paid the rest of the debt off, Im convinced it would be all gone by now (the debt).

Whether you do it alone or via Stepcahnge is a matter for you. I personally wanted to go it alone.

If you want (or anyone else) wants a sanitised copy of my letters I sent to all the creditors including the “I want my charges back” from BC, just ask. I try to check these forums every now & then.

Regards

dancingfairy

There are pros and cons to both dmps and IVAs. They will be wreck your credit file although an IVA is a form of insolvency so is worse and will need to declared if asked for. Your credit file will be damaged by either but can be repaired over time.
Dmps are more flexible, obviously as circumstances improve you can pay more, if things take turn for the worse you can pay less, they are an informal agreement between you and your creditors. An 11 year dmp isn't great, with that length of time you really do want to be looking into alternatives, having said that, obviously if your wife gets a job the dmp could change considerably. Also after a period of say 3-4 years if you are well established in your dmp with no end in sight you may find that your creditors will accept a full and final settlement which may be as low as say 30%-50% of the debt (the thinking being they'd rather get a small lump sum than getting dribs and drabs for years to come).
An IVA is a form of insolvency and an official agreement between you and your creditors. It isn't very flexible, on the plus side this means you know exactly what you will need to pay and for how long for and that you are protected from any action by your creditors, on the minus side you won't be able to vary the payments much/if at all. If you needed to vary the payments downwards by a significant amount then you would need to have a creditors meeting and they may or may not agree to this, obviously the danger is that they then don't accept the new proposal and you are in worse place than when you started due to your money going towards the fees etc.
With an IVA you need to be reasonably certain that you situation is fairly solid and that you can afford the payments for the next 5 years, however if you can manage this then any remaining debt at the end will effectively be wiped.
Generally bankruptcy is a better option than an IVA as the debt is wiped immeadiately. There is no chance it will fail. Obviously you will have to declare it if ever asked and it's not a step to be taken lightly. You also would have to pay into the bankruptcy for up to 3 years depending on your circumstances.
Have a look on the debt camel website and others to get an idea of the pros and cons of each solution.
df