What happens if I can't pay?

keiranflynn101

If I can't pay a credit card debt what can the company do? Court? Prison?

hopefulfooluk

Well, they can't make you pay more than you can afford to, and they can't send you to prison unless you've run the debt up or acted fraudulently.

Why?

Debt_Free_Chick

Owing money isn't a crime - at least not yet So none of the police, criminal process, criminal courts or prison apply.

They want their money and they'll go to extraordinary lengths to get - well, depending on the amount involved.

Generally, if you don't pay and don't get in touch with the credit card (CC) company, they'll pass the debt onto debt collectors. This could be the CC's own internal department or could be some other company.

They will repeat the process - try to get you to pay. They can be very tricky to deal with - they're not allowed to harrass you, but their behaviour often borders on ... bullying, I think is the best description.

If you still don't pay, they can apply to the County Court for judgement against you (CCJ). This can require you to pay all the debt at once, if you have the money, or to pay by instalments. Before the case goes to Court, you have a form to fill in to give details of your income & expenditure, so the Court can decide whether you pay the full amount immediately or by instalments. You can also apply to pay by instalments, but the lender must agree. If the CCJ is awarded, it stays on your credit record for 6 years so you're unlikely to get a loan, a CC or a mortgage in that period.

You can avoid all of this by contacting the CC company and let them know you are in difficulty. Before you do this, have a look at this website

https://www.nationaldebtline.co.uk

They have some helpful information about how to contact the CC company if you have difficulty paying.

Or you could post more details of your situation and we'll try to help.

Sub_2

The card companies won't really go to "extraordinary legnths" to get the money you owe them. There's actually very little they can do to *force* you to repay them.

Basically if you stop paying them you'll get plenty of letters through the post demanding settlement. If you ignore these the letters will get more serious sounding, and threaten to take you to court. They'll generally also pass your account to a debt collection agency too, but this simply means the snotty letters will be printed on the collection agencies letterhead instead of the card co's.

Eventually they'll send the account to the local county court but this isn't really much to be afraid of. The police will not come to your door, you can't be arrested or marched off to a cell or be sent to prison. Most county court cases for debt are dealt with in the absense of the defendant, which means that most people just ignore the court summons. A ccj will be granted against you but this again doesn't really mean a great deal if you still intend to not pay back the debt.

You'll get more snotty letters, same as before. They'll keep changing the wording and the format of these letters to try and make you believe things are getting *very* serious, but the reality is that they are no different from all the other letters they've sent you in the past.

Very often they will also pass the account between different debt agencies but again this just means letters on different paper.

The most alarming thing for most people will be the threat of bailiffs. The debt collection agencies know this and will forever be threatening "doorstep collection" visits and bailiffs. You have no reason to fear bailiffs in this country, they are not allowed by law to force their way into your home. As long as you (and anyone else living at your house) understands *never* to allow a bailiff inside there is nothing they can do.

Don't ever speak with bailiffs or other personal callers at all, just tell them you know the law does not allow them to force their way in and that you deny them peaceful entry, then close the door. Make sure there are no other doors etc open where they can just wander into the house on their own. As long as you do not ever allow them into your home, they cannot ever take your possesions.

So, almost always, the worst that will happen is that you'll get loads of snotty letters through the post and maybe one or two people will knock on your door and ask you to make a payment arrangement. If you are thinck skinned enough to put the letters in the bin, and tell anyone at your door you do not intend to speak to them, then that is that. *shrug*

Of course all of this will screw up your credit record, and would make if very diificult fo ryou to get any loans or other credit cards etc for about 6 years.

Debt_Free_Chick

The card companies won't really go to "extraordinary legnths" to get the money you owe them. There's actually very little they can do to *force* you to repay them.

Agreed - you can't pay what you don't have. But they really will track you down. Letters are "OK", but they will contact you by telephone. This is a different matter as they have the knack of turning the conversation around and getting you to agree to pay what you can't afford. If you can't be contacted by telephone, then the journey is easier (but not "easy"). If your number is listed, then expect some grief. In my opinion, it really does border on bullying.

If you own a property, they will try to get you to agree to a voluntary charge. You will be frightened by (what they claim are) the consequences.

Eventually they'll send the account to the local county court but this isn't really much to be afraid of. The police will not come to your door, you can't be arrested or marched off to a cell or be sent to prison. Most county court cases for debt are dealt with in the absense of the defendant, which means that most people just ignore the court summons. A ccj will be granted against you but this again doesn't really mean a great deal if you still intend to not pay back the debt.

Agreed ... but if youhave a property ... albeit with a mortgage, then it's best if you don't ignore any Court summons.

If you do, the lender can take a charge over your property (provided the Court agrees). Or the lender can file a petition to make you bankrupt.

If you've ignored the original summons, the lender can apply for full payment of the outstanding debt followed by posession/sale of your property. Don't ingnore a Court summons unless you're sure of your ground.

Sub's advice is fine if you want to ditch your obligations and disappear. Otherwise, you need to weigh up your options. They're not great if you have a mortgage/property or any other assets that could be sold to pay your debts.

Debt_Free_Chick

Hello PinkLipstickBabe

If you have no assets - nothing worth selling - then you have nothing to fear. They can't take what you don't have. But if you have a property, even with a mortgage, then be afraid. Be very afraid.

Or, if you have no conscientious issues with walking away ... then it's an option.

A creditor can petition for your bankruptcy if they think you have assets (stuff) that could be sold to pay off what you owe. This is bad news if you own your own house (even if with a mortgage).

The Enterprise Act means that you can be discharged from bankruptcy within 12 months (sometimes longer). Great if you have no assets.

Not so great if you have a mortgage. You can be forced to sell your home and move to rented accommodation. If this doesn't bother you then you should consider bankruptcy.

Some really good information here

https://www.nationaldebtline.co.uk

Sub_2

Agreed - you can't pay what you don't have. But they really will track you down. Letters are "OK", but they will contact you by telephone. This is a different matter as they have the knack of turning the conversation around and getting you to agree to pay what you can't afford. If you can't be contacted by telephone, then the journey is easier (but not "easy"). If your number is listed, then expect some grief. In my opinion, it really does border on bullying.

Being tracked down doesn't matter, there is no need to hide from them. I agree, their main tactic for extracting repayment is bullying, but if debtors are given proper information on this subject they will realise they genuinely have nothing to fear from these people. They are only able to bully you by implying and suggesting that if you don't do as they say the consequences will be horrible and devastating. The truth is they have only empty threats to work with.

If they phone you, so what? Tell them you are not prepared to consider any verbal communication on the matter, and that they must put anything they wish to say in writing. Then put the phone down. If they won't stop ringing and it bothers you, then just change your number.

If you own a property, they will try to get you to agree to a voluntary charge. You will be frightened by (what they claim are) the consequences.

Giving someone a voluntary charge on your property under these circumstances would be an astonishingly stupid thing to do. If they ask for that then they are basically asking you for your permission to evict you from your house and take possesion of it, who in their right mind would say yes to that? Credit card debts and the like are unsecured, they have no right to attach any charge to your property, and a debtor is under no obligation to agree to one. Just say no. In fact, you wouldn't even have to say no, don't speak to them in the first place, do as I suggested earlier and close the door or hang up the phone the moment they announce who they are.

Agreed ... but if youhave a property ... albeit with a mortgage, then it's best if you don't ignore any Court summons.

If you do, the lender can take a charge over your property (provided the Court agrees). Or the lender can file a petition to make you bankrupt.

If you've ignored the original summons, the lender can apply for full payment of the outstanding debt followed by posession/sale of your property. Don't ingnore a Court summons unless you're sure of your ground.

No no no! This is wrong and saying it here could frighten people who are in financial difficulty and struggling with repayments.

The county court has no power to turn unsecured debt in to secured debt. They DO NOT (and cannot) give credit card companies etc charges against your property.

Owning your own home makes no difference to what I said before. Credit card debt is unsecured, they can NOT take your home from you. Ignoring a court summons will not change this. The court can't give them your house. Nor will the court order the sale of your house.

Bankruptcy is an option they have, but if you are a regular joe then you can forget about this. Credit card companies don't go around filing for banckruptcy against defaulters. I won't give detailed advice on this subject because bankcruptcy law is complex, but the bottom line is that credit card and loan companies almost *never* use it as a tool for debt recovery. There is just no point. They don't take action against bad debts because they are angry and want to get at you, they only do what will increase their chances of getting their money back. Banckruptcy proceedings aren't a practical option for them, they don't do it.

Sub's advice is fine if you want to ditch your obligations and disappear. Otherwise, you need to weigh up your options. They're not great if you have a mortgage/property or any other assets that could be sold to pay your debts.

Well, as I've said a home or other assets don't really make a great deal of difference, they have no power to confiscate assets as long as you don't do anything very stupid.

I want to point out what I'm saying in this thread isn't actually my "advice". I don't advocate some kind of "hey it's easy! screw your debts! don't bother paying!" approach.

I'm simply aware that sometimes in life good people hit rock bottom. They lose a job or become ill or something else occurs which drops them in it up to their necks financially speaking. If this happens then they are very often made to live for many years in fear and misery, being threatened all the time by unscrupulous and heavy handed debt collection agencies, set on them by credit companies who were only too happy to be their friend when things were rosy.

That ain't right in my book, and I just want people to know it doesn't have to be that way. My message is relax, forget about them. There is really no need to worry about debt collectors, concentrate on yourself and getting life back on track instead.

Sub_2

Wow! The post from Sub above has had me reading with shock! Is it really that easy to walk away from debt? Even large debt?

Yes, it really is. The size of the debt doesn't matter either. The recovery options that debt collecters have on unsecured credit are exactly the same regardless of whether the amount is £500 or £50,000.

The crux of this is how well you can cope with nasty letters and maybe the occasional phone call or knock on the door. Some people, even if they knew this was all that could happen to them, would find this way too stressful to cope with and it would be a very miserable time for them.

Other people however would be able to cheerfully throw the letters in the bin, or close the door and hang up the phone without a second thought.

Take your pick... *shrug*

If it's so easy to walk away from thousands of pounds worth of debt, literally only ending up with bad credit for 6 years (which you'd have if you defaulted but later repaid anyway) why does anybody bother struggling to pay it off like the many people I have heard on here are doing on a daily basis.

You raise a very good point.

Like you, I'm not going to offer an opinion on the rights or wrongs of either approach, but the reality is that you might often be a lot better off actually not paying back your debts, and you certainly wouldn't be any worse off.

Once people get into dire straits with money problems they generally pick up a default notice or a ccj and their credit record is then buggered for 6 years anyway. It will stay pretty much buggered even if they spend the next 5 years diligently paying off that debt. So, they'd be in no worse position by saying "screw it!" and keeping what they earn to thenselves and waiting for the years to pass.

Sub_2

If you have no assets - nothing worth selling - then you have nothing to fear. They can't take what you don't have. But if you have a property, even with a mortgage, then be afraid. Be very afraid.

Noooooo! You've really got to stop saying this, you're frightening people for no good reason.

Having a property makes no practical difference when dealing with unsecured debts like the credit cards and overdrafts we're discussing here.

It sounds to me like this is something a debt collecter has once told you and you've fallen for it hook line and sinker. This is how they operate, they bully you with all kinds of terrible sounding consequences when in fact they can't do anything other than essentially keep asking you to pay up. If you just keep saying no, or even better just keep ignoring them, there is nothing else they can do.

If a debt is unsecured, they have no charge against your home and they cannot touch it. The county court can't touch it, the credit card company can't touch it. A debt collection agency can't touch it. A bailiff can't touch it.

Have I said it enough times now?

Not unless you do something spectacularly stupid and agree to offer them a voluntary charge would this ever be an issue.

keiranflynn101

I'm really stuggling at the moment. I lost my job several months ago and am finding it hard to cope. I have kept up to date until a few months ago but then it all became too difficult. The phone calls kept coming....which I just had to ignore and the letters went unopened. I was just too stressed. Finally I borrowed money very reluctantly from family and this helped me out for a while but it will run out soon. The CC companys have arranged a payment plan for me but this still seems too much. I am on benefits which they know about but still ask for more than I can afford. I only have two cc's adding up to about £3000 for both. This is not such a great amount to them but absolutely worries me sick. Any more advice or opinions that could help to relieve my mind a little? I'm getting to the end of my tether!!

Tim_L

There are a couple of excellent articles on this at:

http://boards.fool.co.uk/Message.asp?mid=7759984

and

http://boards.fool.co.uk/Message.asp?mid=8370973