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Struggling with debt? Ask a debt adviser a question

edited 24 July 2018 at 1:41PM in Debt-Free Wannabe
1.3K replies 268.7K views
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  • Dory35Dory35 Forumite
    12 posts
    'm wondering if you can help? I'm on a DMP with Stepchange but had some car problems and took out an emergency loan with provident. As they are doorstep collectors I'm worried as do I add them to my DMP? I'm struggling financially and just a bit worried.
  • StepChange_RachaelStepChange_Rachael Organisation Representatives - Private Messages may not be monitored
    375 posts
    Third Anniversary 100 Posts
    ✭✭
    Hi

    Thanks for your post.

    I can see this was also sent to us as a private message which I’ve replied to this morning.

    Please see your private messages for my response and let me know if you’ve any further queries.

    Thanks
    Rachael


    Dory35 wrote: »
    'm wondering if you can help? I'm on a DMP with Stepchange but had some car problems and took out an emergency loan with provident. As they are doorstep collectors I'm worried as do I add them to my DMP? I'm struggling financially and just a bit worried.
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
  • StepChange_RachaelStepChange_Rachael Organisation Representatives - Private Messages may not be monitored
    375 posts
    Third Anniversary 100 Posts
    ✭✭
    Hi

    I’m sorry to hear that your friend is struggling and has been through what I imagine has been a very difficult time.

    I’m glad that your friend was able to contact us to discuss her options. I’d suggest your friend getting back in contact to discuss the concerns she has and for further advice.

    Her job might be affected by a type of insolvency and I’d suggest that she checks her contract, her employer or Union. As she’s a Nurse this should be quite easy to find out through the Nurses Union.

    Your friend can check in her rental agreement to see if Insolvency would affect her contract. Even if a clause is in there which means Insolvency would breach the contract it doesn’t always mean the landlord would act on the clause especially if the rent is up to date and she's on good terms with the landlord.

    The Insolvency clause is less likely to be written in to Council or Housing Association rented properties.

    Assets are taken into account in Insolvency and IVAs offer more protection for assets.

    In Bankruptcy most assets would be taken into account especially vehicles worth over £1000.

    What you’ve mentioned about making an individual agreement to the creditors to make a reduced payment is basically what a Debt Management Plan (DMP) is, but instead of your friend doing it herself, it’d be supported through us.

    As we don’t charge any fees for the service so the creditors are receiving what is affordable based on your friend’s financial situation to pay back the debt.

    We’d give an estimated time frame that’s based on creditors stopping the interest and charges, so I’d assume the 13 years 2 months is based on that calculation.

    Certain debt solutions may be perfect for some and not for others and vice versa. I’d certainly advise your friend to call in to discuss these concerns with us further.

    You can find our contact details here.

    Thanks
    Rachael



    Hi
    My friend has a debt from her Ex husband. She took out several loans to try and bail the family out of debt and now having separated from her husband is left with the debts in her sole name.
    She has a total of £20k debts all with 5 creditors.
    She had been offered three solutions from Stepchange.
    1, Debt management plan £140 over 13 yrs 2 months
    2, Iva
    3, Bankruptcy


    She is in rented accommodation and her only asset is a car £3000.
    Her concern about Bankruptcy is being made homeless should she need to move to another rent property and also any effect this might have on her profession as a nurse.


    My initial thinking is to try and make individual arrangements with each creditor, with the out come being to freeze interest and other charges. To enable her to pay the debts without and need for IVA or Bankruptcy.


    Any advice is very welcome.
    Thank you in advance.
    T
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
  • XJMXJM Forumite
    4 posts
    I've been working as a contractor for a couple of years now and just had my first full year tax bill, which was much larger than expected since I had never heard of tax on account! I also misjudged when i would need to pay and have moved recently, so I think I need to take out a loan to pay it (I know I can speak to HMRC but I doubt I can pay fast enough on my own, certainly not without preventing myself paying next year.

    I'm reviewing my spending and am confident I can make this work, especially if I get my taxes down by operating as a limited company from now on. But if it's to be a loan, I need to think about my other obligations, namely some credit card debt and a career development loan I'm paying off.

    I was planning on being a credit card tart and switching the card debt to a new one with an interest free period, but obviously thats another payment each month. I suspect that would be better than increasing the loan to collect it together right? I might pay a bit more each month, but not a lot, and will save myself interest on that amount.

    Im on schedule to pay off the career development loan around September I think, and I suspect that it might be worthwhile to increase the loan and pay that off, to keep things manageable?
  • StepChange_AllenStepChange_Allen Organisation Representatives - Private Messages may not be monitored
    277 posts
    Fourth Anniversary 100 Posts
    ✭✭
    XJM wrote: »
    I've been working as a contractor for a couple of years now and just had my first full year tax bill, which was much larger than expected since I had never heard of tax on account! I also misjudged when i would need to pay and have moved recently, so I think I need to take out a loan to pay it (I know I can speak to HMRC but I doubt I can pay fast enough on my own, certainly not without preventing myself paying next year.

    I'm reviewing my spending and am confident I can make this work, especially if I get my taxes down by operating as a limited company from now on. But if it's to be a loan, I need to think about my other obligations, namely some credit card debt and a career development loan I'm paying off.

    I was planning on being a credit card tart and switching the card debt to a new one with an interest free period, but obviously thats another payment each month. I suspect that would be better than increasing the loan to collect it together right? I might pay a bit more each month, but not a lot, and will save myself interest on that amount.

    Im on schedule to pay off the career development loan around September I think, and I suspect that it might be worthwhile to increase the loan and pay that off, to keep things manageable?

    Hi there

    Thanks for your post.

    I know that tax can be a tricky subject and quite a lot of self-employed people get into difficulty with it. In our experience borrowing money to pay off other debt can cause its own problems (often more debt) so we never recommend it. That doesn't mean it's always a bad idea, but we wouldn't advise say a loan over a credit card or vice-versa. Any advice would also depend on your overall financial situation and exactly what deals are out there.

    To be honest the information on low cost borrowing on the MSE site itself is probably about as useful information about this sort of thing as there is out there. If you're looking for advice on paying off any debt that's related to the business, you could contact Business Debtline. They may also be able to advise on any tax questions you have.

    I hope this makes sense. I wish you all the best with getting all this under control.

    Allen
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
  • Important update! We have recently reviewed and updated our Forum Rules and FAQs. Please take the time to familiarise yourself with the latest version.
  • edited 9 December 2016 at 2:17PM
    MadhavaMadhava Forumite
    1 posts
    edited 9 December 2016 at 2:17PM
    Hello,

    Long story short I got myself into debt and I have really bad credit. I have 4 credit accounts that have all defaulted. Now my financial situation has improved and I am looking at both paying off all my debts and improving my credit rating.

    So after signing up with Equifax I noticed I have only got £1624 to pay. I currently have two options I to pay £150 a month and be debt free in 11 months (I have enough disposable income that I could pay more) or I can pay it all off now in one go. If I pay the monthly amount I can also put money aside to save for the deposit on buy a house, which is why I need to have good credit rating.

    What I was wondering is which one would be better to improve my credit rating? If I stick to it and be debt free by 2018 will I have a good chance at getting a deal on a mortgage? Or is there a third option that I have missed?

    Any advice you could give me would be great appreciated

    Thank you
  • Hi all.

    From the day I turned 18 I have had a terrible relationship with spending and money. At the age of 27 I'm now desperately wanting to get married, have a mortgage and a baby. But none of those things come cheap!

    I have a wide variety of debts now, old and new, amounting to approx £10,000. My credit score is absolutely appalling from missed payments and all sorts. I have two defaults, no CCJs as I've never let it get that far.

    I am now on a reasonable income for my age, around £1,800 a month depending on overtime/enhancements. If I was able to consolidate my debts into one, I'd be able to get it all paid off in no time. Unfortunately I have a number of lenders with large minimum payments, which has lead to me using all sorts of dreaded payday loans, and as you all know it's a slippery slope.

    I'm desperate to get one consolidation loan so I can put it into one affordable payment, whilst getting onto of my credit rating. But my credit score is too bad to qualify for even the most basic of lenders. I am considering a DMP but I'm worried this may effect my credit score further as it's not all of my accounts that I'm struggling with. As terrible as it sounds I would also like to be able to hold on to one credit card for absolute emergencies, as I do not have anything at all to fall back on.

    All advice welcome. Happy to give more details if needed!

    Thanks so much
  • StepChange_RachaelStepChange_Rachael Organisation Representatives - Private Messages may not be monitored
    375 posts
    Third Anniversary 100 Posts
    ✭✭
    Hi

    Thanks for your post and welcome to the forum.

    I’m glad to hear your financial situation has improved enough to be able to pay back the debt in full or instalments, I know it can be a worrying time when you’re struggling to keep up with your general living costs and payments to creditors.

    With regards to your credit file, the main thing that will have impacted it is the defaults that the creditors have added to your credit file. They’ll drop off after 6 years from the date the default was first issued. This period won’t change even if you pay the debt off sooner.

    Once you’ve paid the debts off, creditors will note this on your credit file and the debt will show as paid in full and settled. This will have a positive impact on your credit file because it shows even though the debt had defaulted you’ve now paid the debt back and that it’s no longer outstanding.

    By paying the debt back in full it also stops the creditor being able to take any further action to collect for the debt. A creditor could take a defaulted debt through a County Court and set a County Court Judgement (CCJ). Having a CCJ on your credit file will have a negative impact on your file.

    By paying the creditors’ affordable monthly payments that they’ll accept its likely this will show on your credit file that you’re paying the debt back which is positive. It will however, take longer to eventually come off your credit file as the debt will stop showing on your credit file 6 years from the last time it was updated by the creditor.

    Mortgage providers will use information of your income, current financial situation including your credit file to decide if they’ll agree to an offer as well as a deposit.

    Credit files can be affected by many different things so you could also look at other ways to improve your credit file.

    Here is a link for further help and information on credit files.

    I hope this is helpful.

    Thanks
    Rachael


    Madhava wrote: »
    Hello,

    Long story short I got myself into debt and I have really bad credit. I have 4 credit accounts that have all defaulted. Now my financial situation has improved and I am looking at both paying off all my debts and improving my credit rating.

    So after signing up with Equifax I noticed I have only got £1624 to pay. I currently have two options I to pay £150 a month and be debt free in 11 months (I have enough disposable income that I could pay more) or I can pay it all off now in one go. If I pay the monthly amount I can also put money aside to save for the deposit on buy a house, which is why I need to have good credit rating.

    What I was wondering is which one would be better to improve my credit rating? If I stick to it and be debt free by 2018 will I have a good chance at getting a deal on a mortgage? Or is there a third option that I have missed?

    Any advice you could give me would be great appreciated

    Thank you
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
  • StepChange_RachaelStepChange_Rachael Organisation Representatives - Private Messages may not be monitored
    375 posts
    Third Anniversary 100 Posts
    ✭✭
    Hi

    Thanks for posting.

    I can understand you’d want to get on top of your finances and get things back on track and that it’s important to find a way that is suitable for you and your situation.

    I know you’ve mentioned you’ve been unable to get a consolidation loan but I wouldn’t suggest further borrowing as a solution in any case as this rarely solves the problem of interest and high monthly payments.

    I’d suggest looking into other options to becoming debt free. There are many different solutions depending on your situation some may be more suitable than others.

    A Debt Management Plan (DMP) is one debt solution which is likely to have less of an impact on your credit file than other forms. This is because a DMP is paying back the full amount of the debt but with affordable payments so that you can maintain your priorities such as mortgage payment and other priority household bills.

    If you have debts that have already defaulted and the creditor has issued a default, then a DMP is unlikely to have further negative impact. This is because it will show on your credit file that you’re making regular repayments. The defaults will fall off your credit file 6 years after the first date they were issued.

    In a debt solution you’d need to include all your unsecured non priority debts as this shows the creditors you’re not giving any preferential treatment.

    Creditors may check your credit file and will see if you’re making contractual payments to some creditors and are paying them a reduced amount in a DMP. It’s much more likely the creditors in the DMP will take the debt through a court to set a Count Court Judgement (CCJ) against the debt to try and get a higher payment through the court.

    It’s important to budget for all your expenditure including setting an amount aside for sundries and emergencies for unexpected or irregular expenses. This should stop any need for further borrowing when in a debt solution.

    If you’d like to look further into what debt solutions would be suitable for your situation you can use our anonymous online Debt Remedy tool, once completed you’ll be able to access and read through our advice and recommendations.

    Take care,

    Rachael


    iamkingy wrote: »
    Hi all.

    From the day I turned 18 I have had a terrible relationship with spending and money. At the age of 27 I'm now desperately wanting to get married, have a mortgage and a baby. But none of those things come cheap!

    I have a wide variety of debts now, old and new, amounting to approx £10,000. My credit score is absolutely appalling from missed payments and all sorts. I have two defaults, no CCJs as I've never let it get that far.

    I am now on a reasonable income for my age, around £1,800 a month depending on overtime/enhancements. If I was able to consolidate my debts into one, I'd be able to get it all paid off in no time. Unfortunately I have a number of lenders with large minimum payments, which has lead to me using all sorts of dreaded payday loans, and as you all know it's a slippery slope.

    I'm desperate to get one consolidation loan so I can put it into one affordable payment, whilst getting onto of my credit rating. But my credit score is too bad to qualify for even the most basic of lenders. I am considering a DMP but I'm worried this may effect my credit score further as it's not all of my accounts that I'm struggling with. As terrible as it sounds I would also like to be able to hold on to one credit card for absolute emergencies, as I do not have anything at all to fall back on.

    All advice welcome. Happy to give more details if needed!

    Thanks so much
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
  • Hi all

    I need some guidance as to what to do with my son's debts.

    The total debt is around 4K with 5 providers and arose 2 years ago. As I had bailed him out previously, I decided not to do so for these debts to try and make him more responsible with his money

    Instead of bailing him out we sat down together and arranged DMPs with the 5 providers but in 2015 he lost his job and unknown to me he stopped the DMP payments and they have never been reinstated (I only found this out last week).

    He is now doing well in a new job and earns 24K p.a.

    My big Q is

    1. I could clear all the debts in full and arrange a payment plan to me from my son - this will clear his debt record quicker but my concern is that I am just going back to what I did years ago

    or

    2. We re-contact the providers and try and reinstate the DMPs

    Any guidance would be very helpful.

    Thanks
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