Advice needed about debt and being a guarantor

ripplyuk

This is for a friend who has just been left in a dire situation by her partner walking out on her suddenly. She now has no internet access so I told her I'd try to find advice.

She has been in debt for a while now, and got an agency to help but they're charging her £25 every month for their services, which she really can't afford. Is there any free advice centres or do they all charge a fee?

Also, she is a guarantor for a large payday loan her partner took out. It's unlikely that the loan company will be able to trace her partner anytime soon and there's almost zero chance he'll ever make a payment on it again. So she knows they will come after her for it. She cannot afford the minimum payment (£80 per month) which was only covering the interest anyway.

She's wondering how quickly the loan company will be to contact her. Will this take months whilst they try to contact her partner, or will they just ask her to pay immediately? Also, assuming she tells them she cannot pay, will they ruin her credit rating immediately, or do they have to go to court first to force a guarantor to pay?

Any advice would be appreciated.

sourcrates

Hi,

She should dump the fee charging DMC straight away.

Stepchange are a free debt charity :

https://www.stepchange.org/?WT.srch=1&WT.mc_id=270049&WT.seg_1=stepchange&gclid=CMb88dHOg9ECFYQW0woduBAHQw

As are payplan :

https://www.payplan.com/?category=BRAND&keyword=payplan&gclid=CMD_0ujOg9ECFRaeGwodUYwLOA

Both equally as good.

The second part of your post baffles me a little, I was unaware anyone could use a guarantor to take out a payday loan ?

Can you just clarify that part a bit, are you sure it's a payday loan ?

ripplyuk

Thanks sourcrates. I knew there were free debt companies but wasn't sure which ones.

Yes, apparently it is a payday loan. I think she said 'amigo loans' or possibly she meant a similar company 'like' amigo loans. All I know is that she says she agreed to be a guarantor as they wouldn't give her partner the loan without one. I know her partner has made 3 payments on it, just covering the interest.

ETA: I've just found this https://www.amigoloans.co.uk/question/what-is-the-guarantor-criteria so it looks like they do use guarantors.

sourcrates

ripplyuk wrote: »

Thanks sourcrates. I knew there were free debt companies but wasn't sure which ones.

Yes, apparently it is a payday loan. I think she said 'amigo loans' or possibly she meant a similar company 'like' amigo loans. All I know is that she says she agreed to be a guarantor as they wouldn't give her partner the loan without one. I know her partner has made 3 payments on it, just covering the interest.

ETA: I've just found this https://www.amigoloans.co.uk/question/what-is-the-guarantor-criteria so it looks like they do use guarantors.

Amigo loans are not payday lenders, they provide guarantor loans repayable monthly, up to £5000 if memory serves me.

Unfortunately if he dosent pay it, she is equally liable for the full amount.

I don't know what there debt collection policy is, but if he stops paying, it won't be too long before they will be in touch.

Did she provide debt card details or bank details at all ?

I assume she would of done, they are able to take the missing payments as and when they fall due.

ripplyuk

I've been doing some reading on the amigo loans FAQ page for guarantors. It says this:

"The one time you could find your credit file and score affected is if both you and the borrower refuse to pay and we are forced to take court action, where the court judges that you must pay and you still refuse. In these circumstances, after 28 days the court will record the judgement on your file."

Does this mean they won't take the payment without her permission? Also, will it not affect her credit rating unless a court says she must pay it (and she then doesn't)?

She's managed so far to keep her credit rating reasonable, basically by paying one loan or card off with another, but she can't keep up now her partner has left. Today is the first day she had to use a food bank to feed her children.

fatbelly

This sounds like a serious situation and her credit rating is probably not the thing to worry about if she can't afford food.

Can she come on here and post? It's all anonymous

Previous advice from sourcrates is good. Good free advice is also available from National Debtline
0808 808 4000
Monday to Friday
9am to 8pm
Saturday 9.30am to 1pm

sourcrates

What I would suggest she does is cancel the fee paying debt management plan she has, then ring stepchange and give them the whole story.

They will be able to advise her on a way forward, it's much easier if she does it herself, rather than on an Internet forum through a 3rd party.

Unless she can come on here herself ?

ripplyuk

Her priority is certainly for basic things at the minute, and her children's welfare mainly, but she's terrified that if her credit rating gets ruined, it'll make things even worse for her.

Unfortunately she has no internet access as her partner took the wifi hub when he left. The contract is in his name. She lives in a very rural area and can't even get a decent mobile phone reception. Texts go through but it's often impossible to make a call. She can't afford to get broadband installed in her own name now and can't go and use the internet in a library as her partner took the car too.

Sharon87

Her credit rating shouldn't worry her, not being able to afford should.

As others have said she should contact the free debt charities and set up a payment plan with them (like £1 to each creditor for example). The Amigo loan - she shouldn't have to pay a thing unless he defaults and if he does, tell them about her change of circumstances. Can she contact them and say she's in no position to be a guarantor for him now?

First priorities for money for her are: rent, council tax, food, electric, water, gas.etc not debt.

MrsTinks

Wait a minute... if she's already on a DMP which it sounds like if she's using a fee paying company then there is a very good chance her file already contains defaults. So for starters she shouldn't have been able to become a guarantor as they should have credit checked her surely?

If she gave them the details to her account when she signed as guarantor then unfortunately there is probably not very much stopping Amigo from simply collecting their payment when her partner fails to pay. I would suggest as a priority she speaks to one of the free debt charities - as there are children and their welfare involved her this isn't a situation that is easily managed through a forum and a willing friend texting back and forth.

Why does her (arguably fictional) credit score worry her?

ripplyuk

I think her fear is that if her credit is ruined, she'll never be able to get an account in her name for e.g. broadband. I know she does have previous defaults but she was trying to improve things and has been managing to make the minimum payments. She's just anxious now that she'll never keep up and it'll be a downward spiral.

I can see on the amigo loans website that they say a guarantor must have good credit, so I also find it strange that she was accepted. Maybe they're flexible about it, or maybe it's because she hasn't defaulted in quite a long time. I really don't know.

I've passed on the details of the debt charities to her, so hopefully they can help.