Stepchange Question

chachaslide

I have got myself into a bit of a pickle with unsecured debts and am working really hard to get myself to a point where I am back on track and repairing my credit. I have just sent an appeal to my own bank asking them to look at a consolidation loan so I can get everything in one place. In the meanwhile I contacted Stepchange but I am a little bit confused. I currently have a car on finance which I need to keep - I am currently two months behind on the finance but I think by my own means I will be up to date and back in the good books of my creditors in about 3 months. If I do decide to go via the Stepchange route can my car be claimed back via the creditor company? Also some of the debts that I am paying off include 3 payday loans I am hoping to clear these ASAP as they were the biggest mistake of my debt to date. Sorry pressed send too soon. If I do decide to go with Stepchange as a complete last resort - how does this actually affect what lenders see on your credit file? - does it leave a mark for 6 years as is the case with judgments etc. or is it taken off of your file once you are back in the black?

sourcrates

Hi,

First off avoid a consolidation loan at all costs.

You need to address why you are in debt, because if you don't, and you continue your bad habits, you will just run the debt up again, and be in even more shtuck.

Your car finance needs to be treated as a priority debt, otherwise you could lose the car, your other unsecured debts are all non priority, and are paid last of all.

If you go down the debt management route, you risk been defaulted by your creditors, which would affect your file for 6 years.

But that is the better option than having "AP" markers, which stay there for 6 years AFTER you repay the debts.

Look on the stepchange and National Debtline websites for more info.

sourcrates

Also have you concidered a complaint against your payday loan companies for unaffordable lending ?
You could get balances reduced/written off, refunds of interest/charges etc.

Reclaiming thread here :

https://forums.moneysavingexpert.com/discussion/5289150

Full guide to reclaiming here :

http://debtcamel.co.uk/payday-loan-refunds/

National_Debtline

Hi

Regarding your car, whether the lender can repossess it or not will depend on a few factors. Either way you should treat it as a priority debt as sourcrates says. Stepchange should let you prioritise it.

Firstly the type of finance is important as finance is a very general term. If it’s fixed sum loan where you actually own the car at this point then it can’t be repossessed. If it’s a type of hire purchase/conditional sale/PCP agreement where you don’t own the car until the final payment is made then it’s possible the lender could take steps to repossess.

Whether the lender would need to get a court order to repossess or not will depend on how much of the agreement you’ve already paid. This factsheet goes into more detail:

www.nationaldebtline.org/EW/factsheets/Pages/hire-purchase-debt/hire-purchase-and-conditional-sale.aspx

James
@natdebtline

StepChange_Kirsty

Hi,

I was looking through the forum and noticed your post. I am a Debt Advisor at StepChange and thought I might be able to help.

As James said, the type of finance you have for your car is very important. If it is an agreement such as hire purchase, conditional sale or PCP it means you don’t own the vehicle until it has been paid in full therefore it would be at risk of repossession. We will always prioritise this type of finance in the budget for you. If this hasn’t been included on your budget, please [URL="hyperlink: http://www.stepchange.org/Contactus.aspx?utm_source=MSE&utm_medium=Social&utm_campaign=Forum_post&utm_content=&domain=forums.moneysavingexpert.co.uk &WT.mc_id=403509"]contact us[/URL] so we can update your budget and make sure we are still giving you the best advice.

If the finance isn’t secured against your car, it would be known as a fixed sum loan agreement. This means you own the vehicle but have just borrowed the money to buy it. We would treat this as an unsecured debt the same as your other creditors. This is because the finance company cannot repossess the vehicle so it would pose no greater risk than any other personal loan, payday loan or credit card etc.

I’m not sure what solution we have recommended; different debt solutions will have different impacts on your credit file. Most solutions we recommend will involve at least reducing payments to your unsecured creditors and this will lead to a default against the debt on your credit file. The default mark will last for 6 years from the date the default was applied. This link has more information about how debt can impact a credit file but please do not hesitate to contact us if you want more information relating to your individual solution.

Sourcrates is right, you should avoid a consolidation loan at all costs. This option rarely works and in our experience people often end up in worse situations than they started. If you’re able to get back on track with your creditors within 3 months and without taking a consolidation loan you might want to consider trying this first. Remember we are always here if you need any further help and advice.

All the best.

Kirsty

chachaslide wrote: »

I have got myself into a bit of a pickle with unsecured debts and am working really hard to get myself to a point where I am back on track and repairing my credit. I have just sent an appeal to my own bank asking them to look at a consolidation loan so I can get everything in one place. In the meanwhile I contacted Stepchange but I am a little bit confused. I currently have a car on finance which I need to keep - I am currently two months behind on the finance but I think by my own means I will be up to date and back in the good books of my creditors in about 3 months. If I do decide to go via the Stepchange route can my car be claimed back via the creditor company? Also some of the debts that I am paying off include 3 payday loans I am hoping to clear these ASAP as they were the biggest mistake of my debt to date. Sorry pressed send too soon. If I do decide to go with Stepchange as a complete last resort - how does this actually affect what lenders see on your credit file? - does it leave a mark for 6 years as is the case with judgments etc. or is it taken off of your file once you are back in the black?