Defaulting on credit card, better than paying interest?

catleugh

I had a change in circumstances just over a year ago. Got in touch with Sainsbury's bank about my credit card straight away, and made an agreement, for one year, to make monthly payments with interest frozen.
The year is up next month, and when I phoned to make this months payment they told me that the interest freeze would stop, because my minimum payment would be less than the amount I have been paying every month for the last year.
As I have no interest in maintaining a good credit rating, or applying for any more cards or loans, I was thinking of defaulting on my payments, and trying to make a deal with whoever they sell my debt to.
After I've made next months payment, I'll only owe just under £500, but in my current circumstances (which aren't going to change), that is a lot of money.
I don't have any assets, like a house or a car, and no savings.
What's the worst that could happen?

Anthorn

catleugh wrote: »

I had a change in circumstances just over a year ago. Got in touch with Sainsbury's bank about my credit card straight away, and made an agreement, for one year, to make monthly payments with interest frozen.
The year is up next month, and when I phoned to make this months payment they told me that the interest freeze would stop, because my minimum payment would be less than the amount I have been paying every month for the last year.
As I have no interest in maintaining a good credit rating, or applying for any more cards or loans, I was thinking of defaulting on my payments, and trying to make a deal with whoever they sell my debt to.
After I've made next months payment, I'll only owe just under £500, but in my current circumstances (which aren't going to change), that is a lot of money.
I don't have any assets, like a house or a car, and no savings.
What's the worst that could happen?

Conversely, they are charging you interest again because you are paying more than the minimum payment?

The best that could happen is that you'll get away with two months payments because if they are going to default the account they will do it after you have missed the payments for two consecutive months. Or they will default the account in the time scale stated in the credit agreement which could be longer.

The worst that could happen is that they won't default the account. They will harass you for the money you owe, pass on the debt to a debt collector and threaten you with legal action in the county court. Then to avoid all the hassle you'll make an agreement to pay and when you have paid, the account will become settled and will stay on your credit report for 6 years after the settlement date.

Apart from the usual credit such as credit cards and loans, your credit report is also relevant at the very least in your circumstances for energy and a rental property.

Make an income and expenditure budget and sent it to them with an offer to pay. National Debtline has an income and expenditure budget tool where you can fill out all the details, save it online and print a budget summary and the full income and expenditure statement:
https://www.nationaldebtline.org/EW/steps/step2/Pages/default.aspx

catleugh

Thanks Anthorn, I'll take a look at that link you give me.
I'm not worried about house rental. I've been renting the same house with a housing association for 8 or 9 years, and am not planning on moving. Not worried about energy either - I have prepayment meters, and am happy with them. Totally not bothered about my credit report, I'm on Pension Credit and not planning to ever work again. All I'm interested is spending the least amount of money possible on settling this debt, and if they unfreeze the interest charges, it will probably double what I pay back, and double the time it takes to do it (I haven't actually worked this out, I'm just guessing).

System

Can't you move the debt to a new 0% credit card then you wont have any interest to pay and can keep up with the minimum monthly payments which would eventually clear the card?

You could ignore the debt but then eventually you'll have the constant flood of letters, then debt collectors calling you and knocking at your door which will cause you undue stress

If you really are struggling then maybe seek advice from Citizens Advice

PeacefulWaters

AlexandLauren wrote: »

Can't you move the debt to a new 0% credit card then you wont have any interest to pay and can keep up with the minimum monthly payments which would eventually clear the card?

The OP is currently on reduced payments below the contractual minimum required.

I'd be gobsmacked if they qualified for a Vanquis card, let alone a lovely 0% deal.

catleugh

AlexandLauren wrote: »

You could ignore the debt but then eventually you'll have the constant flood of letters, then debt collectors calling you and knocking at your door which will cause you undue stress

I'm not bothered about letters, or people knocking on my door (I've dealt with far more stressful things). Just as long as they aren't entitled to force an entry into my house and take my laptop, or my daughters Playstation (not much else worth taking).

alfred64

Good`grief,man.You`are`prepared`to`default`for`£500?


Pension`credit`will`clear`it`in`no`time.

MEM62

catleugh wrote: »

Totally not bothered about my credit report, I'm on Pension Credit and not planning to ever work again.

catleugh wrote: »

I have no interest in maintaining a good credit rating, or applying for any more cards or loans

catleugh wrote: »

I'm not bothered about letters, or people knocking on my door (I've dealt with far more stressful things

OP, You have made it crystal clear that your mind is already made up so I don't see where the discussion is. Default and deal with the consequences.

StopIt

catleugh wrote: »

I had a change in circumstances just over a year ago. Got in touch with Sainsbury's bank about my credit card straight away, and made an agreement, for one year, to make monthly payments with interest frozen.
The year is up next month, and when I phoned to make this months payment they told me that the interest freeze would stop, because my minimum payment would be less than the amount I have been paying every month for the last year.
As I have no interest in maintaining a good credit rating, or applying for any more cards or loans, I was thinking of defaulting on my payments, and trying to make a deal with whoever they sell my debt to.
After I've made next months payment, I'll only owe just under £500, but in my current circumstances (which aren't going to change), that is a lot of money.
I don't have any assets, like a house or a car, and no savings.
What's the worst that could happen?

The worst? Let's say you bury your head in the sand.


Sainsbury's charge 3-6 months of late payment charges and interests. Then defaults the account and sells it to a DCA. They whack a load of charges, wait 5 years, then whack a CCJ at you. You ignore that and they get a CCJ for £1,000+ after charges and fees. They can then enforce the CCJ at any point in the future (Although 6 years is generally the limit as they would need to re-apply to the courts for enforcement after that).


If you don't care about the worst case scenario and want to ignore the debt, that's your call. The best case is nothing happens at all other than a letter or two. Non payments of debt is always a gamble. I'd be contacting Sainsbury's and trying to arrange something than just walking away, but it really isn't world ending either way.

john2054

Pay the debt, is my advice. Even if it is only £30 a week. better than nothing

catleugh

MEM62 wrote: »

OP, You have made it crystal clear that your mind is already made up so I don't see where the discussion is. Default and deal with the consequences.

You're probably right. I was just trying to ascertain what the "consequences" would be.