Debt help - thanks

rachaelsmith82

Thanks for reply.

Does anyone know how receptive banks are to a settlement offer outwith a trust deed? My friend is currently paying £300 a month for his debt - he wants to pay something off every month but just can't afford £300! As CAB advised if he stopped paying (or CAB gave him templates to send to lloyds not exactly sure what these are - think they are to say he can't afford etc ) Has anyone had experiences of how they usually respond? I understand everyone is different just to see if they usually say flat no and instruct debt collectors or if they do actually try and help. My friend is worried as has next payments due to come out on the 4th and no money in his lloyds account for this. Ideally if lloyds did write some off and he could pay an amount that was affordable that would really help him out !

If lloyds did refuse to write off and they go to court and instruct debt collectors etc - at that point can they just come in and take stuff? when it gets to that stage what are the implications?

Sorry to keep asking so many questions - really thanks so much for all the help guys !

rachaelsmith82

My friend is currently writing a letter to lloyds just now,

I think he wants to offer a lower monthly payment - not sure if they will accept this ? Also he is having trouble finding an address to send it too!

Does anyone know this?

Thanks

rachaelsmith82

Sorry - yet another question (my friend today has been for 2 hour meeting at CAB, called credit fix, web chatted to step change and business line and he feels pretty helpless with it all. As he is self employed no-one can help him it seems)

As mentioned in previous note the only option he feels he has is to write to lloyds to offer either monthly payment or full and final ( from any inheritance he may receive in future - his sister has indicated she may be able to loan him some money for a full and final.

His debt to Lloyds is approx £10,000 ( £7700 CC and rest Overdraft ) - he has not missed any payments yet ( next one due Monday ) what would be an acceptable offer to them would you imagine? I know every case different but he has no idea what to write to them - He is so clueless with all of this and hoped he would have received more specific advice today !

Thanks

confused?

Hi rachaelsmith82
Although Im no expert in this particular case regarding inheritance.
I did find a lot of information regarding dealing with creditors, when going through a 'forced Bankruptcy' back in 2010.

As far as I'm aware your friend should be able to notify his creditors to the difficulties he is going through, by phone and then backed up with a letter (templates may be available??).

Usually they will be glad that you called before the debt has gone to a 3rd party debt collection company for the missed payments / arrears (i.e sold). And should be able to give a bit of breathing space by either freezing interest or reducing payments for an agreed period.

However if it has gone to an external debt collection company then you can call them and ask for a reduced full and final settlement.
This may be able to be paid In part payments or full.

In addition to the above I have heard of people asking their creditors before it gets to debt collection stage to request these full and final settlement figures from their direct creditors before it gets to the debt collection stage, (might be worth a call before asking for reduced payments).

REMEMBER THOUGH If the debt is to be paid to either in part payments ensure that you get a written full and final settlement figure from them first, and keep the record (not verbal over the phone) before making any payments.

Please Note: If the debt collection company send debt collection letters regular enough they sometimes (when no response is received) send these full and final settlement figures in the post with a pay by date as bait, hoping you respond,
which may be advanagous if your friend is at this stage already.

As if affordable by using the inherratance may give them the break they need.

Any way like I say Im no expert and have not digested your friend situation fully however I will read again later properly.

Bankruptsy although in my situation 'Luckily' helped me out its not always the best solution. It took 6 years to get over and wasn't a great experience.

Tell your friend to chin up and stay strong

Regrds
Confused?
Debt Free since 2011

lewishardwick

If your friend has been meeting their minimum repayments on the cc and the overdraft is not in excess of its limit,it's unlikely Lloyds will accept full and final settlements.

Based on the numbers you gave, a £3,300 overdraft is pretty significant and every month incurring more fees.

Is it possible to use the inheritance to at least clear that debt? Having a current account in the black makes things so much easier. No sudden lumps for fees being taken.

I spent two years living in an overdraft, now I'd avoid like the plague!

confused?

lewishardwick wrote: »

If your friend has been meeting their minimum repayments on the cc and the overdraft is not in excess of its limit,it's unlikely Lloyds will accept full and final settlements.

<<True - I do agree with lewishardwick but they may accept a reduced payment, which may be an option before it gets serious enough to warrant debt collection.

When at that point my statement would apply (sale of debt by creditor, debt collection agencies, letters and negotiated settlements).

I need to read up on this again, and im not in any way advising your friend to stop paying, but as far as I am aware I don't think anyone can walk into your house and take anything for non payments (even debt collection companies) unless courts are involved CCJ's, Court Balifs etc...

However It was 2010 the last time I looked into anything to do with all this

Regards
Confused?

rachaelsmith82

Hi,

Thanks again for replies folks.

Not too sure what he should do from here. Unsure of his inheritance status. Think it would in in region of £2000-£3000 if he is lucky. This is what he could use for full and final - as mentioned his sister may be willing to give/ loan him this amount if it would help him clear his debts.

Given the above info - does anyone have any advice on what they feel he should do ? CAB couldnt help but they were kind of hinting at if you perhaps just not pay then they will have to go through debt collectors , court etc ( they advised potentially it would not get to court for this amount which i thought odd? ) It just struck me as strange they would suggest just not paying as an option ? What would be the worst case scenario for this ?

So a break down of his situation is :

Self employed with equipment that is needed to continue

Lives in Scotland

£7700 CC with Lloyds and £2300 Overdraft with lloyds

Should be able to pay a token amount (approx £2000- 3000)

Cannot afford the current £300 approx he is currently scraping together by selling stuff , borrowing etc to pay the cc and overdraft fees

really would want to avoid anyone coming into his flat taking his business equipment he needs to work and his computer he uses for work etc

If anyone could give options - anything at all he has as an option at this point that would be great - i know i keep repeating myself but he feels like he has plucked up courage after a long long time to go to CAB , Business debt etc and he has not actually gotten any real help. I am not saying these places are at fault - he knows he has gotten himself in a bad situation and it is his fault - its just when you hear on adverts, websites etc to speak to people , banks, charities etc when you are in dire straits then do and still feel helpless it feels like there is no hope.

Again - thank you so much. it really helps having this forum here.

Pixie5740

rachaelsmith82 wrote: »

Sorry - yet another question (my friend today has been for 2 hour meeting at CAB, called credit fix, web chatted to step change and business line and he feels pretty helpless with it all. As he is self employed no-one can help him it seems)

As mentioned in previous note the only option he feels he has is to write to lloyds to offer either monthly payment or full and final ( from any inheritance he may receive in future - his sister has indicated she may be able to loan him some money for a full and final.

His debt to Lloyds is approx £10,000 ( £7700 CC and rest Overdraft ) - he has not missed any payments yet ( next one due Monday ) what would be an acceptable offer to them would you imagine? I know every case different but he has no idea what to write to them - He is so clueless with all of this and hoped he would have received more specific advice today !

Thanks

Were you at the CAB meeting with your friend? Is it possible he didn't take in or has misunderstood the advice given to him? I find it difficult to believe that neither Step Change nor Business Debtline would not have a debt solution(s) for your friend. Perhaps not even something as full on as sequestration (Scottish bankruptcy) such as an informal debt management plan since his debts aren't really that great (I know it depends on your perspective).

Are the credit card and overdraft debts personal debts or business debts?

One of the first things he ought to do is open a basic bank account away from the Lloyds banking group and ensure all his income is paid into the new account from now on.

Has he looked into any benefits that he may be entitled to yet?

If he barely scratches a living through his self employed work does he really need the equipment he uses for it? Would he be able to sell the equipment, clear his debts, and find paid employment elsewhere? I know you said he was looking for part time work but maybe it's actually full time work he needs to find because his self employment sounds more like a hobby.

haggis0073

If he cant make the repayments then dont, there is no point scraping by, selling things, going short on the food shop etc to cover the repayments. My personal opinion would be to open a new bank account (not lloyds), then create a budget, work out what he actually is bringing in a month, then work out what his essential bills and living costs are, then after that if there is any money left over split it between the 2 debts.... for the time being

I would make another appointment with CAB and this time you go along with your friend, just in case (as mentioned above) he misunderstood something

With the work tools, could he simply not mention that he has expensive tools, unless they were bought recently then i would not disclose that he has them at all

elljay

I was self employed as sole trader and Stepchange and Business Debtline were really very helpful, lovely people in fact. I found that CAB were kind but their remit is a bit too broad to know all the ins and outs of everything.

In my case I wrote to banks, cards etc and said I was having difficulties but that I was taking advice to try to sort it out and that I could offer a £1 a month to each in the meantime. Every single one said yes fine and I carried on paying £1 to each on the dot of the date payable for 6 or more months, nobody chased or even sent snotty letters. That bought me several months in which to look at other options and to get some money together for the bankruptcy fees. I definitely wouldn't just stop paying, their computer will soon start sending out red letters which might not mean much but your friend doesn't need the stress at the moment.

In terms of the inheritance, it doesn't really matter either way, either he uses it to pay off the debts in as acceptable a way as the creditor is happy with, (and at least he won't have a bankruptcy on his hands) or else he goes bankrupt and loses it to the OR who will use it for fees and to repay creditors if there's any left. He won't be able to keep it to enjoy the spending of it.

If it was me, I'd stall the creditors with the pound payments till the inheritance comes through, sell everything and get a full time job in the meantime, then offer as much as poss to them all and if there's any more to pay, do so over a period of time while working. He can always go back to self employment in later years once he's solvent again.

EJ