Credit Card Missmanagement?

WantSome

Hi all,

If this was you, what would you do?

So you have a credit card with a limit of £8k. You took out this card when you lived and worked in the UK but now find yourself living abroad for a while so you can't easily change your credit card to a 0% one or transfer balances etc. Your credit history isn't so great either.

You have max'd out your £8k limit and run into some financial difficulties, so you arrange with the CC to freeze all transactions and allow you to pay down the debt in smaller increments. Lucky for you, they also freeze the interest and no longer charge interest to the account. You manage to pay down the debt to under £1k, and the company re-activates the card and interest begins to accrue once more.

Not only do they do this, but they increase the credit limit to £10k. Once again you max out the CC and are finding it hard to keep up with payments.

You are aware that you have been quite stupid to max out a card you can't pay. Twice. You are also aware that you are in need of help to pay down this debt once more.

You don't live in the UK so are finding it hard to communicate with the CC - you can have a family member talk for you but the CC won't allow this without power of attorney.

The CC seemingly do not want to enter into another debt repayment arrangement with you to clear this debt.

This is your only debt currently and you do not have any savings.

Questions:
Should the CC be more accommodating regarding paying the debt in small increments again or have you max'd out their good will as well as the credit card?

Was it technically correct for the CC to have allowed you to continue using this card, including increasing the limit, after you ran into difficulties before? Could you say that they are guilty of misconduct? Or at least dealt with your situation poorly (in order to convince them to waive the new interest and allow you to pay the debt in small increments again)

Should you get a Debt Relief Order (can you, would you) in this case?

What would you do?

(Note: Please don't judge, I am genuinely not the main character of this story, and really asking for a friend :A ).

Names and details have deliberately been kept vague to protect the guilty.

EDIT (31/05/19 - 16:36): To be clear - the card holder is not trying to shirk their responsibilities and is genuinely trying to clear this debt but is looking at various options and finding the information and advice overwhelming.
Try to be a little understanding of human folly before being judgmental about someone who has made a mistake.
So I reiterate: If you have been in this situation before, or if this was you, what would you do?

[Deleted User]

You need to work out what your priorities are - your credit file or cashflow.

If your credit file is shot, then defaulting and arranging a repayment plan would seem to be the best way.

I wouldn't bother with the 'if you hadn't increased my limit I wouldn't have been forced to buy stuff with it' argument.

[Deleted User]

Stop spending what you can't afford to pay back?

A bit of self-control?

WantSome

Deleted_User wrote: »

You need to work out what your priorities are - your credit file or cashflow.

If your credit file is shot, then defaulting and arranging a repayment plan would seem to be the best way.

I wouldn't bother with the 'if you hadn't increased my limit I wouldn't have been forced to buy stuff with it' argument.

Thanks! Currently it seems the CC are holding out for the full payments and don't want to enter into a repayment plan. Do you have to default in order for this to become an option?

WantSome

!!! wrote: »

Stop spending what you can't afford to pay back?

A bit of self-control?

Thanks, this is sound advice and is currently being practiced.

Unfortunately the position is as it is, and the option of going back in time and telling your old self not to be an idiot is not one that is open to you.

[Deleted User]

WantSome wrote: »

Thanks! Currently it seems the CC are holding out for the full payments and don't want to enter into a repayment plan. Do you have to default in order for this to become an option?

If they don't feel like offering it otherwise, yes.

Candyapple

WantSome wrote: »

You manage to pay down the debt to under £1k, and the company re-activates the card and interest begins to accrue once more.

Not only do they do this, but they increase the credit limit to £10k. Once again you max out the CC and are finding it hard to keep up with payments.

How long was the period between spending £9k on the card again to realising you couldn’t afford it?

Also, I imagine you didn’t just make a one-off £9k purchase so can you not sell anything you bought to recoup some of the loss?

WantSome wrote: »

You are aware that you have been quite stupid to max out a card you can't pay. Twice. You are also aware that you are in need of help to pay down this debt once more.

Glad you haven’t made any excuses for this. Your own stupidity for spending money that isn’t yours and not having the means to pay it back despite knowing the consequences. Twice.

WantSome wrote: »

You don't live in the UK so are finding it hard to communicate with the CC - you can have a family member talk for you but the CC won't allow this without power of attorney.

Why is it hard to communicate with them? Surely you have access to a phone and speak English? If it’s a case of time zone difference then the onus would be on you to make any phone calls at the time the cc provider is open during UK weekday working hours. This just sounds like an excuse to me, trying to get a family member to deal with your problems.

WantSome wrote: »

Questions:
Should the CC be more accommodating regarding paying the debt in small increments again or have you max'd out their good will as well as the credit card?

Why should the cc provider be more accommodating? You are in a contractual agreement with them that if you spend money, you need to make at least the monthly minimum repayments or if you don’t, you know the consequences.

If you want to pay a lesser amount then you need to wait until they have defaulted your account and in the process your credit files will get trashed. The only plus point of this is that you no longer live in the UK and not looking to get any further credit in any event, so it’s neither here nor there.

WantSome wrote: »

Was it technically correct for the CC to have allowed you to continue using this card, including increasing the limit, after you ran into difficulties before? Could you say that they are guilty of misconduct? Or at least dealt with your situation poorly (in order to convince them to waive the new interest and allow you to pay the debt in small increments again)

Should you get a Debt Relief Order (can you, would you) in this case?

As you clearly didn’t learn anything the first time around, to remove yourself from all temptation and stop this from happening again, when the account defaults and you start with the lower payments, ask the cc provider to close the account. That way your debt will still be paid off, but you won’t have to face being in the same situation 3 times in a row say 5 years down the line when you clear the debt with a new card being reissued. Also, as you no longer live in the UK, you have no real need for a UK credit card living abroad. If you need a cc, get one from your country’s cc providers. If you are planning to come back to the UK, then just apply for one when you are back on UK shores.

Would you be able to apply for a DRO given you are abroad? I don’t know. Probably best to speak to Stepchange about it.

https://www.stepchange.org/how-we-help/debt-relief-order.aspx

CC company is not guilty of misconduct. They are a business looking to make money. They make money by lending to people in the hopes they don’t clear their balances and earn interest off them. You had a choice not to partake in spending the money they offered and could have quite easily asked them to close the account instead of going on a spending spree.

stevenhp1987

WantSome wrote: »

Not only do they do this, but they increase the credit limit to £10k. Once again you max out the CC and are finding it hard to keep up with payments.

That's £9k of spending... what did you buy? Sell/Return what you can to turn them into cash!

WantSome

Thanks for the input, all. I will pass on your comments, and appreciate your thoughts and advice.

I am genuinely not the main character of this story, so I don't know what was purchased to max out the card. I believe it took a couple years to do, and was probably the case of living a little bit beyond means over a long period of time. Also this person previously had the support of a partner who did the finances which is now no longer the case so it's a learning curve at present.

In terms of communicating with the CC, the card holder abroad works most evenings when the CC would be open in this country. It's not impossible to talk to them, just difficult. The family member involved as volunteered, not been asked, to speak to the company - I don't think the card holder is trying to avoid their issues but is looking at ways of getting it resolved quickly if possible.

Many thanks to all of you for your advice.

Terry_Towelling

It doesn't matter who is the main character in the story (as you put it) and, as you seem to be quite well up on the detail, why don't you get the 'guilty party' to write a letter to the CC company allowing you to be the contact point? That's easy.

As for the crux of the matter, the person incurring the debt (twice) has probably been a bit conniving (is that being judgemental?) and the CC company has been incredibly stupid. That said, it is all a case of risk-management for the CC company and, if they want to manage their risks this way, that is up to them.

If they want to get their money back, they are going to have to be careful. The 'guilty party' has already shown themselves to be capable of paying back a debt and the CC company has probably worked out by now that the 'having-trouble-paying-please-freeze-interest' line was nothing more than a ruse to get away with paying less.

Almost certainly the 'guilty party' is not having any trouble managing the payments but they are 'trying it on' again (and why not? - it worked before).

No one here is going to offer advice but you may get some suggestions. The question really is, does the 'guilty party' want to pay the debt or not? If not, they are on their own; if yes, they can try to negotiate a deal and take advice from debt charities and see where that leads.

On the subject of being vague with names and details - I see no names at all, and exactly what sort of details are vague? If we haven't got the full story, any suggestions made could be way off the mark.

Best of luck to the 'guilty party'.

LobsterMemory

Terry_Towelling wrote: »

the person incurring the debt (twice) has probably been a bit conniving (is that being judgemental?)

As someone who's been a position closer to the thread subject than you prossibly have, yes, I think you are. I think candyapple's indignatious post was more reasonable though I'm going to take it at face value it was aimed at the wrong person.

1/ I do have a thing about the use of the word 'probably' when there is no evidence at all whether it's probable or possible

2/ I believe there is such a thing as just being crap with credit. Personally, I thought it didn't matter that I maxed out my cards as I could cover it with other savings if worst came to worst. Turned out that wasn't the case and I got in a right old mess. Thinking about it, I'd done the same as a student. Was I cconniving the second time round 'cos I thought I could get away with it? No, I was just a complete idiot.

3/ It may be that there are completely understandable reasons why they messed up again the second time. To be fair, I can't think of any that don't stretch incredulity but who knows? Not me, not you