Struggling with debt? Ask a stepchange debt adviser a question

StepChange_Rachael

sar1975 said:

Hi
I have received a letter from Link Finance saying I owe money on a Barclaycard...they now have the debt.In 2012 I agreed to pay them £1 a month (through Stepchange advice)which I have continued to do.I noticed in May 2019 payment stopped but i did not cancel it. Now they are asking for the full amount.Where do i stand on what i should pay them and because I have paid a offer payment has that scuppered the debt being statute barred?

Hi

Thanks for getting in contact.

Creditors will often accept a reduced payment for a time but generally will ask for a review 6-12 months later. They shouldn’t really be cancelling payments before asking for a review. You can always get in touch for further debt advice over the phone or online. If things haven’t changed the creditor will be able to see that through the updated budget, you can then set up a token payment again, and if they have changed, alternate options could be available.

In terms of a debt being statute barred; if a debt hasn’t been acknowledged for a period of six full years, and the creditor in this time hasn’t taken the debt to court, most debts would become statute barred. There are exceptions with debt types and time frames. However, most creditors will look to take court action before a debt becomes statute barred, making sure the debt is paid through enforcement if necessary, such as enforcement agents or an attachment of earnings.

I hope that helps.

Thanks
Rachael

StepChange_Rachael

Akelly said:

Looking for some advice please. 
So im currently on a dmp but atm making token payments. Ive recently chnged my job and have to work a month in lieu. I work on the Bank in the NHS. Im able to pay for my dmp payments but not sure how much because it depends on what i work/is available.

I created 14k debt from gambling. After a replapse im back on track again with gamcare.
My question is how do i work out what i can afford if im unable to know what im working? Also can some of this debt be written off?
Im also looking to go to uni in sept, what happens when i become a full time student? 

Hi and thanks for posting.

When it comes to creating a realistic budget and where income can vary, it’s important to try and work out a good average. Where some months it might be higher and some lower, looking for a realistic middle ground. This might be much harder if you’ve not started your new job and there are no set hours. In this case, it might be advisable to wait for a few months to see what the income is over that period, so you have something to work with and continue with token payments until then.

Anytime your financial situation changes significantly, you’d need to review your options. Depending on your financial situation will determine what solutions are most suitable. If you decided to speak with an adviser, they’d be able to discuss these changes and tie it into the solutions advice. There are types of insolvency solutions that can write debt off, some maybe suitable for you.

If you’d like to look at your options further, I’d recommend getting some further advice. If you’d like to speak with us at StepChange you can find our contact details here.

Thanks
Rachael

klw7me

I am one of the unfortunate ones who have a massive overdraft £3,250 and with the changes etc am worrying about the 39.9% apr interest rate looming and have a credit card that has an 0% rate ending soon with over £4,000 on. I have other debts also and money is tight. I am not at the point where I can’t afford to pay minimum payments but I don’t really have anything left after minimum payments petrol to get to and from work and food. In 18 months time my pay is likely to go down a little (I am on protected pay right now but don’t know what the amount will be after the end and am not likely to know for at least a year). I tried to get the bank to extend my loan I have up to it’s previous limit but over a longer time frame to pay off my overdraft and a credit card with them so not borrowing any more money just refinancing it. This would have bought down my monthly payments by over £100 a month to enable me to pay off some other bits but they said no. I don’t have any missed or late payments etc and have a mortgage just have a high debt to income ratio and am using lots of my available credit. Am I best just trying to sit out until my bank will allow me to extend my loan or are there other options available to me. I am reluctant to go anywhere near a debt management plan as I’m don’t think the nega
tive effect it will have on my credit is worth it 

StepChange_Allen

klw7me said:

I am one of the unfortunate ones who have a massive overdraft £3,250 and with the changes etc am worrying about the 39.9% apr interest rate looming and have a credit card that has an 0% rate ending soon with over £4,000 on. I have other debts also and money is tight. I am not at the point where I can’t afford to pay minimum payments but I don’t really have anything left after minimum payments petrol to get to and from work and food. In 18 months time my pay is likely to go down a little (I am on protected pay right now but don’t know what the amount will be after the end and am not likely to know for at least a year). I tried to get the bank to extend my loan I have up to it’s previous limit but over a longer time frame to pay off my overdraft and a credit card with them so not borrowing any more money just refinancing it. This would have bought down my monthly payments by over £100 a month to enable me to pay off some other bits but they said no. I don’t have any missed or late payments etc and have a mortgage just have a high debt to income ratio and am using lots of my available credit. Am I best just trying to sit out until my bank will allow me to extend my loan or are there other options available to me. I am reluctant to go anywhere near a debt management plan as I’m don’t think the nega
tive effect it will have on my credit is worth it 

Hi there

Thanks for posting.

If you're already struggling to make minimum payments and will soon have this interest rate hitting your bank account, it certainly sounds like you need to do something. In simple terms, when facing this situation the options are likely to be refinancing/restructuring the debt or looking at a debt solution, such as a debt management plan (DMP).

There can be positives and negatives of both/either depending on your situation. Taking out new credit can result in increased debt, and can be difficult if already maxed out on credit, or if your credit file isn't great. A DMP can potentially reduce your monthly outgoings and possibly freeze interest and charges, but will affect your credit file for at least 6 years.

I'd recommend putting a budget together to get a really clear picture of your financial situation. You could do this with us, free of charge, and we can talk through various options. You can find details of how to register with us on our website: http://www.stepchange.org/contact-us

I hope this is helpful.

Allen

StepChange_Rachael

Triptik said:

Hi,
Hopefully this is the right place. I'm in need of advice and kind of new to financial management/ recovery.

Over the course of a few years I accrued around £5k on my credit card. Last year I got a 0% balance transfer card with Virgin to wipe the debt from the first and started repaying that.

Now though, thanks to life events I've now reached £4600 on the first one again. Still got about 4k on the Virgin card.

I have a mortgage, a non-working partner with autism and a 1 year old. I have one source of income, my job (full-time), which doesn't quite cover the essentials (mortgage, bills, food shop etc.) so I'm constantly going overdrawn and being charged. There are some luxuries in there such as an Adobe subscription for £50 per month, so I've made a little spreadsheet and I've worked out I can cut out the luxuries and down on the essentials so they are covered by my job. But I've still got the two cards to pay off.

My question is, do I get a second 0% balance card to clear the first one again, cut the first one up so I never use it again and slowly repay the two balance transfer cards with what's left over from my job (after cutting and budgeting so I don't go overdrawn) and transfer THAT debt to other balance cards later down the line should I need to (closer to the end of the 0% 28 month period or whatever the length of period is)? - I've done the eligibility checker again and I have a 95% chance of getting a 29-month card.

I'd like to get on-top of this before it turns into a bit of a horror story.
I hope that all makes sense.
Thanks in advance for your help,
Dan

Hi Dan

Welcome to the forum and thanks for posting.

I know you’ve look at your spending and cut down on some areas, it’s the most important bit, but often looked over. If your income isn’t covering the household bills and living costs then further debt is going to accrue.  It might be worth checking if your partner or as a household, you can get any financial support. Universal Credit or child/working tax credits to help top up the household income. As your partner has autism, might they be eligible for a disability benefit?

In terms of the debts, where you can reduce any interest and charges by using a cheaper product, it’s going to really help reduce the overall amount you pay to the creditors and help pay them back sooner. Just be aware most balance transfer options charge a small percentage fee for the privilege.

If after you’ve reduced any living costs and increased any income, if minimum payments to creditors are still unaffordable, then I’d recommend getting some debt advice to look at alternative options. You can speak with us at StepChange if you decide to go down this route.

Take care,
Rachael

johnson28

Hi there, I have been working very hard to improve my credit score over the past few years. I had over 20k of debts which I have cleared using a DMP and using a solicitor to challenge debts. I also did PPI claims and won which closed many of the accounts. I now have a default from virgin media when I switched accounts that I don't know what it is for... I am assuming they are claiming we had a rollover account or something and are being devious. I also have small credit card balances that I will reduce with extra payments over the next few years. How can I challenge the defaults from Virgin? I also have a very old default account from 2015 with PRAC financial who I believe bought an old debt which must now be closed which they haven't removed. What do I do about this? I want to get a mortgage over the next year as I live in my stepdad home and he will be selling it next year. Is it possible to settle accounts and request that they remove the defaults? I'm not sure how best to improve my credit rating so I stand a chance.of getting a mortgage. 
 

StepChange_Rachael

johnson28 said:

Hi there, I have been working very hard to improve my credit score over the past few years. I had over 20k of debts which I have cleared using a DMP and using a solicitor to challenge debts. I also did PPI claims and won which closed many of the accounts. I now have a default from virgin media when I switched accounts that I don't know what it is for... I am assuming they are claiming we had a rollover account or something and are being devious. I also have small credit card balances that I will reduce with extra payments over the next few years. How can I challenge the defaults from Virgin? I also have a very old default account from 2015 with PRAC financial who I believe bought an old debt which must now be closed which they haven't removed. What do I do about this? I want to get a mortgage over the next year as I live in my stepdad home and he will be selling it next year. Is it possible to settle accounts and request that they remove the defaults? I'm not sure how best to improve my credit rating so I stand a chance.of getting a mortgage. 
 

Hi

Thanks for your post.

Defaults will naturally fall off on the sixth year they were entered on your credit file. Even if you settle the debt, the default will remain for this time as most notes on your credit file will remain for six years, so the one added in 2015 should come off soon.

If you feel a default has been added incorrectly then you can challenge this with the original lender or contact a credit reference agency who would know more about the process. Ultimately the creditor or reference agency can amend your credit file but it’s likely to be difficult to dispute, as they might require evidence.

There are other ways to improve your credit file over time as credit files do usually improve, even if there are defaults on. It's unlikely to be the only reason someone might not be able to get a mortgage, it’s more likely that it would impact the interest rate you’d get initially. It might be worth exploring the MSE website further for advice on how to improve your credit score as this isn't something i'd be able to give advice on in detail. 

Thanks

Rachael 

cherellew

Hi, new to this forum but looking for advise. I have recently started saving for my first property with a help to buy ISA. Over the last year and a half I have spent a lot of money significantly reducing my debt. I now only (I say only, as in comparison to before it is a lot less) have £2000 on a credit card. Prior to saving my focus has been to pay off debt however over the last 6-8 months I have been saving in my ISA and now have £1000 in the account. As I am now starting to see my money build it is really motivating me to continue saving and helping me tighten the reigns. The debt on my credit card has recently been moved to a 0% interest free for 20 months. Each month I pay off more than the minimum payment, I usually pay anywhere between £50-100 sometimes a little more dependant on what I have on that month. I have recently been told to pay off half of my credit card with the money I have saved in my ISA, however that would put me back to “square one” with my savings and I would have to start again. As silly as it sounds I am really proud to see that money sat there knowing how hard I have spent. Would you recommend emptying my ISA and paying off a lump sum on my credit card or continue saving and reducing my credit card? Thank you.

StepChange_Aidan

cherellew said:

Hi, new to this forum but looking for advise. I have recently started saving for my first property with a help to buy ISA. Over the last year and a half I have spent a lot of money significantly reducing my debt. I now only (I say only, as in comparison to before it is a lot less) have £2000 on a credit card. Prior to saving my focus has been to pay off debt however over the last 6-8 months I have been saving in my ISA and now have £1000 in the account. As I am now starting to see my money build it is really motivating me to continue saving and helping me tighten the reigns. The debt on my credit card has recently been moved to a 0% interest free for 20 months. Each month I pay off more than the minimum payment, I usually pay anywhere between £50-100 sometimes a little more dependant on what I have on that month. I have recently been told to pay off half of my credit card with the money I have saved in my ISA, however that would put me back to “square one” with my savings and I would have to start again. As silly as it sounds I am really proud to see that money sat there knowing how hard I have spent. Would you recommend emptying my ISA and paying off a lump sum on my credit card or continue saving and reducing my credit card? Thank you.

Hi Cherelle,

Thanks for posting and welcome to the forum

You’ve said that you were told to pay off half of the credit card using your savings. Was it the credit card company that asked you to do this or were your advised to by someone else?

Ultimately, it’s up to you what to decide what is best for your situation. If you have the money available I’d recommend making a lump sum payment to clear the debt faster, but if you’d prefer to keep the savings aside for your first property, and it is affordable to carry on making the minimum payments (plus a bit extra to reduce the balance) each month you can do so.

You could also consider saving up to clear the credit card debt in full before the interest free period ends.

I hope this helps.

Aidan

Oneworriedsoule

I’m wondering if you can help me at all.  I was on a dmp until the end of 2018 when my review advised I was unable to meet my payment plan.  Not a lot has changed since (apart from another child). I’m self employed so my income goes up and down which has a knock on effect on my partners universal credit.  The more I get, the less she gets.  I owe roughly £14.5k in unsecured debt and my father may be gifting me and my partner £15k as we are literally paying bills with nothing left over for clothing, saving etc.  My question is, would I have to offer the lot towards a settlement if the money was paid to my partner instead of me?  I really need to get my head out of the sand and get this sorted.  Thank you in advance.