Struggling with debt? Ask a stepchange debt adviser a question

StepChange_Ciaran

Oneworriedsoule said:

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.

Hi

Thank you for using this forum

From what you have told me I think there are two issues for you at present. 

•  Paying of your debts 

• Maintaining your household expenditure

If your current DMP provider has determined after a review that you are no longer able to afford payments to the debts, I would suggest token gestures of £1 per debt can be used whilst you get yourself back on your feet. 

**Might be worth exploring – was your DMC a fee charger?  There are providers that offer the service for no charge, so more money would go towards paying off the actual debt balances.

It might be worth reviewing your budget to see if any other areas can be reduced to ensure at the minimum you can cover your ‘essential’ living costs.

Regarding the £15,000 gift from your father.  There are two options here, either you can use the money to supplement the budget and cover any short fall in costs and possible re-instate a DMP?  Or you could possibly use the money to offer the creditors partial settlements.  

**You would not necessarily have to use the full balance of the ‘gifted sum’, but we would recommend that you offer each creditor a pro-rata offer of any available settlement figure be proposed.

Other information –

• You would not have to use the full balance for the settlement figure.

• Before the gift is made it might be worth considering alternate solutions based on current situation such as the possibility of an insolvency.  (Please seek further guidance from a Debt Advice Service before masking any decisions in this area)

• As you are Self-Employed, I would suggest speaking with Business Debtline on 0800 197 6026

I hope this is all useful information

Regards

Ciaran

adben12

Hello
I am 15k in debt, spread across 3 credit cards and one loan. I want to start tackling them one by one. Do I start with the smallest debt or the one with the highest interest please? Advice from Dave Ramsey says smallest first, but that goes against the logic of high interest building on one of my cards. Two of my cards are 0%

Thanks

StepChange_Ciaran

adben12 said:

Hello
I am 15k in debt, spread across 3 credit cards and one loan. I want to start tackling them one by one. Do I start with the smallest debt or the one with the highest interest please? Advice from Dave Ramsey says smallest first, but that goes against the logic of high interest building on one of my cards. Two of my cards are 0%

Thanks

Hi

Thanks for using the MSE forum.

When paying of your creditors, it is always important to calculate APR on each product to fully understand how expensive each balance is.  In an ideal world I would suggest you pay of the Card and Loan that have charges and interest applied first.

That said, the two cards on 0% APR will have time limited deals.  Usually cards on 0% deals have very significant APR once the introductory offers come to an end.  If these cards have significantly higher balances owed, you will need to factor this into your decision.

I would suggest if your credit score allows; you maybe able to apply for new deals on extended 0% offers to balance transfer the cards as their terms come to an end.  But consider that although this may help you in the short term this is simply ‘kicking the can down the road’.

Try using an APR calculator - You can find one on this site

 Or if you feel you might need more structured support

You can always try our Debt Remedy tool online to view alternative solutions on our site

Hope this helps

Ciaran

rgp20

Hello,

I have 2 credit cards with high APR which are MBNA and Vanquis between them I owe £12k!

I pay just under £500 a month on interest on them which is usually minimum payment and I am classed as in persistent debt as I’ve been paying this for over 18 month now as I am unable to pay anymore off the cards although I have never missed a payment or defaulted either of these accounts!
I have been fortunate enough to be offered a lump sum of £8k by a relative, which I would be able to pay them back without any interest although it is less than what I owe!
What my question is, is in light of the persistent debt, would It be worth it to contact my card companies and ask if they would accept a full and final settlement offer up to £8000 or would they not be interested as I have never missed a payment or defaulted my accounts? 

Also I would like to know if they were to accept would a full and final settlement offer impact my credit score as the debt was never paid in full or would this be something I would discuss with the card companies?
i am unable to get a mortgage or any 0 percent balance transfer credit cards with substantial amount on due to my credit usage as those cards are maxed out indicating I am a high risk for any future creditors!

any advice would be appreciated, thanks!

laa90

Hi, are CCj and car finance inc in debt plans ie iva dro

StepChange_Allen

rgp20 said:

Hello,

I have 2 credit cards with high APR which are MBNA and Vanquis between them I owe £12k!

I pay just under £500 a month on interest on them which is usually minimum payment and I am classed as in persistent debt as I’ve been paying this for over 18 month now as I am unable to pay anymore off the cards although I have never missed a payment or defaulted either of these accounts!
I have been fortunate enough to be offered a lump sum of £8k by a relative, which I would be able to pay them back without any interest although it is less than what I owe!
What my question is, is in light of the persistent debt, would It be worth it to contact my card companies and ask if they would accept a full and final settlement offer up to £8000 or would they not be interested as I have never missed a payment or defaulted my accounts? 

Also I would like to know if they were to accept would a full and final settlement offer impact my credit score as the debt was never paid in full or would this be something I would discuss with the card companies?
i am unable to get a mortgage or any 0 percent balance transfer credit cards with substantial amount on due to my credit usage as those cards are maxed out indicating I am a high risk for any future creditors!

any advice would be appreciated, thanks!

Hi there

Welcome to the forum and thanks for posting.

I think it's very unlikely that your creditors would accept a partial settlement when the accounts are still up to date. They'd normally only do that if the account had defaulted and you could prove that paying by instalments would take a very long time to clear the debt.

If you pay any kind of reduced settlement, the entry on your credit file would be marked as 'partially satisfied' rather than paid in full. This shows that you negotiated a discount to pay off the debt, indicating some financial difficulty. Therefore, it's likely that it would affect your credit file negatively.

If you'd like to discuss your options, we have a persistent debt team at StepChange. Their telephone number can be found on our contact page: http://www.stepchange.org/contact-us

I hope this helps.

Allen

becks_dan

Hi there,
I took 2 loans to do a uni e in 2006- Things have not gone to plan. The total amount was initially £24 k and as I was not able to make large repayments I made arrangements to pay a reduced amount of £115 a month which I have been paying back to the bank monthly since circa 2009 (I have not received a statement for several years).
I spent some time abroad around 2010-14 but kept the payments up.
I called the bank today to get an update-  and it turns out  that the bank has sold the debt on to Allied International, then onto another debt collector and now it's with Zinc.
the bank informed me that I still owe £13k - does'nt sound right considering my payments but the bank refused to provide any statements as the debt is with a third party. 

I would like to clear this debt as quickly as possible but I don't want to deal with the debt collection agencies (fear, lack of trust--- is this irrational?) I don't recall seeing any letters for the last one.

I have asked for statements from the bank who refuse and wish me to deal only with the debt agency. They explained that I pay the agency and the agency takes fees and then pays the bank.
I explained that I have always paid the bank directly using the same branch sort code etc and have never made payments to any third party and have never had any arrangement with the agency. 

I was also told my current accounts were sold to the agency. I explained that this was worrying as the balances of the 1 account that I can recall would have been 0 as of 2008. I don't remember having 2 current accounts. The bank refused to answer questions and said this was common practice for current accounts to be sold.  

Please help me I would really appreciate any advice.
Thank you

StepChange_Ciaran

laa90 said:

Hi, are CCj and car finance inc in debt plans ie iva dro

Hi 

Thank you for using the MSE forum and welcome.

I will need to deal with your query in two parts as a County Court Judgement (CCJ) debt and a HP (car finance) would be dealt with differently during an insolvency application.

CCJ:

Insolvencies include all debts; Your County Court Judgement would be included in the debt balance total so would be written off with the other debts.  The assumption would be that the payment towards the CCJ would be included in your ‘available’ surplus calculation.

This would be the same for IVA’s, DRO’s and Bankruptcy applications.

HP & PCP

• A HP or PCP would not automatically be included in the insolvency but often the regular payment towards the item will be used in a Surplus/Deficit calculation.
• The insolvency service will review affordability, can you actually afford to maintain these payments etc
• They will also review the cost of this item, if it is seen as too high, they may reject your application.

Considerations; Your finance agreement is an active line of credit; this means that your agreement may have an ‘insolvency clause’ within the terms.  This may state that if you are declared insolvent, they may terminate the agreement.  I would recommend reviewing the contract before pursuing an insolvency application.

If you would like further information or guidance on specifics, I would recommend speaking to the Insolvency Service directly.

I hope this has provided some basic guidance to your query.

Ciaran

StepChange_Ciaran

becks_dan said:

Hi there,
I took 2 loans to do a uni e in 2006- Things have not gone to plan. The total amount was initially £24 k and as I was not able to make large repayments I made arrangements to pay a reduced amount of £115 a month which I have been paying back to the bank monthly since circa 2009 (I have not received a statement for several years).
I spent some time abroad around 2010-14 but kept the payments up.
I called the bank today to get an update-  and it turns out  that the bank has sold the debt on to Allied International, then onto another debt collector and now it's with Zinc.
the bank informed me that I still owe £13k - does'nt sound right considering my payments but the bank refused to provide any statements as the debt is with a third party. 

I would like to clear this debt as quickly as possible but I don't want to deal with the debt collection agencies (fear, lack of trust--- is this irrational?) I don't recall seeing any letters for the last one.

I have asked for statements from the bank who refuse and wish me to deal only with the debt agency. They explained that I pay the agency and the agency takes fees and then pays the bank.
I explained that I have always paid the bank directly using the same branch sort code etc and have never made payments to any third party and have never had any arrangement with the agency. 

I was also told my current accounts were sold to the agency. I explained that this was worrying as the balances of the 1 account that I can recall would have been 0 as of 2008. I don't remember having 2 current accounts. The bank refused to answer questions and said this was common practice for current accounts to be sold.  

Please help me I would really appreciate any advice.
Thank you

Hi

Thank you for using the MSE forum and welcome.

I can try and give you some basic guidance on your query but this may fall into the legal area so you might need legal advice.

• The original creditor legally would need to confirm the date that your account was ‘sold’ to the Allied International.  They would also be able to confirm the balance figure transferred.
• You will need to contact your bank to calculate the number of payments that have been made to the loan since the debt was sold/the account was closed - this money is due back to you.  This is because these payments have not been deducted from your debt balance.
• Zinc legally need to provide you a breakdown of the balance owed if requested, as they will have applied some charges.  They can add charges legally but must be able to provide you a breakdown of them.

If a Debt Collection Agency has ‘purchased’ the debt.  All communication and future payments must go through them. 

• Update them of your contact details and ask for a statement breakdown in the post.

You can review your credit file to obtain a basic timeline of actions from your bank and confirm the current owners of each debt.  Regarding your bank account balance when sold.

You either want a refund of payments made against the debt after it has been sold or you want to request this balance be cleared against the debt owed to the Debt Collection company.

** I would suggest you obtain legal advice on the matter, maybe arrange to speak the Citizens Advice Bureau 

Hope this helps

Ciaran

becks_dan

StepChange_Ciaran said:
Hi

Thank you for using the MSE forum and welcome.

I can try and give you some basic guidance on your query but this may fall into the legal area so you might need legal advice.

• The original creditor legally would need to confirm the date that your account was ‘sold’ to the Allied International.  They would also be able to confirm the balance figure transferred.
• You will need to contact your bank to calculate the number of payments that have been made to the loan since the debt was sold/the account was closed - this money is due back to you.  This is because these payments have not been deducted from your debt balance.
• Zinc legally need to provide you a breakdown of the balance owed if requested, as they will have applied some charges.  They can add charges legally but must be able to provide you a breakdown of them.

If a Debt Collection Agency has ‘purchased’ the debt.  All communication and future payments must go through them. 

• Update them of your contact details and ask for a statement breakdown in the post.

You can review your credit file to obtain a basic timeline of actions from your bank and confirm the current owners of each debt.  Regarding your bank account balance when sold.

You either want a refund of payments made against the debt after it has been sold or you want to request this balance be cleared against the debt owed to the Debt Collection company.

** I would suggest you obtain legal advice on the matter, maybe arrange to speak the Citizens Advice Bureau 

Hope this helps

Ciaran

Thank you Ciaran so much for your kind advice.
I think the bank sold the debt 7 or 8 years ago but I am not sure and will confirm.  I hope this will not be a problem, meaning they would return the payments made - approx £10,000.
I'm still very worried but will update you on progress. 

Thanks again.