Struggling with debt? Ask a stepchange debt adviser a question

StepChange_Aidan

Mike1006 said:

Hi, I’m currently on a dmp with StepChange, been on this about a year. I have a debt with piggybank which is my lowest debt of £148. They have contacted me offering a settlement offer of a 40% reduction on my balance. And they would report back to my credit file that the loan was paid in full and not partially settled. This seems a good offer to me and if I could pay this Would StepChange be ok with me doing this ? 

Hi Mike,

Thanks for posting.

In a Debt Management Plan, each creditor is being treated as fairly as possible and should be receiving a pro-rata share of the available funds. We would advise against a settlement offer, as that would be preferential treatment to PiggyBank and could suggest to your other creditors that you have more money to pay towards your debts.

However, it would be your decision. If you feel this is a good offer and have the money available to settle the debt, it can be removed from your DMP. I'd recommend giving us a call to review your options before you respond to PiggyBank.

I hope this helps.

Aidan

Gareth1985

Good evening!

A defalt was recorded against me by Studio in 2019, and the debt subsequently sold onto Debt Managers Ltd. A payment plan was agreed and the account paid off several months later. However, both accounts are showing on my credit file as defaulted. Is this correct practice? I'm applying for a mortgage next year and worried lenders will see this as two defaulted accounts as opposed to one!

StepChange_Aidan

Gareth1985 said:

Good evening!

A defalt was recorded against me by Studio in 2019, and the debt subsequently sold onto Debt Managers Ltd. A payment plan was agreed and the account paid off several months later. However, both accounts are showing on my credit file as defaulted. Is this correct practice? I'm applying for a mortgage next year and worried lenders will see this as two defaulted accounts as opposed to one!

Hi Gareth,

Thanks for your post.

When a debt has been sold to a collection agency, it can appear twice on your credit file. The original creditor should have recorded the account as settled with a zero balance and can add a note to say that the debt is reassigned. The collection agency will also have added a new entry. Both should have the same default date.

It should be clear to lenders that both entries relate to the same default. If the information on your credit file is misleading, you could contact the credit reference agencies to update your record or add a note to explain the situation.

I hope this helps.

Aidan

mrjoshua88

Hi. I was just wondering how Guarantor loans are dealt with on a DMP (if at all). I’m guessing no company would ever realistically accept lower payments on these types of loans when they can just chase up the guarantor instead? 

StepChange_Allen

mrjoshua88 said:

Hi. I was just wondering how Guarantor loans are dealt with on a DMP (if at all). I’m guessing no company would ever realistically accept lower payments on these types of loans when they can just chase up the guarantor instead? 

Hi there

Thanks for your post.

As a general rule, a guarantor loan would have to be included in a DMP unless either the guarantor can take over the full payments, or there are exceptional circumstances. If a guaranteed debt was left out for any other reasons, it's likely that it would be seen as preferential treatment of that creditor and could lead to other creditors not agreeing to help.

If it was included, then the guarantor would almost certainly be asked to make up the payments, yes. We can discuss this in more detail if you decide to register with us. Details of how to register with us can be found at www.stepchange.org

I hope this helps.
Allen

Roger216

Hi all; long-time reviewer, just been stuck in the fog of debt for so long.
We have 10 creditors managed DMP with Step Change.  Total debt (excl. mortgage) was £89k, now £52k (2 years in, 2 1/2 to go).
Five of these creditors have reached default, and to put this scenario into perspective our interest-only mortgage runs out Apr-25.  Some of these defaults will not be gone from our records by this date, but I'm hoping to play dumb with the mortgage company for long enough for there only to be one left showing; hopefully not too bad, as we'll have 60% equity to remortgage (will have paid some down by then; if health stays good).
My plan (after reading several posts on here), which I'd love feedback on is;
1. cancel Step Change and write to all creditors offering £1/mth for 3 months allowing us time to build up £5k, which could be more as I could receive £5k inheritance in Spring (but I'll come to that).
2. begin paying each creditor £1.
3. Make offers to full and finally settle each defaulted debt, using built up fund.
4. in four months set up new payment arrangement with remaining creditors.
5. if inheritance comes in; use this to pay off debts that are still charging interest; Clydesdale CCards; (sent letter to FO regarding this last week).
Any comments would be appreciated.

StepChange_Allen

Roger216 said:

Hi all; long-time reviewer, just been stuck in the fog of debt for so long.
We have 10 creditors managed DMP with Step Change.  Total debt (excl. mortgage) was £89k, now £52k (2 years in, 2 1/2 to go).
Five of these creditors have reached default, and to put this scenario into perspective our interest-only mortgage runs out Apr-25.  Some of these defaults will not be gone from our records by this date, but I'm hoping to play dumb with the mortgage company for long enough for there only to be one left showing; hopefully not too bad, as we'll have 60% equity to remortgage (will have paid some down by then; if health stays good).
My plan (after reading several posts on here), which I'd love feedback on is;
1. cancel Step Change and write to all creditors offering £1/mth for 3 months allowing us time to build up £5k, which could be more as I could receive £5k inheritance in Spring (but I'll come to that).
2. begin paying each creditor £1.
3. Make offers to full and finally settle each defaulted debt, using built up fund.
4. in four months set up new payment arrangement with remaining creditors.
5. if inheritance comes in; use this to pay off debts that are still charging interest; Clydesdale CCards; (sent letter to FO regarding this last week).
Any comments would be appreciated.

Hi Roger

Thanks for posting.

Firstly, it sounds like you're making great progress with your DMP, which is great to hear.

I can understand your concerns around the mortgage, and also the logic to your post, however it's not a plan that we could really endorse or recommend. There are a number of points where the plan could fall apart.

Firstly, creditors would likely only accept £1/month with a supporting budget, showing that's all you can afford. It sounds as though you're making substantial payments to your DMP, so any accurate budget won't show that £1 is a fair and affordable payment. If you tell your creditors that this is your plan, they almost certainly won't accept it.

Then there's no guarantee at all that they'll accept the settlements. They're likely to ask where the money has come from in order to pay a settlement, and if the answer is that it was by saving up DMP payments, I'm not sure they'd be too happy with that. Even if the source of funds is okay, there's no telling what percentage creditors would accept.

In regards to the inheritance, and using to pay off interest-charging cards, that's all depending on whatever else happens, so it's probably best to discuss with us down the line.

With the mortgage, the renewal is quite some way down the line, and any debts defaulting 6 years or more before that date will have dropped off your credit file by then. However, you explain that it's interest only; is there a repayment vehicle in place to repay it? If not, this is something to give serious consideration to.

I think the best thing to do right now is to discuss your concerns, hopes and plans with our team that's looking after your DMP, and potentially get some advice on the mortgage if there's no repayment vehicle in place.

I hope this is helpful.

Allen

Happy_Kitties

Hi 
I hope this is okay to post this question here, or if not if you could please where would be best to get advice.
My mum died before Christmas and I’ve been left sorting out her paperwork. 

She had no property, no savings, nothing of value, just credit card debt to the tune of £4500.
She left a personal insurance policy naming beneficiaries to the tune of about £2000. Will this go into her estate to help pay off the credit cards or does it go direct to the beneficiaries?

If it goes straight into her estate, where is best to get help so it can be divided up for the credit cards?

Many thanks

StepChange_Aidan

Happy_Kitties said:

Hi 
I hope this is okay to post this question here, or if not if you could please where would be best to get advice.
My mum died before Christmas and I’ve been left sorting out her paperwork. 

She had no property, no savings, nothing of value, just credit card debt to the tune of £4500.
She left a personal insurance policy naming beneficiaries to the tune of about £2000. Will this go into her estate to help pay off the credit cards or does it go direct to the beneficiaries?

If it goes straight into her estate, where is best to get help so it can be divided up for the credit cards?

Many thanks

Hi,

Thank you for your post. I’m sorry for your loss.

If there are named beneficiaries on the insurance policy, the proceeds would normally be paid directly to them and not to your mum’s estate.

If there is any money that forms part your mum’s estate, it would first be used to cover funeral and administration costs, before any credit card debt is repaid. If there’s no money or assets in the estate the creditors may decide to write off the debt.

I’d recommend getting in touch with Cruse Bereavement Care or the Bereavement Advice Centre for specialist advice if you need help in dealing with your mum’s estate. 

There’s some more information on dealing with debt after death here.

I hope this helps.

Aidan

2cocktailsrach

I am really struggling in terms of budgeting. I changed my job which has seen me move from monthly pay to 4 weekly. I struggle every month to the point where I maxed out my credit cards to buy food. I am not entitled to benefits and only told my partner about the
is last month. He is very supportive but I feel like an idiot compared to him (earns more and has no debt at all) I have no savings.
before I changed my job I had an exact date when everything would leave my account the day after I was paid I knew exactly what I would have left and would mark them off my spreadsheet. Now I have things paid things waiting to be paid I am constantly checking to see if there is anything I’ve missed and to top it all off received a letter saying I owe over £200 for a broadband account from 4 years ago! I have asked for a breakdown of the amount 6 times and they are saying they don’t have it. I’m dreading when the schools reopen as I will have to pay for childcare again which will put me in a worse situation. I know I am lucky to be working still and to still have an income coming i worked really hard to get myself on track and I feel like it’s just one thing after another now