Default but not all cards?

mrpicto

Hi everyone

I did try to find info on this as I'm sure it must have been asked before, but I couldn't find anything..

Long story short, the epidemic has devastated my self employed income and unfortunately my sector will take a long time to recover. I have decided (using lots of advice in this forum) that the best course of action is to stop paying my credit cards & loans, and once defaulted negotiate payments with eventual F&F settlements. I have no plans for further credit in the next 5-6 years so this seems like a logical plan, rather than tearing my hair out month after month worrying about payments I can no longer make.

My question is, is there any sense in continuing to pay the cards with the smallest balances and manageable monthly payments. Would retaining 1 or 2 cards go against me with regard to the other creditors? Or would these 1 or 2 creditors be alerted to the other non-payments/defaults and restrict/close my account as soon as possible anyway?

The reason I'm wondering is that I can manage to pay the 2 smallest monthly payments, the balances are interest free, and it would remove 2 creditors from the stress pile while I deal with the larger debts. But I have a feeling that this may well be an all or nothing situation..

Thanks in advance for any advice, this forum is a massive help!

[Deleted User]

If everything is now defaulted and therefore not incurring interest, it doesn't matter which ones you choose to focus on.

Your accounts will be closed once defaulted or in arrears in any case, so there's no further impact, apart from reducing the debt.

mrpicto

Hi zx81, I think you misread my post. Nothing is defaulted, I haven't even broken any agreements yet.

ryanm8655

mrpicto said:

Hi zx81, I think you misread my post. Nothing is defaulted, I haven't even broken any agreements yet.

But when you do the interest will freeze anyway, I think is the point. So essentially it won’t make any difference if you were to default the interest free accounts. If anything you might end up better off in the long run if you end up setting those for less than the full amount owing. Plus potentially your credit could suffer for longer if you end up defaulting at a later date.

sourcrates

Creditors don`t hold on to bad debt accounts for very long you see, they offload them to debt purchasing companies pretty quickly, who will not know or care how you have conducted your buisness with the previous owners of the accounts.

Once defaulted, all interest and charges stop, the balance is effectivly frozen.

Debt collection is a stage by stage process, and can take many months, even years, if you stop paying today, it will be a good 6-8 months before the debts get sold, add to that another year or so for the debt buyers to run through there standard series of letters, then you will be at the stage where you can make offers to settle.

The way things are going, the only people who will do well out of this pandemic are the debt collectors.

mrpicto

ok that all makes sense and is very helpful thank you.

So it seems the way forward now is to cease all payments, ignore all communications from creditors and somehow hold my nerve until they default the accounts then initiate the DMP. Do I wait until they have all defaulted before writing to start the DMP or start this on an individual basis with each creditor as each account defaults?

I'm assuming then that sending holding letters would simply delay the defaults by an extra month with no real benefit when all is said and done. I'm a little worried that some accounts would not be defaulted as quickly as hoped, and with the epidemic delaying things even more I could end up with many many months of additional fees and interest added to the accounts before eventually being defaulted, but I guess there's no way around that.

Also, do creditors really treat people who completely ignore them no more aggressively than those who have made contact to explain the situation etc? That just seems counter-intuitive.

Many thanks