Dealing with my debts

Freeatlast

I'm currently living abroad and have a lot of UK debt, around 70K, until recently I was keeping up with payments and managing to clear some off, however due to some interest free periods coming to an end and other unexpected expenses I got into a situation where  was having to borrow more every month to keep up the payments then the debts are rising not falling. For the last 2 or 3 months I have not made any payments on any. 

What is the best way forward, if I contact the companies now and offer to pay what I can afford, will they still keep adding on the interest? Should I let them fall into default first so at least the interest is frozen then offer a payment plan? other than damage to credit rating is there any other negatives to this approach? 

My job situation where I am is not secure and I want to avoid any legal agreement such as an IVA. 

EssexHebridean

OK - first thing is to say that you CANNOT borrow your way out of debt - I think you have now discovered that, but it might help someone else reading the thread. 

Defaults can be a good way forward - and allows for you to build an emergency fund ahead of entering a DMP (Debt Management Plan) - this sounds like the direction you are looking in? I assume that you have accepted that your credit history is going to be pretty much shot for a while, and fairly poorly until the defaults start dropping off? It sounds as though you may already be well on the way to accounts defaulting  anyway if you have already missed 2/3 payments.

Have you sorted out the issues that caused the debt in the first place? 

It might prove useful to complete your Statement of Affairs - SOA - and post it in here as we'll then be able to see whether a DMP is suitable for you. The SOA needs to be honest and open, and to reflect the situation you are in right now - so not "prettied up" to show what you think you should be spending, or what you imagine we "expect". You'll likely find it helpful to get your bank and card statements plus details of any loans etc together first as well - as it will ask for balances, interests rates etc. You can find a link to one of the SOA calculators we recommend in my signature - or there is a different one in one of the sticky threads at the top of the board. 

OP I've just looked back on your other posts on here - your debt has increased from 40k to 70k since March - is that correct? You HAVE to tackle this now - it's not going to go away, and will only get bigger. Deal with it now, get a plan in place, and you will feel far more in control.

Freeatlast

The debts to the banks were 40k, now 46K I also have a debt to my retired parents of 17K, they gave me a loan a while back to try and help me out but clearly that failed. This is my big concern, how I tackle my debt while still paying my parents, I know you should not proffer a creditor, but they are retired and would not be able to foot this bill. 

As I said I'm living abroad, and don't know how all of this can work while I'm here, I also have additional debts in the country I am living which I am keeping up with, as the place I live is not the sort of place you don't pay your debts, as there are very severe consequences.  Very complex circumstances and how I justify all of this is an SOA I have no idea. 

Freeatlast

Am I right in thinking that defaulted debts don't accrue any additional interest? 

EssexHebridean

Don't worry about justifying anything in the first instance. just complete it as well as you can - there is the scope to add additional lines in if some stuff that you have to pay isn't covered. The priority is to get everything - income and outgoings - in one place as this will also give you the start of a budget to work to.

Again - as you are now finding out - we usually advise against loans from family to help with clearing debts - it rarely works, because it simply means that not going through the process tends to disrupt the learning process. It's an "easier" way out than actually knuckling down, entering into a DMP and spending some time having to learn to watch your pennies - and often means that people will continue to use credit - a DMP takes away that route so you HAVE to learn to budget effectively. Hopefully the SOA will show that some form of DMP that you can include the debt to your parents in is workable. 

sourcrates

Do you intend coming back to the UK for at least 6 years ?.

Debts very rarely get chased abroad, what with the cost`s involved, tracing debtors, etc etc, its not economically viable for most banks to do this, yes in theory, if a reciprocal agreement exists then it is a possibility, but usually they just tend to either side-line the debt, in case you show up again, or after 6 years it goes statute barred.

The usual course of events after you fail to pay, is the bank will start its collections process, this includes calls and letters etc, if these go ignored for a length of time, then the debts goes to debt collection, who will rinse and repeat.

After a while the accounts may be sold on, the new owner will do the same thing over again, but unless you inform them of your whereabouts, its unlikely they will even know you have left the country.

You may end up with CCJ`s, but if your not resident, then it won`t really matter.

If you have the money to deal with it, then letting the accounts default will stop the interest, it does sound like you have a very complex financial situation going on, and the UK debts may be the least of your problems.

enthusiasticsaver

I think I would let them default given you have debts as well in your country of residence  (not relevant I know but I wonder what consequences are for there).  They are unlikely to chase you if you live abroad and have no system for recovering debts. I don't think a DMP will be suitable if you live abroad.  Having defaulted debts will be an issue if you come back to the UK within 6 years though as your credit record will be trashed.