Unsecured debt write-off on health grounds not to be considered due to having a mortgaged property?

timetosortthings

I have a 4k credit card debt which has never defaulted despite having paid a £1 payment every month for the last 6 years. I’ve posted previously about this debt situation and am trying to deal with it.

However, in doing so, I have a separate question due to the point raised in a conversation with NCO who manage the debt for Arrow Global, and it has me thinking.

• I asked if they’d write the debt off on health grounds, and after a brief discussion they said: "Regardless of what’s wrong with me, as I live in a mortgaged property, under no circumstance would they consider writing off the debt – its policy."

I fully understand this stance on Secured debt

But as this is an UNSECURED debt, I’m wondering what their methodology is for such a policy.

Any ideas?

MEM62

timetosortthings said:

But as this is an UNSECURED debt, I’m wondering what their methodology is for such a policy.

Simple, they are not writing the debt off while you have sufficient assets to clear it - ie the equity that is in your house.  Ultimately, the creditor could use litigation with a view to securing the debt by means of a charge on your house.  

sourcrates

You just got the opinion of one call handler, applying the policy as they see it, you may get a much different answer if you were to write to them and give an exact description of your issues, and how they affect you.

These decisions are taken at a much higher level than the call handler, which is why it`s best to never call these companies, and do everything either in writing or by email, as it`s much more preferable than using the phone.

The basic logic behind such a policy would be that you have a tangible asset they could, potentially secure a charging order on, should they wish to go that far down the legal route, which for a debt of 4k is extremely unlikely, so don`t worry on that score, but that would perhaps be their basic train of thought here.

It essentially makes no difference if a debt is secured or not, a creditor can still pursue you through the courts and if they win, obtain a charging order, although it is a process where you have your say at each juncture, it rarely happens on consumer debts, but it is possible.

timetosortthings

I realise that Lenders (& Debt Management Companies) will naturally look for ways to get the debt cleared, paid or settled.

I was just a little surprised about the mention of such a policy for unsecured debt.

As always, when having sort advice from online forums and debt charities (like Step Change) much would be made about focusing on debt payments in a prioritised manner, i.e.

1. Priority Bills
2. Secured Debts
3. Unsecured Debts
4. Other Debt

With Unsecured Debt coming towards the bottom of the ‘who to pay list’ in terms of paying what you can from any funds left (even a token payment, if anything). My assumption was (right or wrong) that in making a ‘what you can afford payment’ there was never any likelihood that the unsecured debt (no matter what the value) could ever result in a charging order even being attempted.

In truth, I thought the fact it was unsecured meant a charging order couldn't happen at all.

sourcrates said:

It essentially makes no difference if a debt is secured or not, a creditor can still pursue you through the courts and if they win, obtain a charging order, although it is a process where you have your say at each juncture, it rarely happens on consumer debts, but it is possible.

Based on what you've said I do now recognise that none of this is clear cut, and guess much depends on timing, the person, the lender, the circumstance, the debt value, etc

Thanks for your assistance