Dealing with £39K debt

bcs7

Hello all,

I built up debt over probably the last 2 decades, sometimes paying off, but then getting more credit.
As the years went on and my wages increased I ended up taking out larger amounts of credit feeling I could handle it as I was always making the payments each month although increasingly this became the minimum payment so over time I was barely covering the interest.

A few years ago I just couldn't handle it and ended up stopping paying, made easier by the pandemic happening where on my bank accounts, credit cards and loans I was being offered payment holidays so just stuck my head in the sand and did nothing more.
At that point I had the following debt.

Credit debt - £109
Credit debt - £1,070
Bank overdraft - £1,497
Credit card 1 - £2,075
Credit card 2 - £5,302
Credit card 3 - £11,157
Bank loan - £19,117
TOTAL - £40,327

Fast forward to last year and I started to think about getting things sorted.

I opened a new basic account with a separate bank as the above overdraft, credit cards 1&2 and the bank loan were all with my previous bank. I paid off the small credit debt of £109 and started monthly payments with the £1,070. Both of these had already been handed over through several credit companies over the time I was ignoring everything. Then earlier this year I set up standing orders for agreed amounts with my previous bank with all of their debts. The credit card 3 account from a separate bank had already been handed over to a debt company and is being paid on a monthly direct debit.

The total debt now currently sits at just under £39,000 but I'm only paying about £200 per month off this and so it seems this will take 15 years to pay off, which has put me in a really depressed mood.

This has been exacerbated by receiving a letter today from a debt management company that has been given the bank loan debt which has confused me because I came to an agreement with my former bank back in April and have made 5 payments all on time. Apparently this was going to be reviewed in 12 months so I was taken aback they have now handed this debt on where I'm likely going to get hassled, which has not happened since all these agreements were in place.

Coincidentally the bank loan (my previous bank) and credit card 3 (separate bank) have both been handed to the same debt management company.

Also this evening I've tried to access my accounts for the 2 smallest debts to find that the websites of the collectors now don't accept my account details and on phoning them they've said they've handed me account back to the debt company they were acting on behalf. But the debt companies website also is not working. Their loss as I had saved some money and was going to make a payment which would have paid off half of their debt with the other half possibly getting paid next month. 

I was attempting to pay things off with the snowball approach and get the smallest paid off first but now I'm wondering if there is a better way?

The thought of taking 15 years to pay everything off is not doing much for my mental health.

Would there be the option of settling some of these debts early (possibly for less money) and how would I go about it?

RAS

How many of these debts have defaulted? And stopped charging interest?

What sort of emergency fund do you have built up?

Defaulted debts are bought for say 5-20pence in the pound. If you're not paying off much, you may well get offers of full and final settlements in a couple of years. They want 70%, you offer 10% and settle somewhere in between. Or stick to low repayments for a while longer.

bcs7

RAS said:

How many of these debts have defaulted? And stopped charging interest?

What sort of emergency fund do you have built up?

Defaulted debts are bought for say 5-20pence in the pound. If you're not paying off much, you may well get offers of full and final settlements in a couple of years. They want 70%, you offer 10% and settle somewhere in between. Or stick to low repayments for a while longer.

As far as I'm aware all of them defaulted because of the 18 month+ period where I stopped paying completely and was getting letters, emails, phone calls, text messages and voice mails chasing them up.
None of the debts are currently charging interest.

I don't really have an emergency fund yet as I was just paying the agreed amounts each month then there was not much left. In the last few months I've managed to cut down on various things like phone contract, internet, petrol etc as well as gaining a bit of extra income from selling things. So I have £500 from that which is what I was going to put to my smallest current debt which is £920 but now I'm thinking it may be better spent saving up. I can probably add to an emergency fund at a few hundred per month with my current finances.

Current debt situation is as follows:

Original debt                     Current debt
Credit debt - £109             £0 (paid off) - debt management company 1
Credit debt - £1,070          £920 - paying £10pm to debt management company 1
Bank overdraft - £1,497    £1,422 - paying £15pm to original bank
Credit card 1 - £2,075       £1,975 - paying £20pm to original bank
Credit card 2 - £5,302       £5,177 - paying £25pm to original bank
Credit card 3 - £11,157     £10,857 - paying £50pm to debt management company 2
Bank loan - £19,117          £18,617 - paying £100pm to debt management company 2
TOTAL - £40,327               £38,968 - paying £220pm in TOTAL

I assume I'm likely not going to get settlement offers from them until review dates?
When agreeing to these payments they said they'd review in 12 months, although the loan which is the biggest they've just handed on to a debt company anyway after I'd made payments on time for 5 months.

enthusiasticsaver

I would focus on an emergency fund for now if you have no savings.

There is no rush to deal with the debt if no interest is being charged.

 I would not enter into payment arrangements as they stay on your file long after defaults have dropped off. However if you have already agreed to the arrangements and they do annual reviews etc. Your best bet is full and final settlements but these tend to happen more if you are paying nothing or little towards them and don’t have arrangements to pay. Worth trying though. 

fatbelly

You should check your credit files to see what is being reported. Hopefully all your debts show as defaulted.

Don't pay anything for this. All three have free services and actually what you need to see will be on a statutory report if you just want to get three of those.

It is good that not all of your surplus in going to your creditors. You need to start a fighting fund and make settlement offers when appropriate.

You're not snowballing. You're on a (rather long) self-managed debt management plan

bcs7

fatbelly said:

You should check your credit files to see what is being reported. Hopefully all your debts show as defaulted.

Don't pay anything for this. All three have free services and actually what you need to see will be on a statutory report if you just want to get three of those.

It is good that not all of your surplus in going to your creditors. You need to start a fighting fund and make settlement offers when appropriate.

You're not snowballing. You're on a (rather long) self-managed debt management plan

I’ve checked my credit files this morning and can see they are all defaulted. Some having gone through several companies that have then handed them on. Do these drop off after a certain amount of time?

I received a letter yesterday telling me that the largest debt for the loan was being handed from my original bank to a company that had bought the debt. This company had also previously bought the second biggest debt off a credit card company.

Looking at my credit file this morning I can see they also now appear to have bought my other credit card debts in the last week so I’m expecting more letters saying they’ve been transferred.

So now the situation is I have 1 debt of £920 left with the first debt management company and all of the remaining 5 debts are about to be with the 2nd debt management company.

sourcrates

"Debt purchasing company" to give them their correct title, "Debt management companies" sell debt management plans to those who are unaware you can do them for free, there is a distinct difference in the name, and how they operate.

It`s OK for you to name names, so I`m guessing Lowell, Cabot, PRA Group, might be one or more of these buying up your accounts (other debt purchasing companies are available) Lowell are good for discounting, PRA Group not so good, so it can advantageous to know who you are dealing with, as although they all do a similar job, the way they operate differs quite a bit.

bcs7

sourcrates said:

"Debt purchasing company" to give them their correct title, "Debt management companies" sell debt management plans to those who are unaware you can do them for free, there is a distinct difference in the name, and how they operate.

It`s OK for you to name names, so I`m guessing Lowell, Cabot, PRA Group, might be one or more of these buying up your accounts (other debt purchasing companies are available) Lowell are good for discounting, PRA Group not so good, so it can advantageous to know who you are dealing with, as although they all do a similar job, the way they operate differs quite a bit.

Intrum for the smallest debt and Link Financial for all the others.

gwynlas

What exactly are you asking advice for? Is sounds as though you are self managing your debt plan and have an ending in sight so what if it is 15 years at current rates of payment. The companies will keep writing to you every 12 months but are easy enough to deal with if you tell them you are paying as much as you can afford and wish amount to continue.I went on paying my debts for about 10 years before I was in a position to offer FF having had proposals along the way.

fatbelly

If you can save on the side you can make full & final offers from your savings pot and reduce that timescale hugely.

Remember when a debt purchaser buys your debt they pay around 10p in the pound, which gives room for negotiation. Also they do not get proper paperwork so somewhere down the line you may be able to challenge them.

If i genuinely thought you were in this for 15 years i would suggest insolvency. But i don't think you need that

bcs7

gwynlas said:

What exactly are you asking advice for? Is sounds as though you are self managing your debt plan and have an ending in sight so what if it is 15 years at current rates of payment. The companies will keep writing to you every 12 months but are easy enough to deal with if you tell them you are paying as much as you can afford and wish amount to continue.I went on paying my debts for about 10 years before I was in a position to offer FF having had proposals along the way.

It was more about reducing this time as I'm not keen on still paying off debts in to my 60's.