Dealing with £39K debt

bcs7

I have had some problems with illness over the last year so much of what was discussed above was put on hold. The monthly payments were being made but I didn't get anywhere with making offers.

I have recently made an offer to my lowest creditor where I still owe £820 which is being paid at £10 per month.
I offered £180 as a final settlement which is 18 months payments, pointing out that I have 5 other debts which are much larger so this small debt would not be a priority. With my letter I did include a copy of my expenditure (as it was advised in the template). After reading some other threads on here I'm wondering if I should have left that out?

They called me today and said they would be willing to settle for £656 (80%). 
I've said I can't afford that so it will have to stay as the monthly payments and they've put a note on my file.

Is it now a case of just waiting and see if they come back again in future with a lower settlement amount?

I have 5 other larger debts totalling about £36K which I eventually want to make offers on also but was using this smallest one as a tester for the process first.

fatbelly

Yes, that's a big gap between what you are offering and what they want. It's not a quick process.

Give them 6 months. 

On the others see if you can find 25% as a starting point

bcs7

fatbelly said:

Yes, that's a big gap between what you are offering and what they want. It's not a quick process.

Give them 6 months. 

On the others see if you can find 25% as a starting point

This small debt (£820) is with Intrum but the other 5 (ranging from £1,230 to £17,600) are all with Link.
I sent an expenditure form with the offer, but I'm wondering if that was a mistake.

My concern with the others is if I make an offer on 1 of the Link debts will they want me to split it between the 5 they have as extra payments instead of writing off say the smallest? I have been receiving repayment review requests from Link on all these recently which I've not yet responded to.

stu12345_2

how many years will it take to clear debts, a debt management plan should be no more than 5 years.
if it is longer then look for a form of insolvency. but do not clear one creditor in preference over another and that is seen as preferential treatment and that is a no no if you are considering a form of insolvency 

bcs7

stu12345_2 said:

how many years will it take to clear debts, a debt management plan should be no more than 5 years.
if it is longer then look for a form of insolvency. but do not clear one creditor in preference over another and that is seen as preferential treatment and that is a no no if you are considering a form of insolvency 

At the current rate of monthly payment the 3 lowest debts will take 7 years to pay off.
The 3 biggest will take between 14-17 years to pay.

As 5 of the debts are with Link I assume trying to pay off them individually wouldn't be seen as preferential as they are all over to the same creditor?

fatbelly

The only realistic form of insolvency would be an IVA and they have their own problems. It's only 9 months since our first discussions. If those payments are not causing hardship, stick with the plan.

stu12345_2

my point is if you went via a debt management company like step change or CAB they would not recommend a dmp as it's too long 
they would advise insolvency such as an IVA for you ( which looks great in the eyes of the CAB or step change, but isn't in practice)

but as your doing your own plan, you run it to suit you and if you are prepared to run it for years,and you can afford to, then you have decided that's best for you

and if you want to try and clear each creditor one at at a time, then do it, but the point I make is if you suddenly have to go via insolvency, then any preferential treatment you made  in the recent past will be investigated by the official receiver

DisabledDan

bcs7 said:

I have had some problems with illness over the last year so much of what was discussed above was put on hold. The monthly payments were being made but I didn't get anywhere with making offers.

I have recently made an offer to my lowest creditor where I still owe £820 which is being paid at £10 per month.
I offered £180 as a final settlement which is 18 months payments, pointing out that I have 5 other debts which are much larger so this small debt would not be a priority. With my letter I did include a copy of my expenditure (as it was advised in the template). After reading some other threads on here I'm wondering if I should have left that out?

They called me today and said they would be willing to settle for £656 (80%). 
I've said I can't afford that so it will have to stay as the monthly payments and they've put a note on my file.

Is it now a case of just waiting and see if they come back again in future with a lower settlement amount?

I have 5 other larger debts totalling about £36K which I eventually want to make offers on also but was using this smallest one as a tester for the process first.

How you deal with this is up to you, but you already trashed your credit record and you are at the halfway point of the debt becoming statute barred unless they get a CCJ.

My approach to this would be to wean then off the £10 a month by writing them an email saying that due to a change in circumstances you are not going to be able to make any payments to your debts.

Do not be in a hurry to settle the cheapest or the ones with Link, the interest rate and amount matters when interest is being added but that is no longer the case so debt is debt is debt.  Also reaching a generous settlement at less than 60% off tells the other lenders that they can squeeze you for more, more per month and more as a settlement.  

While if you pay nothing to any of them you just prepare the ground for the next stage, they will threaten blah blah and you just ignore them, do not engage, not to emails nor calls, SMS nor letters.  You can demand they limit communications to just Royal Mail BTW. 

They have a choice, put it on ice hoping your circumstances change or start the cycle of letters that may lead to a settlement offer between 60% and 90% although the latter is usually reserved for debt they know they can't enforce or if the company or debt is about to be sold.

The mindset I have is that I have paid enough interest over the years and I consider 

What is Money
What is Debt

It turns out that they are the same thing; debt on a promise.

Money is debt, whether it be Government bonds where the Gov secures the bond on taxation of their citizens or money you are paid which has a promise to pay the bearer, but even that money does not really exist, it was created in computers on the back of these promises.

So basically all transactions are based on one thing, Confidence of repayment.

If a member of your family lend you £10,000 they would have paid tax on the gross of that, they can't lend you money they do not have.  

The lending institutions on the other hand create the money out of thin air, the amount they can lend is limited by their liquidity ratios, when they lend you money it make their ratios worse if they are not getting payments so they sell it and replace it with good debt.

The people who bought your debt paid between 5p and 12p in the pound for it, they are in an entirely different game, they are governed by FCA rules and for them it is all about getting as much as they can by using all sorts of threats and intimidation.  If you engage with them they can put pressure on you and gather information from you.  So they look at your credit record and make a decision.

They can disappear for a year or the debt can be assigned to a different collection company.  In my experience they only thought about a CCJ in year 5 but only one consumer debt company went through with it and that was from far bigger debts and far more players.  If I cared about my credit record I might have settled that debt, it was the smallest of my debts.

So when they write a letter before action your response can be,

I am sorry it has come to this, feel free to get CCJ, my circumstances are not going to change, I have spoken to debt charities  and they suggested that I will pay £1 a month to the Court for each debt as it is all I can afford.  So they can do the casework get a CCJ and probably get £72 back in 6 years. 

By reducing your payments to nil now you get them used to this being a delinquent debt, while if you pay or service a debt they see someone who has lump sums and a chance of repayment.

How you proceed is up to you, you won't be getting a new credit record any time soon and it might be that is a good thing if you need it for self discipline or if like me you want nothing more to do with any debt.  I pay my energy on receipt of bill and my water too, I don't like owing money to anyone and I would rather not participate in the debt game.

You might take a different route which is why you should be paying something to your emergency fund, maybe not to settle the debts but to cover an unexpected expense.

stu12345_2

dan is that true that if they got a ccj for £1 month, then in 6 years no more payments are due£72 in total and the debt ends or does the debt keep going after 6 years of ccj payments 

if the £1 a month stops at year 6 in the ccj, why do folk do £1 a month token payments for years and years  and that doesn't stop, they do this,  even if a ccj never happened and they simply agreed £1 as soon as the creditor got more demanding way back in the past for them

and when you did get a ccj for your large creditor, and you didn't pay, did they do an attachment of earnings can I ask?

sourcrates

stu12345_2 said:

dan is that true that if they got a ccj for £1 month, then in 6 years no more payments are due£72 in total and the debt ends or does the debt keep going after 6 years of ccj payments 

if the £1 a month stops at year 6 in the ccj, why do folk do £1 a month token payments for years and years  and that doesn't stop, they do this,  even if a ccj never happened and they simply agreed £1 as soon as the creditor got more demanding way back in the past for them

and when you did get a ccj for your large creditor, and you didn't pay, did they do an attachment of earnings can I ask?

If a creditor obtains a CCJ, the payment is normally set by the court at whatever amount of disposable income you had showing on the income/expenditure form you submitted with your defence.

CCJ`s by default, where no response to the claim form was received, are normally "forthwith" judgements, payment due in one lump sum, you can of course submit an N-245 to vary the judgement to an instalment order instead.

If your budget shows only £1 disposable income, its likely that the court would set payment at that amount, CCJ`s are enforceable for 6 years, so if you stop paying after 6 years and a few weeks, there is nothing the creditor can do to enforce the judgement.

Non payment could see an escalation to an AOE order (I believe they are called something else nowadays) if you are working, but only if you fail to pay the £1 per month.

Why do folk make token payments for years on end?

Pft, I don`t know, stability, fear of the unknown, not wanting a CCJ on file due to renting/work issues, many reasons I guess, if you know how the system works, you can dodge the raindrops so to speak.