Dealing with £39K debt

stu12345_2

does that mean Dan is right eg you owe £3000, you can only afford £1 a month, court fees take that to £3250, but in reality you pay only £72 grand total, then the debt stops

what if you earn more during the 6 year period

sourcrates

stu12345_2 said:

does that mean Dan is right eg you owe £3000, you can only afford £1 a month, court fees take that to £3250, but in reality you pay only £72 grand total, then the debt stops

what if you earn more during the 6 year period

Creditor doesn't know what you earn, or if your income increases, they can ask you to pay more, but can`t force the issue unless they pay another court fee to vary the judgement, you can always produce a budget that shows only the £1 is affordable, so it would be a waste of time for them.

stu12345_2

so if your very skint then a ccj should not be feared cos it ends after 6 years and you could land a good job very quickly after the £1 ccj has been awarded, but you still only pay £1 a month.

cos it is never re assessed by the court again once it had its decision for £1 a month

unlike an IVA where every time you earn more you pay more each month for 5 years
( bad comparison but you get my drift)

sourcrates

That is essentially correct, yes.

bcs7

fatbelly said:

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.

The plan as in carry on with the monthly payments and wait to see if they offer settlements?

bcs7

stu12345_2 said:

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

I've realised that in my original post from last year I didn't mention I had spoken to StepChange after months of not paying the debts and being chased with letters. They did indeed advise an IVA but left it with me and I didn't go back.
I was put off by the thought they could have access to my accounts and control over what was spent.
I do sometimes have money from family or get money from selling things that I collect. It's not a regular income but I assumed if anything like that appeared in my accounts they could force it to go to the IVA.

This is why I went down my own route and made arrangements to make small payments to all the creditors.

Ultimately what I want is to clear the debt as fast as possible and as cheap as possible.
Once the debt is gone I intend to save towards buying a boat to live on.

bcs7

DisabledDan said:

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.

So if I wanted to reduce the size of the monthly payments I could just write to them telling them so and then reduce them?

I gave Intrum an expenditure form with my settlement offer letter as that was advised in the template I used (I think this was National Debtline).

I'm being chased by Link (email/texts/letters) telling me it is now time to review my monthly payments and to fill in an expenditure form. It's all worded to say they want to make sure I can still afford my payments but I assume this is just a ruse to find out the state of my finances in order to pressure me in other ways?

bcs7

Just as an update, my current situation is:

Credit debt - £810 - (monthly £10)
Bank overdraft - £1,215 - (monthly £15)
Credit card 1 - £1,740 - (monthly £20)
Credit card 2 - £4,875 - (monthly £25)
Credit card 3 - £10,300 - (monthly £50)
Bank loan - £17,500 - (monthly £100)
TOTAL - £36,440 (monthly £220)

Current rate of payments are going to take around 15 years to pay off.
I have no savings or emergency fund at the moment but I'm working on that and will be selling some things.
I hope to make at least a few thousand in the next few months.
I'm wondering If I should aim to get around £10K saved in the next year or 2 and then make offers to all creditors at once. They may send me offers individually in the meantime that I could consider?

stu12345_2

£10000 may work if the debts are very old and you can show the money isn't coming from you,say it's from a third party and you are on a low income, otherwise look for discounts of 20 to 30% off

sourcrates

Original creditors rarely want or offer settlements, ideally you want the debts to be sold, as the best settlement deals come from debt buyers such as Lowell/Cabot/Arrow Global/Intrum/Lantern etc.

There are a few major players in the debt purchasing industry, who buy old debts in bulk for literally pennies in the pound.
PRA Group are not too hot to trot, they don`t like to deal, but the majority of the others will.

Obviously this will take time, 2/3 years maybe more, so saving a good settlement fund is essential.

You should not confuse "Debt purchasers" with "Debt collectors".

Collection companies just collect on behalf of banks, some multi task, by being a debt collector, and a debt purchaser, others are stand alone debt buyers.

The clue can be in the company name, and in what they write in their letters, if they mention "their client" then they are simply a collector, if they have bought your debt, they state as much in the letter.