Seeking advice for my disastrous debt

Emmel

DebtFreeWannabe27 said:

@sourcrates Do you have any advice on my question above (repasted here)

A question I'd like some advice on please....
My mortgage deal runs out in a couple years and we'll just remortgage with the same provider, so I don't think a hard credit search will be needed. One of my credit cards is with this provider though. Should I keep repaying that credit card in order to maintain a good relationship with them? If I default on that credit card, I worry they will use that against us when we renew our deal. 

I should add, I've started to try create a budget for spending, emergency fund and settlement fund, and trying to make minimum repayments to that credit card at the same time is going to be super difficult. It's also on an insane interest rate, so ideally, I want to default on that credit card to get a DMP in place. Will the bank hold that against me on mortgage renewal?

The CC from your bank wont affect your mortgage. The CC is unsecure. They will only care about getting the mortgage payment, and from my experience it makes no difference when getting a renewal deal.

Emmel

DebtFreeWannabe27 said: 

I'm going to propose bringing all of our finances into one pot and managing it all together as that would be easier and the debt could be tackled much quicker too. It depends how he feels about the situation though.

Personally I would keep finances separate. Allow him access to your accounts if you wish so he can see that you are not spending unnecessarily and he knows you are serious about working this out. He might also feel like he is being dragged into your mess by combining finances. I personally see no good in doing this. But perhaps those more knowledgable will advise better 

Sea_Shell

I'm usually for the "all in one pot" strategy, but in this case keeping everything separate for now might be best.   Open and honest, but separate.   Pay all the bills, yes.  But maybe not anything you're able to save.

Once you tell him, you're probably going to have to regain his trust regarding the way the debt has accrued, and prove to him that it's under control, over time.

Maybe hand over the financial reins for a bit too?

Is he "good" with money?   Or is he in a pickle too?

sourcrates

The mortgage and the credit card are both separate financial products, how you manage the card, should not affect the mortgage.

Remember the easiest approach is nearly always the best, thousands of mortgage payers are in debt management, they nearly all have to re-new at some point, if banks didn`t separate how they deal with secured debt as a pose to unsecured debt, there would be many more repossessions.

DebtFreeWannabe27

sourcrates said:

The mortgage and the credit card are both separate financial products, how you manage the card, should not affect the mortgage.

Remember the easiest approach is nearly always the best, thousands of mortgage payers are in debt management, they nearly all have to re-new at some point, if banks didn`t separate how they deal with secured debt as a pose to unsecured debt, there would be many more repossessions.

Thanks for responding. Seems like the same answer from a couple folks so that gives me peace of mind and means I'll default on that credit card next month. If charges for this take me over my credit limit, I guess I just hold on with doing nothing? This sitting on my hands situation is so alien to me! 

I've been thinking too about lenders that might take a while to default my account, such as virgin. Is there anything I can do to encourage them so I can get the dmp process marked off my credit file quicker? 

RAS

Have you set up your savings account, so you can squirrel away enough for an emergency fund by the time the default hits?

sourcrates

Non payment is the best way to get what you want, anything else simply slows the default process down.

And yes it does feel alien at first, like you, I'd never missed a payment before, let alone defaulted on a debt, but circumstances change, and to survive, you have to change with them, and knowledge is power when things go wrong.

As an example, lots of folk post on here fearing legal action by creditors, they have all been watching far too much telly most of them, and always tend to think worst case scenario.

When you do your research, you find that that around 99% of creditors prefer to use debt collectors, than go to court themselves, legal action is mainly only used by debt purchasing companies who buy old defaulted debts, and only then if you continue to ignore all contact from them.

Once you have a plan in place, then things just continue as before, no drama usually.

You have to familiarise yourself with the various stages of debt collection, to train yourself to ignore all kinds of threatening letters, calls etc, the only letter to take any notice of is a pre-action letter, that usually precedes legal action, all else can be ignored.

We always attempt to give you good advice on this board, to set you up in the best position possible, so you know what to do, and how to best deal with various things that may crop up, but there are 1001 variables to each stage, creditors have choices, but they usually all follow very similar paths in how they deal with debts, but you can never be 100% certain that`s what they will do, however as a rule of thumb, our predictions are usually right.

So anything you don`t understand, any letters you get that you are unsure of, anything at all, post on here for advice, and please don`t panic, debt collection is a very slow process, creditor timescales mean nothing, there isn`t a scenario we won`t have come across before.

DebtFreeWannabe27

RAS said:

Have you set up your savings account, so you can squirrel away enough for an emergency fund by the time the default hits?

I have an ISA already set up that I was going to use and it takes a day or two to withdraw money, meaning I'm not as tempted to do that because it's not instantly available cash. Also tax efficient! 

DebtFreeWannabe27

sourcrates said:

Non payment is the best way to get what you want, anything else simply slows the default process down.

And yes it does feel alien at first, like you, I'd never missed a payment before, let alone defaulted on a debt, but circumstances change, and to survive, you have to change with them, and knowledge is power when things go wrong.

As an example, lots of folk post on here fearing legal action by creditors, they have all been watching far too much telly most of them, and always tend to think worst case scenario.

When you do your research, you find that that around 99% of creditors prefer to use debt collectors, than go to court themselves, legal action is mainly only used by debt purchasing companies who buy old defaulted debts, and only then if you continue to ignore all contact from them.

Once you have a plan in place, then things just continue as before, no drama usually.

You have to familiarise yourself with the various stages of debt collection, to train yourself to ignore all kinds of threatening letters, calls etc, the only letter to take any notice of is a pre-action letter, that usually precedes legal action, all else can be ignored.

We always attempt to give you good advice on this board, to set you up in the best position possible, so you know what to do, and how to best deal with various things that may crop up, but there are 1001 variables to each stage, creditors have choices, but they usually all follow very similar paths in how they deal with debts, but you can never be 100% certain that`s what they will do, however as a rule of thumb, our predictions are usually right.

So anything you don`t understand, any letters you get that you are unsure of, anything at all, post on here for advice, and please don`t panic, debt collection is a very slow process, creditor timescales mean nothing, there isn`t a scenario we won`t have come across before.

Thanks so much for taking the time to post this. Honestly really appreciate the advice and support I'm getting from this forum and just wish I'd found it sooner. I'm pretty nervous about the next few months going into this, but I feel so much support on here that I feel like I'm able to do it. Eventhough there will be things I'm not sure about, I know I can come back to MSE for advice. So again, thank you everyone! @lillypoo @Emmel @essexhebridian

Emmel

Its always a bit scary when those letter come through the mail. But what i found is that having gained knowledge from the wonderful people on here is that there is nothing to be scared or worried about. Virgin defaulted my account and its removed from my credit file, ive not had a letter saying they sold it in, very little correspondence from them but the other day a new account appeared on my credit report for their amount so i assume its been sold on to a purchaser. I await their letter and I will set up a direct debit with them. Think I then just have 1 creditor who I had an overdraft, loan and credit card with who I have had next to no contact with and its been almost a year.