Better Off Not Clearing Debts?

johnd73

In attempting to correct a lifetime of financial miss-management, resulting in debts amounting to over £44,000. I have come to the conclusion that I would probably be better off not clearing my debts and using a sum of money recently available from wider family to improve the living conditions for my children (i.e. not sharing a bedroom).   Other than an energy debt, none of my debts are increasing or are accruing any interest. I make a small payment to all of them (£2-£5 a month) and my understanding is that they will be wiped on my death.

I appreciate that this goes against all debt advice, but I just can’t see how clearing some or all of the debts from a lump sum would benefit the day to day life of me and more importantly my children. Any advice or thoughts would be greatly appreciated.

tacpot12

How do you propose to improve the living conditions of our children? Do they live with you, and if not how much contact do you have with them? Would the improvement make a difference that they would notice, i.e. have the complained to you about having to share a bedroom? 

RAS

This depends on so many other issues.

Debt does not die with you. Any assets you own when you die would have to be used to pay them off, even if that means your executors selling them. 

This is particularly true because you acknowledge your debts every month when you pay that £2-5 so they will never become statute barred. How long ago did they default? Check your credit records.

fatbelly

On your death, debts would be paid from your estate. Do you own a property?

johnd73

Thank you for your comments and for clarifying that any debts left after my death would be recovered from my estate. I do own a property on an interest only mortgage of £98,000 with the property value being around £230,000.  My thinking is if I increase my monthly payments and/or use a lump sum from family to clear debts, then I have less money each month for day to day living or the chance to provide a bedroom for my teenage daughter.

Any further thoughts or comments appreciated.

RAS

Do you have an emergency fund? Life insurance to cover the capital cost of the mortgage?

fatbelly

If you have access to a lump sum, the way forward may be to try to settle these by way of full & final settlement.

If these are Consumer Credit Act debts then we recommend that you first do a 'CCA request' which checks if they can access your initial agreement. If they can't, then the debt becomes unenforceable in court, and strengthens your hand

RAS

Agreed with fatbelly re the CCA request. Given you've been paying peanuts for a long while, there's a decent chance that the existing owner doesn't have the require documentation. 

If they can't produce it, you stop paying and if they've still not produced it, it becomes statute barred in 6 years (England and Wales).
If they can produce, keep paying the £2-5 and hopefully they'll offer a decent discount for a full and final settlement. Always counter offer a lower percentage.

Karonher

You mentioned a daughter but not the sex of the other child/children. There is differing advice on the age of siblings sharing a room.

This is from the NSPCC site

Legislation states that children of the opposite sex over the age of 10 should not share rooms - and that this can be considered overcrowding.

This is from a lawyers site

Legally, there is no specific age at which children of different sex from the same family must be provided with separate bedrooms

johnd73

Thanks for all the comments and advice. I will look into the CCA Request. Most of the debts are from credit cards and have been passed to numerous debt collection agencies over the years.

fatbelly

johnd73 said:

Thanks for all the comments and advice. I will look into the CCA Request. Most of the debts are from credit cards and have been passed to numerous debt collection agencies over the years.

Let us know what comes back