Credit Card Arrears Scotland. Lender Wants Me to Fill Out Their Budget Planner.

debtslave2024

I have built up approximately £14400 of debt spread over 4 credit cards, and an overdraft. In the past year I started struggling to pay the credit cards, and stopped paying them roughly 4 to 5 months ago. I am coming to the end of the ‘breathing space’ arrangements for the cards, and now have to setup some sort of payment plan. I speak to the lenders over the phone, once a month.

This happened partly due to my income being slashed in the post pandemic period. I realised that the only real solution to my money problems was to secure a second job (which I have done.) I will not be paid by the second employer till the end of August, and am just trying to hold the credit card companies at bay, until then.

One of the card companies has asked me to fill out their budget planner, and detail my outgoings, and income. They want it done within 10 days (don’t know what the rush is?) I am slightly reluctant to fill it out at this stage for 2 reasons: a) It asks me to provide full details on my other credit card debts, and b) I will not be able to include income from second employment, as I will not be paid till end of August.

The minimum payments for my credit cards are going up and up every month, and some of them are quite significant minimum payments at present, due to the arrears building up over 4 to 5 months. From memory, I think the minimum payment on one card alone is now sitting at over £200 (which I cannot pay just now.) I am concerned that if reveal the full details of my credit card debts across all cards, and inflated minimum payments in the budget planner the lender will view my ability to setup a payment plan unfavourably.

My question is, should I fill out the budget planner in full at this stage, and reveal the full details of my credit cards debts to other companies with a single lender, and also why do they want it done in only 10 days? Personally, I would rather have waited till the end of August, when my finances are hopefully stabilising.

Thanks in advance.

Grumpelstiltskin

Forget Breathing Space running out it doesn't matter.

Do not make any payments until the debts have defaulted, I guess none of them have yet.

You do not have to give your creditors details of your budget at any time , only a court can ask for that information.

Start by reading this thread In Debt and Wannabe Debt Free? First Steps! — MoneySavingExpert Forum

Complete a honest SOA format for MSE and copy and paste on here then when we see your full financial position we can advise you the best way forward.

One thing you need to do at the moment is to save as much as you can in to an emergency fund, you will need this in the future.

debtslave2024

@Grumpelstiltskin. Thanks for taking the time to reply. I will read the “first steps” next. I am not sure if the thread you mention covers the topic of “defaulting.” If you have time, could you please explain why I should “default,” and why it is to my advantage? I am not financially astute, and with my limited knowledge thought that simply going into arrears was effectively a default. However, after reading several posts on here, I am assuming that is not correct.

Thanks.

RAS

If your creditor issues a default, your credit record will recover in 6 years time. Regardless of whether you've paid anything towards your debt.

If you make payments before a default is recorded, these will be reported as Arrangement to Pay (AP) markers. These stay in your credit record for 6 years after the debt is paid off, so damage your credit record longer.

Grumpelstiltskin

Yes you need the debt to default, it stops interest and charges being added.

A default stays on your credit record for 6 years, it then disappears whether it has been paid or not, if you carry on making payments without the default it shows as an arrangement to pay and stays for 6 years after your final payment.

One of the biggest mistakes you can make is panicking and jumping into a DMP too soon before you fully understand what you are doing. Nothing terrible is going to happen if you go months without paying.

Another thing to remember is never phone your creditors, communicate by snail mail if you can, also ignore any phone calls, texts. E Mails etc but always open anything you receive by snail mail

debtslave2024

Thanks for both replies. I was panicked, with the thought of bailiffs at the door etc, and was keen to setup an arrangement with the card companies or a DMP company asap. However, I think that it would be very unwise of me to jump into anything right now. I will be honest, in the years after the pandemic, my finances became increasingly chaotic for various reasons, and I was overwhelmed on multiple fronts. Only now, with the second job that I have quickly settled into, are there any signs of stabilisation.

Looks like I have a lot of reading to do, as I have never been in this situation before. 

If I am understanding both responses correctly, why does making an “arrangement to pay” stay on your credit file longer? In my mind, making an “arrangement to pay,” should be a positive thing?

Grumpelstiltskin

No arrangement to pay can last much longer, ie. You pay your debt for 5 years, then the arrangement to pay stays for a further 6 years a total of 11 years from the start of your journey. The default drops off 6 years from the start whether debt has been paid or not.

Forget bailiffs, that doesn't happen.

You need to change your mindset and realize you can be in control not your creditors, you can run your own DMP, many people do, you decide what you can afford to pay them.

It is important whilst you are not paying your debts to save an emergency fund, you need it for when something goes wrong and you don't resort to credit to pay for it.

debtslave2024

RAS said:

If your creditor issues a default, your credit record will recover in 6 years time. Regardless of whether you've paid anything towards your debt.

If you make payments before a default is recorded, these will be reported as Arrangement to Pay (AP) markers. These stay in your credit record for 6 years after the debt is paid off, so damage your credit record longer.

Does an “arrangement to pay” marker even cover participating in a Debt Arrangement Scheme. I have the option of setting up a DAS here in Scotland. I believe that in England it is slightly different, and called a DMP?

Thanks.

RAS

Ok, Scottish law is often different. It would really help if you can edit the title of your thread or first post to mention Scotland.

debtslave2024

@RAS. I have tried to edit post title, however cannot seem to do it on iPad. I have phoned the lender who were sending me emails daily about filling in the budget planner with wording like “Urgent - You Need to Fill Out The Budget Planner” by a certain date. I was not comfortable with this, as it made it sound like an obligation. However, I have learnt from this thread, that it is not an obligation. I told them that, and they agreed. 

I have also told them, that I want to hold off proceeding until I get through the first month of my second job - by then my financial situation should have stabilised by then. I do not see the point in filling out lengthy income and expenditure forms, until in my mind my second job is guaranteed to continue (so far, so good.)

I also intend to speak to Citizens Advice, and Payplan again, who will be familiar with the differences in Scottish law with regards to debts.

[EDIT] I can now edit my posts, and have added the word Scotland, to the post title.

Thanks again.