Credit Cards - Close to Default. Will a Single Token Payment Delay it for Another 6 Months?

sourcrates

debtslave2024 said:

@Sourcrates. Given the employment situation, I will seriously need to consider this default option. However, can you clarify one thing please. One of the lenders suggested that if I do not start making payments to them again soon, then “I could be liable to pay the balance in full.” Which is of course impossible given my current predicament. Is this just a coercion tactic?

Thanks.

Yes, in a way, it basically means they will default you if you don`t make payment arrangements.

You obviously can`t make payment in full, its just wording they use to invoke the terms of the consumer credit act to default the account, close it down, and likely sell the balance to a 3rd party.

debtslave2024

I have managed to setup payment plans for lowish amounts with 2 card companies, and working on another 2. I did indeed lose my second job as anticipated (in an unfair manner in my humble opinion, but that is another story.)

I have made “token payments” to the 2 cards I have not managed to setup a payment plan with yet. I am confused over whether this “token payment” will avoid default for now, or does it need to be the “minimum payment” which of course since I have not paid for months and months has gone up and up.

I asked a credit card company directly if my token payment would avoid default, and the answer was no. I may have misunderstood responses at the start of this thread that I took as “a payment will kick default another 6 months down the road.”

Can anyone please clarify, if a token payment would “kick default another another 6 months down the road,” or are they wanting the “minimum payment” which I cannot afford.

I still have some regular monthly income, but it is very low vs outgoings. I also regularly look at the job market but in my area but the offerings are very poor indeed, and given the amount of applications I have made in previous months, I am beginning to fear that I have been placed on the proverbial scrapheap.

All my credit card accounts are currently in arrears by a couple of hundred to a few hundred (those with payment plans, and token payments.)

Thanks.

sourcrates

Anything other than full contractual repayment can and likely will, trigger the default process to kick in.

Why are you trying to "kick the default another 6 months down the road"?

What`s the reasoning behind that? If you can`t make any payment its much simpler to just tell them so.

debtslave2024

Thanks Sourcrates. Why? I have been given lots of information from all different sources, and I am just fearful of the impact a default will have on my future. Yes, after doing lots of reading I have realised that no bailiff is going to try and take my car, or try and force me to sell my house, but I am just nervous about the whole situation. I have never been in a situation like this before. I always worked, and paid my bills, and things have changed in a way that I could never have anticipated.

I wanted to “kick default 6 months down the road” in the hope I would get a permanent job, but the chances whilst not impossible are low. Much of the employment offerings are zero hours, a few days here and there, or 3 month probationary contracts (where on a whim they can get rid of you.) I have been reading about the impact of the recent budget on already struggling employers, and supposedly things on that front will worsen.

Grumpelstiltskin

OK Once you default it will disappear from your credit record in 6 yeas time whether  you clear it or not

If you pay before it defaults then it won't clear until 6 years after your final payment. So if it takes you 5 years to repay it will be on your credit report for 11 years.

So why are you wanting to delay a default?

debtslave2024

Thanks for the previous new comments. It is stuff like this that make me nervous:

https://www.stepchange.org/debt-info/debt-collection/scotland-court-action.aspx

Information like this from a debt help organisation is putting “fear of the unknown” into me. My 4 debts are under £4500, some quite a bit lower. The rational part of my mind says that this will not happen, but then there is the  fearful part of my mind that hates uncertainty, and uncharted waters!

Did some research on this supposed form 6A, sometimes applied under Scottish law. This is what I found:

Receiving a Form 6A—the Simple Procedure Notice of Claim—does not immediately obligate you to pay the claimed amount. Instead, it signifies that a legal claim has been initiated against you, and you must respond appropriately within the specified timeframe.

Your Options Upon Receiving Form 6A:

1. Admit the Claim and Pay: If you agree with the claim, you can choose to pay the amount in full.

2. Admit the Claim and Request Time to Pay: If you acknowledge the debt but cannot pay immediately, you can apply for a Time to Pay Direction, allowing you to make payments in installments or at a later date. 

   Legislation.gov.uk

3. Dispute the Claim: If you disagree with the claim, you can submit a defense, providing reasons and any supporting evidence.

Important Considerations:

• Timely Response: It's crucial to respond within the timeframe specified in the Form 6A. Failing to do so may result in the court granting a decree (judgment) against you by default, which could lead to enforcement actions. 

  StepChange

• Seek Advice: If you're uncertain about how to proceed, consider seeking legal advice or contacting organizations like Citizens Advice Scotland for guidance.

In summary, while Form 6A does not compel immediate payment, it requires prompt attention and action to address the claim appropriately.

p.s. from my limited understanding, Scottish law is supposedly a bit more lenient on this type of debt (not sure.)

RAS

Do you live in Scotland?

debtslave2024

RAS said:

Do you live in Scotland?

Yes, I do.

ManyWays

I am not a Scottish expert but the way StepChange has explained what you do in Scotland if you get a form 6A sounds similar to what you do in the rest of the country if you get a form N1.  This is in formal language which sounds scary as people have to take action fast when they are being taken to court, but that doesnt mean that it is likely you will be taken to court.
If you want to reduce the chance of being taken to court to as low as possible, start making token payments to them, token because it sounds unlikely that you can afford anything more? Also it doesnt sound as though you expect any big improvements in the near future, so there is no point in hoping that you can restart normal payments in a few months.
But defaults are good as your credit record gets cleaned up sooner so your ideal may be a default followed by token payments.

sourcrates

The stepchange information is worse case scenario, I don`t think the Scottish debt collection process differs that much from the rest of the UK to be honest.

In order to take legal action, a debt must first default, but if everyone took legal action on every defaulted debt the courts and legal system would grind to a halt, as they would be overrun with cases, its simply not practical to take everyone to court.

This is why there is a debt collection industry, lenders in the vast majority of cases, assign there bad debts to collection companies, or sell them to debt purchasing companies, who will then chase you for the money.

This process can take many months, years sometimes, the world of debt collection moves very slowly mostly.

Almost all of these companies will accept whatever payments your budget says you can afford, so there is little point in struggling, just let the dice roll and pay what is affordable.

Making token payments is not a long term strategy, but shows goodwill on your part, the default process will likely continue regardless, but any form of payment to whoever owns your debts will limit the potential for legal action, as your payments are made according to your available disposable income, taking legal action when you have no money is pointless, and if that is your worry, just keep your creditors informed of your circumstances, all it takes is a letter.