We're aware that some users are experiencing technical issues which the team are working to resolve. See the Community Noticeboard for more info. Thank you for your patience.
📨 Have you signed up to the Forum's new Email Digest yet? Get a selection of trending threads sent straight to your inbox daily, weekly or monthly!

I am terrified

Options
13»

Comments

  • Alayne_
    Alayne_ Posts: 8 Forumite
    First Post
    Following the advice I ignored debts. 

    I am starting getting default notices. It now makes me terrified that they will take me to court. 

    I spoke with stepchange and they claim there is no difference in credit score whether you set up dmp straight away or way for defaults. 

    I am starting stressing so much again
  • birdsfoottrefoil
    birdsfoottrefoil Posts: 168 Forumite
    100 Posts First Anniversary Name Dropper
    Hi! I think they mean by this that “Arrangement to Pay” markers and “Default” are often seen as the same “black mark” on a credit score. However why people on here advise you to default first is that the “Arrangement to Pay” marker will stay on your credit file for 6 years after you clear the debt, while “Default” also goes after 6 years. 

    So if you default today and take 4 years to pay off the debt the “default” marker will drop off your file in 6 years from today, while if you don’t default and are in an “arrangement to pay” for the same 4 years it will be a further 6 years after that for the marker to drop off - a total of 10 years from today.

    Hope that helps! I’m fairly sure it’s 6 years but I’m sure I’ll be corrected if it’s not.  


    14.05.2014 Total unsecured debt £15,360.99
    20.06.2024 Total unsecured debt £15,087.29
    29.07.24 Total - £15,681
    12.09.24 - £16,187 oops…..
    Oct 24 - £18,325
    Nov 24 - £18,185
    Dec 24 - £18,131
    Jan 25 -£18,347
  • RAS
    RAS Posts: 35,574 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Calm down.

    Creditors who haven't defaulted the debt can't take you to court, for a start.

    Are you sure the some of the creditors have registered defaults against the accounts? They may pursue in-house, out source or sell the debt. Have they told what they are doing and have you received your account number and details of how to pay? If so, set up affordable payments on-line and they are unlikely to bother going to court. Not worth wasting money on fees when they are getting payments with no cost.

    So what do the accounts look like on your credit records (check all three).

    By the way, Stepchange are right but their answer is incomplete. Defaults do no more damage to your credit record than AP markers. But AP markers usually damage your credit records for much longer, so waiting for defaults reduces the number of years before your credit record improves.

     

    If you've have not made a mistake, you've made nothing
  • ManyWays
    ManyWays Posts: 1,336 Forumite
    1,000 Posts Fifth Anniversary Name Dropper
    So 6 months in, how many defaults or default notices do you have? How many other creditors are there?
    Have you managed to save an emergency fund and have you switched your banking to a bank you don't owe any money to? 
  • sourcrates
    sourcrates Posts: 31,546 Ambassador
    Part of the Furniture 10,000 Posts I've been Money Tipped! Name Dropper
    Its always best to research these matters, you`ll find it avoids panicky posts written under stress.

    In order to take legal action, you first have to break the terms and conditions of your agreement, that means you must first default on the agreement, only after a default notice is issued under sec87(1) consumer credit act, and you fail to respond to that notice within 14 days, and a default is then registered on your credit file, can a creditor even consider taking action through the courts.

    As you have been advised previously, in 99.9% of cases, a debt collector is used to collect the debt, legal action is a last resort, not a first response in by far the majority of cases, please stop stressing unnecessarily.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • DankVielen
    DankVielen Posts: 88 Forumite
    10 Posts Name Dropper
    edited 8 May at 10:05AM

        Alayne_ said:
        Following the advice I ignored debts.
        I am starting getting default notices. It now makes me terrified that they will take me to court.
        I spoke with stepchange and they claim there is no difference in credit score whether you set up dmp straight away or way for defaults.
        I am starting stressing so much again

    I am sorry you are feeling the stress of all of this but let me reassure you that it is extremely rare to be taken to Court for consumer debts, especially if they do not think there is a chance of getting any money.
    My total debt was over £90,000, the trouble started in the 2007/08 financial crash, I had lots of different lines of consumer credit mostly to support my business cashflow so I could pay staff if I had not been paid. I paid most of them off within 56 days and they kept increasing my credit limits.
    When that crash happened the sources of contracts dried up and I was forced to let people go, something I found far harder than failing myself. I then worked on a speculative 7 figure project that had no cost to me but I had to cover my overheads, occasionally I would find a small project and improve balances but in the end I crashed and burned.
    Foolishly I serviced the debt for years with small payments of £30 a month each, then less and less eventually settling at £1 a month, I did not know that these micro payments reset the statute bar period to 6 years.
    At first I used to read all these nasty letters and believe the nonsense they wrote actually meant anything, I then started putting all the debt letters unopened in a bag, I would google the return addresses and see it was just another debt agency.
    I went through some pretty bad anxiety, my Ex decided to abandon ship and took our kids even though this made things even harder for all of us.  I lost my home and redirected my mail to a friends house while I was homeless, that lasted around six months before my health got bad enough that I got access to a shelter.  I then started to rebuild my life, I was 15 months in that place and it gave me great perspective on what is important and what is not so important.
    The letters and threats all continued but nobody took me to Court, nobody ever called at my friends house, I had used dedicated email addresses for each creditor which redirected to a mailbox I did not access.  I took some debt advice and it was explained to me that consumer credit companies rarely take their customers to Court.  It was explained that they create money with something called percentage reserve or similar ( I can't remember the name of it) but basically they can lend money they create on their computers and the only limits are ratios of debt to their security deposits.  As bad debt looks bad on their balance sheet and may lead to restrictions on their lending they sell the debts off for pennies in the pound, this takes the bad debt off their accounts and onto the accounts of debt consolidators.  It is these companies who then own the debt and appoint debt collection companies to chase the debt but again, these companies rarely take the debt to Court unless they are sure they will get something.
    They do not have much of a source for determining whether they will get a result, they can look at your credit record which shows they are not the only debt you defaulted on.  In all that time only one consumer debt company obtained a CCJ, it was one of the smallest debts, three to four thousand I think, they did this because the debt was close to the six year statute bar limit and because they saw what looked like my bank authorising an overdraft.  The truth of the matter was my bank was reducing my overdraft and because I had asked for time to reduce the amount owed to the new limit they did a credit check.  The company never got a penny of their CCJ, it expired just like the other debts.
    Now these companies can make all kinds of threats, they are worded to create anxiety, but it might help if you understood the cycle of letters. It is critical that you do not reply to these letters, do not make any payments and do not engage in email or phone or text.
    1. You stop payments and inform the company you hit hard times and will not be able to make any payments in the foreseeable future.
    2. Debt Default letter informing you agreement terminated and debt has been sold to Debt Consolidator (DC)
    3. Letter from DC saying they now own the debt and have appointed Debt Manager Company (DMC) to collect the debt.
    4. Letter from DMC telling you they have appointed Debt Collection Agency (DCA) and give you their name.
    5a. Intro letter from DCA01 saying from now on you should make payments to them, sometimes they increase the size of the debt by their fake fee but this is later removed.  They add these fake fees to create a sense of urgency.
    5b to 5f Letters from DCA01 which escalate in their fake urgency and fake threats, in fact the urgency is theirs because if they do not get a payment or have any engagement from you they get fired and a new DCA is appointed.
    5g. Before being fired by the DMC the first DCA will offer a discount, they won't say how much but encourage you to call to discuss. If you make the mistake of contacting them you reset the amount of time they have to enforce the debt to 6 years, but if you don't engage they will have 6 years from the date of default and/or last payment (this depends on the terms of the original credit agreement).
    5h. Just before being fired DCA01 will write offering a specific discount to settle the debt, this early into the game the discount will probably only offer around 30% off, later other companies will offer between 60% and 95% off (based on my records)
    6. If you continue to not engage and not make any payments you will receive a letter from DMC saying they have appointed a new DCA.
    7. The cycle of 5a to 5h repeats itself, the wording changes, some of them get quite creative they threaten doorstep visits (which never happened on any of my debt), they threaten going to Court and throw different discounts at you. Some DCA's do employ doorstep debt collectors, these have no right of entry and should be told to go away.  You can find some very funny videos on YouTube of people asking them to go away.
    8. A new DCA is appointed every 6 months or so at first this later stretches, sometimes the DMC says they have brought the debt back in house.  They then threaten legal action and become more desperate as the 6 years wind down.
    9. If a company is going to take you to Court it will only be because that is their modus operandi and because they think/hope your situation will improve and they want another 6 years to harass you.  So the letter you will get is called a Letter Before Action, this is not like the previous letters, it will quote the legislation and it has to follow the "pre-action protocol and practice direction" (google that if you want more details) it will likely come from a firm of debt solicitors (that does not mean all debt solicitor letters are letters before action).
    10. If like me you kept your address one step behind your actual address using redirect or friends, you may find that the company got the CCJ by writing to you at an old address, you were never informed and so never put in a defence.  It costs around £350 to reverse these but only if you have a valid reason of now owing the debt.  By the time I found out a CCJ had been obtained several years had passed.
    The CCJ changed nothing because my approach was not to engage and not to pay, this is not something I recommend to others, it just suited my life, my principles and my objectives.
    If you are a person who has virtually no income except for say benefits or a low paid zero hours contract then a DRO would be a better solution, this is like a mini bankruptcy.  I could not use this option as it had a limit of £20k at the time, I think this is now £50k.
    Bankruptcy was also an option for me but I was already 4 or 5 years in before I considered that and I decided to wait it out.
    What most people do is a DMP, essentially they are waiting for the stage where the 60% discount is offered as full and final settlement of the debt.
    I gather that this was your chosen route and you just need to be patient, even if someone took you to Court you don't have to attend, what would be the point if you have no defence.  However, why would they take you to Court at this stage when they still have 5.5 years to chase you before the debt hits the 6 year statute bar limit.
    I actually did go to Court with a different creditor, it was not a consumer debt company, but I went because I had a dispute, I filed a defence, lost, then appealed and won.  They had to pay £8k of legal fees and they did not get what they wanted.
    As you are just seeking a 60% odd discount all you have to do is wait, you can't tell them that this is your strategy and you need to ignore their contact.  You can use GDPR to limit their contact to Royal Mail letters and not Email, SMS etc.
    Personally I found Stepchange very condescending, to me they are part of the system and I chose not to use them, later I spoke to National Debtline who were far nicer and gave good advice, I was not seeking a DMP but they were very helpful as explaining it all.
    Once you know you are simply in a cycle of auto generated letters where only the details of your debt differ from the next person at your stage of debt, you realise that this is just a process.
    You do not need to worry about the threats, they are meaningless, sometimes it takes a year and two or three DCA's to get the decent discount, so hold fast and try not to worry.
    I am not immune to stress and anxiety, so I am not dismissing how you feel.  I myself started receiving letters again in January and even though I know the debt is long expired it brings back those feelings.  
    Just try to be strong, remember you are in a process and you have an objective.  Do not bin your letters, just file them by debt and then by date.
    Default notices are great news, they show that it is working, the debts are moving to the next stage in the process.  It makes no different to your credit record which would have been trashed when you stopped paying.  When you get a 60% discount and pay you can either choose to rebuild your credit or decide you do not want credit ever again.
    I used a different forum that was far worse than this one and I think was actually run by someone in the debt industry, they were demanding far too much detail for my liking.  So come back to this forum for support and stay strong, just remember do not engage with the debt companies or anyone until you have a decent substantial offer.  Remember that the original lender sold the debt on for pennies in the pound, maybe as low as 3% or perhaps as high as 12%, therefore they make good money if they get you to settle for 60% off. Until they make such an offer I would not engage with them and even then come back here and talk through the offer and how to engage.
  • Smudgeismydog
    Smudgeismydog Posts: 340 Ambassador
    100 Posts Second Anniversary Photogenic Mortgage-free Glee!
    What an inspirational post @dankemp, thank you for sharing
    I’m a Forum Ambassador and I support the Forum Team on the Pension, Debt Free Wanabee, and Over 50 Money Saving boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the Report button, or by e-mailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 351K Banking & Borrowing
  • 253.1K Reduce Debt & Boost Income
  • 453.6K Spending & Discounts
  • 244K Work, Benefits & Business
  • 598.9K Mortgages, Homes & Bills
  • 176.9K Life & Family
  • 257.3K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.