Should I ask for a payment holiday?

Inapickle40

Hello, I’m currently on breathing space, after getting into loads of debt, personally and through my limited business. I have sorted my business out, and have enough income monthly, through doing the work myself and cutting back. 

I had a huge amount of stress upon me during the time of getting the debt, including a very sick spouse, new baby and my business was massively affected after covid. It was awful. 

Now I still have a new loan from Zopa that with interest is £25K, an AA loan of about £9K and another one for £2K. All unsecured. 

I am in breathing space, and I actually didn’t realise you were meant to keep paying during that time!! So I am a month or two behind anyway now. 

Can I ask whether most debts are sold on regardless of whether you are on a payment holiday, DMP or default? The reason I ask is that if I ever came in to any money (whether a dividend or other) it would be nice to be able to clear the debt, and maybe negotiate. (Heres hoping) 

What’s the best options based on this:

1) do a debt management plan through step change? This is what they have suggested I do. 

2) contact the companies myself and ask for a payment holiday for 6 months , in the hope I can improve my business even more and pay back normally in 6 months time and if not go on a DMP? 

3) wait to be officially defaulted like most suggest on this forum? 

Thank you in advance 🙏

sourcrates

Debt collection is not a quick process, that`s what makes the breathing space scheme a waste of everyone's time really.

We were supposed to get a 6 month period of no payments and no collection activity, but what we have ended up with is a watered down version giving you a few weeks grace but they also expect you to pay as well, so of no use to anyone whatsoever.

It will take around 6 months for creditors to go through there standard range of letters and collection calls etc, by then accounts will either be with debt collectors or maybe sold on to 3rd parties.

Best just to wait, keep an eye on the post, then decide your best course of action.

fatbelly

I agree. I could offer a short lecture on Breathing Space, which I refer to as BS, but will save it for another timr.

Your approach sounds a little chaotic. If you are heading for a dmp, because you cannot afford your contractual payments, then what you need to do is pay nobody, talk to nobody and let everyone work through their standard letters.

Obviously you continue to make priority payments like insurances, mortgage, council tax, elec and gas. You just stop paying the credit debts.

6 months like this sounds a sensible timescale to me. See if you can save an emergency/fighting fund in the meantime

Inapickle40

Ok thank you so much. Yes I realise that about Breathing space!! It’s poorly explained and pointless. Should I cancel my direct debts to the debt companies? I also assume they can’t send anyone around in the mean time? How do I know that they have officially defaulted? Will they tell me that? 

I think I’ve had so much conflicting advice hence my chaos!! You guys have helped massively, more than anything so thank you 🙏 

RAS

There are a very few debt collectors who use doorstep agents, two possibly?

Those agents have fewer rights than next door's cat, who is allowed to roam over your property. Should any suggest a visit, write removing their right to enter the curtilage.

But that's way down the line. It's unlikely your debt will be assigned or sold in the next 6 months. Relax.

sourcrates

Your credit lines are all governed by the consumer credit act, there is a process the lender must go through to officially default the account, which will mean certain things will happen.

Guidance on when to default is provided by the FCA, but they are only guidelines, and this is often interpreted differently by different lenders, which can lead to no two accounts being treated in the same way.

Defaults can be registered after between 3/6 missed contractual repayments, your lender will write to you demanding full payment of the arrears within 14 days or else a default will be registered on your credit file.

This is under sec 87 CCA, and must be sent by law.

Once the time limit has expired, most lenders will apply the default to your credit file, and your agreement with that lender will then end, and a permanent freeze will be put on all interest and charges to that account.

They will then either pass the debt to a debt collector, attempt collection themselves, or sell your debt to a 3rd party.
Legal action at this stage is rare, and is mostly reserved for certain credit unions or peer to peer lenders, who tend to use the courts as there starting position, rather than a last resort.

By far the majority of high street lenders use debt collection as their primary response.