After speaking to Business Debtline - default first or not?

jones98746

Thank you for all the advice so far.

I spoke to Business Debtline today. She advised me not to go down the bankruptcy or IVA route, and I cannot do a DRO as I have more than £75 per month. She advised I should contact my creditors (four of them) and offer them pro-rata offers of the amount of money I have left each month.

I mentioned defaulting first, as the debts would be on my file for 6 years from default. She said contacting creditors now and offering an arrangement to pay is better as it is not as bad as a default on my credit file. She also said an arrangement to pay will mean it's less likely I will get a  CCJ or debt collectors will come to my door. 

So I am worrying now as I do not want CCJ or debt collectors if I default first - is it likely?

I have always paid bills on time and never defaulted, it just feels wrong.....help.

Is defaulting first the right thing to do - wait for the default letter and then write to offer a payment?

 Also, after default do I send payment offers by snail mail or email? 

Grumpelstiltskin

Business Debtline should not be worrying you about CCJs, debt collectors OK you will get e mails, texts and letters and very rarely door knockers but they have no more authority than next door's cat.

They obviously don't understand that if you don't default but get arrangement to pay markers, so if you repay the debt in say 5 years then it will be 11 years before your credit record clears.

So defaulting is the way to go and don't contact your creditors at all.

Whilst you are waiting save as much as you can for your emergency fund, ignore E Mails, texts and phone calls but  open any letters.

RAS

Grumplstiltskin is correct.

Arrangement to Pay markers stay on your credit record for 6 years after the debt is paid off.
Defaults are moved from your credit record after 6 years, regardless of whether you paid a penny towards the debt.

So if you clear the debt in 6 years:

With a default your credit record clears, very soon.
With AP markers your credit record clears after 12 (ish) years

Which do you prefer?

fatbelly

So Business Debtline are recommending a self-managed DMP. That sounds sensible. There are resources here

https://nedcab.cabmoney.org.uk/dmp.asp

No rush to start. Use the time while waiting for defaults to build up an emergency/fighting fund.

I see our advice is consistent with your other thread

https://forums.moneysavingexpert.com/discussion/6572414/first-time-dmp-questions-scared-and-unsure/p1

Rob5342

Also if you default then the debt is more likely to be sold to a debr collector who will be open to a settlement offer, so you could clear them for a lot less overall. Debt collectors buy debts for a small fraction of their value ao they aren't looking to try all meana possible to recover the full amount, if you pay 30% over a number of years they'll have more than doubled their money. 

ManyWays

Some business creditors are a LOT faster to go to court if you just stop paying and they may not sell the account to a debt collector. But the creditors you listed before look like normal consumer credit act creditors.