Loan may default, what happens?

Maxrpg

I have a £15k loan with Shawbrook that I have been paying off for the last 2 years. The first year was fine, I made my monthly payments on time and in full but then unexpectedly got made redundant and I had some health issues on top of that.

So for the last year I initially used my savings to keep the monthly repayments going but my savings ran out fast, then I was on Universal Credit and had to reduce my monthly payments from £312 to £100 a month, which Shawbrook was fine with until I got back on my feet (a new job) unfortunately my health has hindered my ability to get a new job and I'm still unemployed on UC benefits.

For the last 6-months I have made payments of £150 a month, but I have now been told this reduced payment agreement will end in May and it will have to go to decision makers or something in regard to what happens next. Over the last 12-months even though I have been making payments, it is now also in arrears by nearly £2k.

My question is do you think the loan will default and if so will I be taken to court, get a CCJ, bailiffs breaking down my door and taking everything I have?

Or could they continue to accept £150 a month in repayments.

I'm seriously worried as "doomsday" is approaching.

fatbelly

This is just a personal loan.

It's called non-priority debt. If you can't pay, stop paying. If you are on UC, you will not have money for non-priority debts. It will default after 3-6 missed payments.

If they start a court claim, you respond to the claim.

The more likely event is that they sell your account to a 3rd party debt buyer who will write to you

Review the situation in 6 months time

RAS

Stop paying if you are on benefits.

Once the debt defaults, they stop adding charges and interest. So you partial payments have encouraged them to keep going.

Added to which, the likely AP markers damage your credit rating longer, so you really need to get that default ASAP.

And save up to replace your emergency fund. That shouldn't be used to cover consumer credit for more than a month or so.

ManyWays

If you are on UC I doubt you can afford £100 a month. Is this your only debt?

sourcrates

Maxrpg said:

I have a £15k loan with Shawbrook that I have been paying off for the last 2 years. 

My question is do you think the loan will default and if so will I be taken to court, get a CCJ, bailiffs breaking down my door and taking everything I have?



I'm seriously worried as "doomsday" is approaching.

Its just a normal non priority debt, its far from being doomsday, it will simply go to a debt collector or be sold on, and you will be written too in either case.

You can then explain your circumstances to them, and pay what you can afford, if anything.

If your situation is unlikely to change, ask them to write it off or put on hold for 6 months till you find work.

Bailiffs are a very last resort, at the end of a long legal process, and there use is extremely limited for CCA regulated debts, they can only be engaged after a CCJ is granted and you fail to keep up with payments or advise why you can`t pay, they can`t "knock your door down" or take your belongings, and can be kept out by a locked door.

It would be extremely foolish for a creditor to send bailiffs to a debtor on universal credit.
Please don`t go straight to the nuclear option.

Maxrpg

sourcrates said:

Maxrpg said:

I have a £15k loan with Shawbrook that I have been paying off for the last 2 years. 

My question is do you think the loan will default and if so will I be taken to court, get a CCJ, bailiffs breaking down my door and taking everything I have?



I'm seriously worried as "doomsday" is approaching.

Its just a normal non priority debt, its far from being doomsday, it will simply go to a debt collector or be sold on, and you will be written too in either case.

You can then explain your circumstances to them, and pay what you can afford, if anything.

If your situation is unlikely to change, ask them to write it off or put on hold for 6 months till you find work.

Bailiffs are a very last resort, at the end of a long legal process, and there use is extremely limited for CCA regulated debts, they can only be engaged after a CCJ is granted and you fail to keep up with payments or advise why you can`t pay, they can`t "knock your door down" or take your belongings, and can be kept out by a locked door.

It would be extremely foolish for a creditor to send bailiffs to a debtor on universal credit.
Please don`t go straight to the nuclear option.

So it would most likely be sold to debt collectors?

I mean in total, I also have other credit card debt that I'm paying the minimum monthly payments on, my total debt (loan and cards) I'm embarrassed to say is around £30k. With this Shawbrook loan being the highest, currently standing at around £11k.

I am on Universal Credit and I have pretty much been starving myself and living in jumpers and thick socks to keep warm for the last 8 months just to pay these things off.

I have no savings, I rent my home, I don't anything of any serious value.

I'm a proud man and I have always, ALWAYS, paid my debts, before the company I worked for went in to administration and I was made redundant, I was coping just fine, no worries at all. But now I'm just worried and I don't know how to get out of this situation.

I'm so stressed.

ManyWays

So it's time to stop starving yourself and put yourself first. Your lenders are commercial operations, they are used to a certain percentage of their loans and credit cards not being repaid on time because something has happened to the borrower; redundancy in your case. To you this feels like some catastrophe, to them it is just normal, if you talk to them about your situation they will be reasonable.

You are partly worried because your pride is at stake and you hate that, partly scared because of probably mostly incorrect ideas about what may happen to you. For normal consumer debts, you won't see bailiffs turning up unless you do a complete ostrich act for a long while, and even then they would have no right to break into your house.

So its time to look at your full situation, not just this Shawbrook loan, by completing a "Statement of Affairs" and posting it here https://www.stoozing.com/soa.php. Think about what you actually need to spend each month for a reasonable standard of living, not what you can scrape by on next month you hope. 

Then we can talk about what your options are and it will start to feel less scary.

RAS

Max, if you are on benefits, you should not be paying consumer credit debts. Your rent, CT, food, utilities and clothing bills are vital, as it essential travel, medical and dental.

Added to which, if you make reduced payments you get Arrangement to Pay (AP) markers which damage your credit record for longer than defaults.

So stop paying, eat and save anything you can whilst waiting for the defaults, please.

sourcrates

Maxrpg said:

I am on Universal Credit and I have pretty much been starving myself and living in jumpers and thick socks to keep warm for the last 8 months just to pay these things off.

I have no savings, I rent my home, I don't anything of any serious value.

I'm a proud man and I have always, ALWAYS, paid my debts, before the company I worked for went in to administration and I was made redundant, I was coping just fine, no worries at all. But now I'm just worried and I don't know how to get out of this situation.

I'm so stressed.

Max,

Given your circumstances, if you stop paying these debts, there is absolutely nothing any of them can do to recover them.

Please stop stressing, look at the facts, you don`t work, so no attachment of earnings.

You rent, so no charging order.

You have no assets, or savings so no point in court action.

That leaves your creditors with no enforcement options left, which puts you in a very good position.

Maxrpg

sourcrates said:

Maxrpg said:

I am on Universal Credit and I have pretty much been starving myself and living in jumpers and thick socks to keep warm for the last 8 months just to pay these things off.

I have no savings, I rent my home, I don't anything of any serious value.

I'm a proud man and I have always, ALWAYS, paid my debts, before the company I worked for went in to administration and I was made redundant, I was coping just fine, no worries at all. But now I'm just worried and I don't know how to get out of this situation.

I'm so stressed.

Max,

Given your circumstances, if you stop paying these debts, there is absolutely nothing any of them can do to recover them.

Please stop stressing, look at the facts, you don`t work, so no attachment of earnings.

You rent, so no charging order.

You have no assets, or savings so no point in court action.

That leaves your creditors with no enforcement options left, which puts you in a very good position.

Ok so if I stop paying the loan and credit cards, say as of now, and sit and wait for them all to default which I assume will be different time frames for each one, then what do I do.

The personal loan will default first in June/July probably, so do I communicate with them once that happens or ignore all calls and letters etc until it gets passed to debt agency or something and then deal with the debt agency?

Basically I'm just trying to understand what I do as everything starts to default, contact them one by one and try agree to pay tiny payments each month, do nothing and just wait for debt collectors or CCJ I don't know.

sourcrates

If you can`t pay, you tell them you can`t pay, and they will then decide what to do, it could include accepting £1 per month, or they may say don`t pay anything and we`ll stop recovery action, or they may just write it off altogether, its the common sense approach really, affordability is everything these days.

Informing them of your circumstances stops recovery action and leads to an altogether better experience, there are situations where radio silence is the best option, but when its a case of can`t pay, rather than won`t pay, its better to be honest with them.