What happens if you can't afford to pay?

exponential

Hi all,

After following the excellent advice on this forum regarding non-payment of unsecured debts to force a default, I am now at the stage where letters have started arriving from Debt Purchasing Companies.
Originally, I had 10 creditors with a combined total debt of approximately £50k which have all slowly fell into default status.

The current letters are from Link Financial and Lowell but I haven't been in touch with them just yet as I am unsure what, if anything I can offer them.
See, with the value of the debt being so high, even 1% of the total balance comes to £500 which is a figure I just can't afford to pay right now.
I can't be seen to favour one debt over another so all must be offered an equal payment but how do I do this when I have no spare income available each month?

We literally live "hand to mouth" each month with myself being the sole earner in our household with my wife having to voluntarily leave her job a number of years ago to look after her dad who has two forms of dementia. Losing her income was the catalyst for where we are now and we never recovered. Life is hard at the moment but we struggle on.

I can't get another higher paid job as I'm self employed and run a business which many many clients rely on so I can't give that up either.

What do I do if I can't offer anything to pay towards these purchased debts?
What will their response likely be when discovering this.

ManyWays

It's lovely that you care about your business clients, but in the end you may have to put your own family first. Is your current income regular and are you up to date with paying tax?

exponential

ManyWays said:

It's lovely that you care about your business clients, but in the end you may have to put your own family first. Is your current income regular and are you up to date with paying tax?

Hi. I have a regular income yes which helps keep our heads above water.
All business taxes (personal, corporation and VAT) are paid as normal.

I have spent over 5 years nurturing and slowly trying to grow this business and I cannot give up on it.
Too much blood, sweat and tears has gone into it so I won't allow it to fail. 

I can't justify closing a business in favour of a regular job in order to pay an unsecured debt back at 1% for the forseeable future.

ManyWays

I suppose you can look at affordability complaints to get the totals down (interest is removed if you win one, complaint is against the lender, not the current creditor.)
But apart from that, you have to hope to save a "war chest" to make settlement offers. If you cant make minimal payments now while you are saving, then its more likely that some creditor will get fed up and go for a CCJ, which you would then have to pay a reasonable amount to, making it less likely that you can save for settlement offers.
a DIY DMP may not work if you only just have enough income to keep your heads above water.
Is this business going to take off and start generating larger profits?

enthusiasticsaver

If you cannot afford to pay towards the debts there is little they can do so will have to either wait until things improve or accept a lower payment.  Presumably these debts are unsecured so what can they do? Just tell them you cannot pay as your wife has had to give up work to care for family. There  will be a process to follow and in time they may accept lower payments  in full if you are in a position to pay it.  For now just focus on essentials.  Mortgage/rent, tax, utilities and food. They won't do anything as they cannot get blood out of a stone. 

enthusiasticsaver

Just to add reading the comments above that I seriously doubt they will go for CCJs if you are living hand to mouth. They may ask for an soa. (details of income and expenditure) which you do not have to give them. 

fatbelly

There's no real minimum for debt repayment but I do agree that a 100- month plan is on the long side. Also you only need to treat them equally if you are heading for an insolvency solution

These are non-priority debts so if tax, mortgage, fuel, food etc is taking all your income then they will have to wait

exponential

ManyWays said:

I suppose you can look at affordability complaints to get the totals down (interest is removed if you win one, complaint is against the lender, not the current creditor.)
But apart from that, you have to hope to save a "war chest" to make settlement offers. If you cant make minimal payments now while you are saving, then its more likely that some creditor will get fed up and go for a CCJ, which you would then have to pay a reasonable amount to, making it less likely that you can save for settlement offers.
a DIY DMP may not work if you only just have enough income to keep your heads above water.
Is this business going to take off and start generating larger profits?

The problem I have is, because I am the sole earner in the household, building up a "war chest" is extremely difficult. It seems that every time I manage to build up some money, something goes wrong with my work van or my wife's car (an old banger before you ask) etc etc and I'm back to where I started.
Personally, I don't care what threats they make as I have dutifully paid my debts throughout my entire adult life (I'm coming up to 47) never ever missed a payment (even through the lock-downs) and have worked hard to keep my family fed and watered.
My main priority is to keep the business running successfully (which I am able to do) which will allow me to pay my priority debts, keep my wife and small children clothed and fed in a comfortable home.

I have been running my business for over 5 years as a sole trader but last year, decided to go Ltd to protect my home. Probably the best decision I have made in a long time. I am doing well to keep things running in these hard times but it's tough. I don't get to put my feet up in the evening and my weekends are generally spent working but these are the sacrifices you make to keep the wheels turning.

exponential

enthusiasticsaver said:

If you cannot afford to pay towards the debts there is little they can do so will have to either wait until things improve or accept a lower payment.  Presumably these debts are unsecured so what can they do? Just tell them you cannot pay as your wife has had to give up work to care for family. There  will be a process to follow and in time they may accept lower payments  in full if you are in a position to pay it.  For now just focus on essentials.  Mortgage/rent, tax, utilities and food. They won't do anything as they cannot get blood out of a stone. 

Thank you. I couldn't agree more.

Yes, the debts are all unsecured.

exponential

enthusiasticsaver said:

Just to add reading the comments above that I seriously doubt they will go for CCJs if you are living hand to mouth. They may ask for an soa. (details of income and expenditure) which you do not have to give them. 

I didn't know that I don't have to provide an SOA? I thought that was pretty standard.

exponential

Can I ask you guys. Am I best just ringing them and explaining the situation or just doing it online without speaking to them?