What happens if you can't afford to pay?

RAS

You don't have to provide an SOA, and your circumstances are complicated by your income doing from business rather than employment.

However if you can provide evidence that you don't have any spare income, creditors may be more co-operative. 

What you do need to do for your own sakes is develop a household budget that is sustainable and that may need some sacrifices if your income is low. Obviously you need to build into that budget a monthly sum towards future expenses. You know car repairs, Christmas, school uniform etc are all going to be required each year. So you need to put one twelfth of the required sum aside each month into a budgeting account rather than getting surprised by the bill. 

Beyond that you also need a small emergency fund, which goes into a separate account and is available to cover emergencies like ill-health. 

Has your wife checked if she can get carer's allowance? If FIL eligible for attendance allowance? And has he had a proper care assessment? 

tigergambit

exponential said:

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.

Hi exponential,

You don't *have* to provide a SOA but it will make things easier for you to explain your circumstances and for creditors to agree a very low repayment. Bear in mind that you don't have to prove any part of the SOA and they have neither the means or inclination to do check anything.

Do not give them anything further like bank statements or business accounts.

ManyWays

In the short run, it's fine not to pay anything to creditors if you cant afford it or you need to save up and emergency fund or you want the debts to defaults asap etc. But this is not a viable long-term "self managed DMP".

See how you summarised your game plan on an earlier thread:

7 x Credit Cards
2 x Loans
1 x Overdraft

• I am not to respond to contact of any kind from unsecured creditors
• I am to keep all documentation received for future reference
• I am not to offer any form of payment plan 
• I am to wait it out for 3 months+ until an official letter of default is received
• I am to save as much as possible during the above 3 month+ period for the purpose of building up a cash reserve for payment of these debts
• I am to offer DCA's (not the creditor collections department) a minimal amount per month until they offer a reasonable settlement figure
• Use the funds previously saved to pay the settlements

So that has all been going fine so far, the first 4 bullet points, but now you don't want to offer your creditors a minimal amount each month, you think you are unlikely to be able to build up savings for settlements, and you don't see this changing, correct?

I am not criticising you, it sounds as if you may have no other option, but you should not assume that these debts will all go quietly into being statute-barred, especially as you have a property with equity. If you dont make any offers to creditors some (many?) of the debts will end up with solicitors and some may end up with a CCJ and possibly a charge over the house if you ignore that.

I agree 1% a month is a long DMP. Obviously 0.25% a month would be even worse if that is all you can afford, but that doesnt make trying to ignore the debts a practical option.

I suggest you talk to Payplan who are used to doing DMPs for the self employed. 

exponential

RAS said:

You don't have to provide an SOA, and your circumstances are complicated by your income doing from business rather than employment.

However if you can provide evidence that you don't have any spare income, creditors may be more co-operative. 

What you do need to do for your own sakes is develop a household budget that is sustainable and that may need some sacrifices if your income is low. Obviously you need to build into that budget a monthly sum towards future expenses. You know car repairs, Christmas, school uniform etc are all going to be required each year. So you need to put one twelfth of the required sum aside each month into a budgeting account rather than getting surprised by the bill. 

Beyond that you also need a small emergency fund, which goes into a separate account and is available to cover emergencies like ill-health. 

Has your wife checked if she can get carer's allowance? If FIL eligible for attendance allowance? And has he had a proper care assessment? 

I will provide them with an SOA as I feel that would be beneficial both for me and for them.

I am technically an employee although I am not on any PAYE scheme as, like I've said previously, I only draw money from the business when it is required to pay the bills.

The plan is to create an emergency fund but as I've said, being the sole earner in the house makes doing so very difficult indeed. 

My wife can't get carers allowance as it will affect her dad's benefits so that's out of the question.
He's due his next round of assessments soon so we will see what his memory nurse/consultants suggest next........

exponential

tigergambit said:

exponential said:

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.

Hi exponential,

You don't *have* to provide a SOA but it will make things easier for you to explain your circumstances and for creditors to agree a very low repayment. Bear in mind that you don't have to prove any part of the SOA and they have neither the means or inclination to do check anything.

Do not give them anything further like bank statements or business accounts.

Yeah, they won't be getting any bank statements off me of any kind. An SOA yes, but no statements for sure.

exponential

ManyWays said:

In the short run, it's fine not to pay anything to creditors if you cant afford it or you need to save up and emergency fund or you want the debts to defaults asap etc. But this is not a viable long-term "self managed DMP".

See how you summarised your game plan on an earlier thread:

7 x Credit Cards
2 x Loans
1 x Overdraft

• I am not to respond to contact of any kind from unsecured creditors
• I am to keep all documentation received for future reference
• I am not to offer any form of payment plan 
• I am to wait it out for 3 months+ until an official letter of default is received
• I am to save as much as possible during the above 3 month+ period for the purpose of building up a cash reserve for payment of these debts
• I am to offer DCA's (not the creditor collections department) a minimal amount per month until they offer a reasonable settlement figure
• Use the funds previously saved to pay the settlements

So that has all been going fine so far, the first 4 bullet points, but now you don't want to offer your creditors a minimal amount each month, you think you are unlikely to be able to build up savings for settlements, and you don't see this changing, correct?

I am not criticising you, it sounds as if you may have no other option, but you should not assume that these debts will all go quietly into being statute-barred, especially as you have a property with equity. If you dont make any offers to creditors some (many?) of the debts will end up with solicitors and some may end up with a CCJ and possibly a charge over the house if you ignore that.

I agree 1% a month is a long DMP. Obviously 0.25% a month would be even worse if that is all you can afford, but that doesnt make trying to ignore the debts a practical option.

I suggest you talk to Payplan who are used to doing DMPs for the self employed. 

Correct, the game plan is still going as I expected and everything has panned out as you all suggested it would which I am grateful for.

However, saving as much as possible is tricky as there's always something to pay for that remove any savings you had. Example, we took our family car for an MOT in January only to be told that the entire sub-frame of the car needs to be replaced which will cost the best part of £1200. We obviously can't afford that so my mechanic has welded it all up as temporary measure but still, the work needs to be done.
Last month, the boiler packed up....there goes another £600.....and the cycle continues.

I need to be clear here, I do intend to pay something towards my debts as after all, I racked those debts up so I am responsible for them but I cannot help the position I am in. We have fell on hard times like a lot of people have during these difficult times and we're doing our best to keep the fires burning.

I'm reluctant to sign up to a DMP as those can drag on for decades.
I would rather just pay the minimum I can to each creditor until they offer a settlement figure which I am hoping, by that time, we can afford to pay it. 

sourcrates

exponential said:

I'm reluctant to sign up to a DMP as those can drag on for decades.
I would rather just pay the minimum I can to each creditor until they offer a settlement figure which I am hoping, by that time, we can afford to pay it. 

In order to receive settlement offers, your debts must first default, and then be sold on at least once, its only debt purchasing companies that buy your old debts for pennies in the pound, that can afford to make significant offers to settle.

Your payments must reflect this, and must be less than the contractual minimum, otherwise your plan won`t bare fruit.

The term "DMP" or just "debt management" covers what you propose, its just you doing your own thing, which is fine.

Don`t be too cut up about not repaying all your borrowing, under our "fractional reserve banking system", the banks originally lent you money they never had in the first place, and over the years have taken more than their fair share of interest off you, when they sell your accounts they do so for around 12% of their face value, and write the rest off to tax, so don`t lose any sleep over it.

exponential

sourcrates said:

exponential said:

I'm reluctant to sign up to a DMP as those can drag on for decades.
I would rather just pay the minimum I can to each creditor until they offer a settlement figure which I am hoping, by that time, we can afford to pay it. 

In order to receive settlement offers, your debts must first default, and then be sold on at least once, its only debt purchasing companies that buy your old debts for pennies in the pound, that can afford to make significant offers to settle.

Your payments must reflect this, and must be less than the contractual minimum, otherwise your plan won`t bare fruit.

The term "DMP" or just "debt management" covers what you propose, its just you doing your own thing, which is fine.

Don`t be too cut up about not repaying all your borrowing, under our "fractional reserve banking system", the banks originally lent you money they never had in the first place, and over the years have taken more than their fair share of interest off you, when they sell your accounts they do so for around 12% of their face value, and write the rest off to tax, so don`t lose any sleep over it.

Thank you for the information, I appreciate it.

With everything that has happened to us over the last few years, after diligently paying our debts and never missing a single payment (regardless of the lengths I had to go to in order to pay), I am honestly past caring about it.
The most important thing to me is my wife and children are well fed, happy and have a roof over their heads.
Everything else is secondary to me.

I am going to be calling them over the coming days to explain our situation and hopefully, come up with a solution to start paying towards the debts they've bought. 

Can anyone give me an idea of how these telephone conversations go?
Is it 1% of the balance they will ask for? I can't remember what's been said previously. Sorry. 

ManyWays

My suggestion is that it is really difficult to have this sort of conversation with one creditor, and impossible with several. You need to decide what you can afford to pay them first, not have a chat about it, if you ask for their suggestions it may well be more than you can afford. And when you have decided, it is probably better to communicate this in writing not on the phone. 

Grumpelstiltskin

As  Man Ways says do not phone these people, all you will get is someone on minimum wage in a call centre who only reads from a script and has no authority. Only communicate by letter.