What happens if you can't afford to pay?

exponential

@ManyWays @grumplestiltskin Thank you very much for the advice. I've been thinking about how calling them could go south quite quickly. You can end up being backed into a corner and come away in a much worse position.

Ok, decision made, no phone calls.

One final question, is there a template letter I should use to communicate with these fools or do I just wing it so to speak.

sourcrates

National debtline have an array of template letters on their website.

Make sure you go to National debtline.org as there are a lot of imposter sites.

DankVielen

exponential said:

@ManyWays @grumplestiltskin Thank you very much for the advice. I've been thinking about how calling them could go south quite quickly. You can end up being backed into a corner and come away in a much worse position.

Ok, decision made, no phone calls.

One final question, is there a template letter I should use to communicate with these fools or do I just wing it so to speak.

Hi there,

Well done for getting advice and recognising your situation, this is half the battle.

I am not sure that you have fully understood the process so I will just double check.

Like your business there are two ways to create disposable income (aka profit), one is to spend less and the other is to charge more.  In most markets you lose business if you charge more so that often means cutting your costs and making difficult decisions, but you can also make easier decisions, for example putting your family, clients, employees and anyone else on the planet ahead of the lenders who lend money that they invent on their computers.  I am not knocking the financial system, I am just saying you do not need to worry about them.

So you have already decided to stop paying them until they ALL default, the goal here is usually a discount of 60% or just never paying the debts if you decide you no longer want to participate in credit.

As you will have been advised, you may need to change banks.

When you are asked for an SOA it is for the helpful experts on this forum, NOT FOR THE CREDITORS

Do not worry about minimum payments, do not pay a penny, put what you might have paid into a savings account with a different bank or keep the cash somewhere else like premium bonds if you prefer, you just want it out of the way so you do not spend it.

The SOA will help you cut at both ends, people on here might spot that you are paying over the odds on a service and redirect you to an MSE offer, for example a Lebara phone plan for for £3 a month.

Why did I say you do not pay any of them until ALL have defaulted?

Because any payments you make will go on your credit record and that is a sign that you have money so may delay a default. 

Consumer debt can only be chased for six years by which time a creditor must seek a CCJ or else the debt becomes statute barred.  They rarely seek a CCJ unless they see signs of income on your credit record, such as a new line of credit, an overdraft, a new car lease.

I sped things up by writing one simple letter to my creditors saying I would not be making any further payments, I did not tell them of my objectives I think I just said I had experienced a massive change of circumstances that I could not see changing in the foreseeable future and so I would not be making any more payments to their debt.

That was the last acknowledgement of the debt and there were no more payments, so 6 year clock starts.  Each month my credit record was worse and worse.

You already trashed your credit record by stopping payments so you have nothing to lose now.

Each debt will be packaged up and sold with thousands of other bad debts, what is IMPORTANT for you to realise is that they sell this debt for pennies in the pound, it could be as low as 3p or 12p, but the company they sell it to can ASK for the full amount of the debt.  I say ask because eventually they will settle for far less, you can get 60% wiped off if you are patient enough and just do not engage in any way.  This also means no demonstration of a lot of money coming in, no posts of that holiday on social media, no credit agreements and ideally you start cutting your costs, which is what this forum and the main site is really good at helping you achieve. So say bye bye to things you don't need like top end Sky TV, you especially do not want things that show on your credit record.

The debt consolidators have a simple cycle of appointing a company like Capquest to manage the debt, by manage they do not mean manage you but manage a series of debt collectors who each have a different way of working.  So Capquest will say they have employed the services of say Opos to work with you on paying this debt.  Opos will send you a series of auto generated letters and if they are not successful (i.e. you do not respond in any way at all) then Capquest assign a new debt collector like AIC who will write you a series of letters, some companies make threats, some send doorsteppers like Verify who just also happen to be part of AIC parent the Perch Group. 

And so it goes on and on and on.

You can replace Capquest for any number of debt managers, sometimes such companies themselves are owned by the debt consolidator or they have loose relationships like being a preferred supplier of such services.

You can replace AIC with any number of Debt Collectors and you can replace Verify with any number of debt naggers who employ commission only reps, these are often featured on YouTube and humiliated in a very funny way.  Verify are simply a part of the Perch group as is AIC and yes they have an inhouse law TM Legal firm but that does not change the decision to seek a CCJ.  First of all they won't waste the 6 years they have and chances are AIC will have been sacked by the time any legal action is ever decided and that decision will be based on clear evidence that you have money or real chance of their getting the money.  Only one of the consumer debt companies went after a CCJ and now having found this forum and reading avidly about my former creditors I can see that the company who did go to Court operate differently, they did not chase the debt at all, not for just under 6 years.  That just kicked off a similar process to that described above but the threats were firmer but still they did not follow through, probably based on the fact that I did not have a 60% off strategy.  I just dropped off the grid, kept them all one or two steps behind me until the debts could no longer be pursued, not even the CCJ.

What I am trying to explain is that all of this is just a process and you may need to wait until numerous companies have given up or been sacked by the debt managers.  Do not take anything in any letter personally, they wrote the letters to be as scary as possible and if you show them anything works they will keep doing it.

At some point you will get your first offer, you will not be told the value of the offer, just that they are willing to accept a lower amount.

IGNORE THIS

Then will come a lowball offer in writing, say 20% off

IGNORE THIS TOO

Eventually, after a certain number of debt collectors have had their go a company will be appointed who after say their 3rd letter will offer full and final settlement at 60% off. They will create fake urgency by putting a time limit but the real time limit is because they know they are about to be replaced by a new debt collector.

The real trick here is patience and getting the timing right, on one hand with a 60% discount you want to take up the offer, hopefully by this time you will have put by a considerable emergency fund as outlined in the DMP Mutual Support Sticky thread.  At the same time you need to consider the other creditors, you ideally want them all in the same place because they will see the debt status change on your credit record.  If it is too soon other creditors will think you have money and they may be less likely to make a similar offer, but at the same time others might see that you responded to a good discount and do the same.

My debt started off with a plethora of different debt consolidators, but after some time it ended up with two or three, I suspect yours will be the same although I played a longer game. I did not even know about the CCJ because despite knowing my address the one firm that went after a CCJ got it at an old address, even older than when I defaulted.

I got a lot of threats for a CCJ and a couple of scams pretending to be CCJ's but no Court Stamps.  Once I knew of the tactics of those firms (I call them Debt Solicitors because that is all they do) I had no fear.  Nothing changed for me, I had nothing so it really was blood out of a stone, but for you what you might be interested in years down the line if you have not paid is a proper letter before action.   I think you will be done with this and achieve a 60% discount before any of that happens.

So do not engage for any reason, expect the debt collectors to change several times, continue to not engage until there is a serious full and final offer of 60%.

So there is no "what happens if you can't afford to pay" because you will pay nothing for quite a while and during this time you will be adding what you can afford to your emergency fund.

This website can help you cut back your costs in many ways so that you can make bigger payments to the emergency fund, set your goal of the emergency fund to cover 40% of your total debt.  Keep other money aside to cover you for expenditure you had not budgeted for, like a car repair.  Do not leave money in your main account, out of sight is ought of mind.

Part of this process is a new attitude to spending, the lenders put us all in a spend spend spend mode while we need to be in a save save save mode. Do not think of them as having helped you or being decent people, it is a disgusting business but sadly one that is necessary to the function of our economy I guess.

exponential

@dankemp Thank you for taking the time to post such a detailed and helpful message.
I really appreciate that and, given your experience with creditors, I will take it all on board and learn from it.

Just to update you on my current position:

All of my 9 creditors have now defaulted where I made no payments or contact whatsoever.
I am now receiving letter from the likes of Link Finacial and Lowells who again have had no response from me at all.
Lowells seem to deal with the Lloyds banking group as all of those Lloyds group debts have been added to the same letters.

Like you were, I am not in a position to offer anything at all, they can threaten all they want but that doesn't change the fact that we are hand to mouth at the moment.
I'm not bothered by this at all and in fact, being in this position actually helps rather than hinders as there is nothing they can take.
We have no significant assets other than our family car which is in my wife's name anyway and my company van which is only worth a couple of grand but is invaluable to the business.

The letters from Lowells have been extremely nice as it happens with lots of "we are here to help" vibes and a handy online login they've asked me to create. I won't be doing that of course.
The Link Finacial letter is stern but still, friendly in the wording.

My phone has been ringing a LOT more than usual but I don't answer calls from numbers I don't know personally so it's likely them trying to reach me.

I'll play the waiting game and see what happens. 
Likely send a letter out of my own soon......

[Deleted User]

This is something I personally would recommend to anyone dealing with any outside agency. I always put everything in writing in the first instance. That way both parties have a permanent record what was said, and nothing can be misinterpreted or forgotten in the future. If/when you have any telephone contact with them, confirm to them afterwards in writing via email what you understood was said. That way they have an opportunity to come back to you over any misunderstandings and it will always ensure you are both on the “same page”. 

I’m not a solicitor but have worked for several high-profile legal firms over the years, so hope this helps.

sourcrates

[Deleted User] said:

This is something I personally would recommend to anyone dealing with any outside agency. I always put everything in writing in the first instance. That way both parties have a permanent record what was said, and nothing can be misinterpreted or forgotten in the future. If/when you have any telephone contact with them, confirm to them afterwards in writing via email what you understood was said. That way they have an opportunity to come back to you over any misunderstandings and it will always ensure you are both on the “same page”. 

I’m not a solicitor but have worked for several high-profile legal firms over the years, so hope this helps.

Where debt is concerned, everything should be in writing only, whether that be email, or in a letter, never, ever speak to these companies on the phone, we always try to get this message across on these boards, as its so important.

If they have you on the phone, they can coerce, manipulate, talk over you, basically read from their own script and drown you out altogether, then its all too easy to agree to something you should not agree too.

When you write, you get your message across in a clear and concise manner, with no opportunity to be fobbed off or dissuaded from your point.

exponential

sourcrates said:

[Deleted User] said:

This is something I personally would recommend to anyone dealing with any outside agency. I always put everything in writing in the first instance. That way both parties have a permanent record what was said, and nothing can be misinterpreted or forgotten in the future. If/when you have any telephone contact with them, confirm to them afterwards in writing via email what you understood was said. That way they have an opportunity to come back to you over any misunderstandings and it will always ensure you are both on the “same page”. 

I’m not a solicitor but have worked for several high-profile legal firms over the years, so hope this helps.

Where debt is concerned, everything should be in writing only, whether that be email, or in a letter, never, ever speak to these companies on the phone, we always try to get this message across on these boards, as its so important.

If they have you on the phone, they can coerce, manipulate, talk over you, basically read from their own script and drown you out altogether, then its all too easy to agree to something you should not agree too.

When you write, you get your message across in a clear and concise manner, with no opportunity to be fobbed off or dissuaded from your point.

I remember back during the crash of 2009 where we ran into difficulties which ultimately led to declaring bankruptcy, we took calls from the banks and debt collectors where we were literally shouted at over the phone by these people. They screamed at us over the phone for getting into difficulties and basically took the mickey out of us laughing at our poor fortune etc etc. It was a horrific experience that I'll never forget.

Fortunately, they can't act this way anymore. Thank god.

tigergambit

exponential said:

sourcrates said:

[Deleted User] said:

This is something I personally would recommend to anyone dealing with any outside agency. I always put everything in writing in the first instance. That way both parties have a permanent record what was said, and nothing can be misinterpreted or forgotten in the future. If/when you have any telephone contact with them, confirm to them afterwards in writing via email what you understood was said. That way they have an opportunity to come back to you over any misunderstandings and it will always ensure you are both on the “same page”. 

I’m not a solicitor but have worked for several high-profile legal firms over the years, so hope this helps.

Where debt is concerned, everything should be in writing only, whether that be email, or in a letter, never, ever speak to these companies on the phone, we always try to get this message across on these boards, as its so important.

If they have you on the phone, they can coerce, manipulate, talk over you, basically read from their own script and drown you out altogether, then its all too easy to agree to something you should not agree too.

When you write, you get your message across in a clear and concise manner, with no opportunity to be fobbed off or dissuaded from your point.

I remember back during the crash of 2009 where we ran into difficulties which ultimately led to declaring bankruptcy, we took calls from the banks and debt collectors where we were literally shouted at over the phone by these people. They screamed at us over the phone for getting into difficulties and basically took the mickey out of us laughing at our poor fortune etc etc. It was a horrific experience that I'll never forget.

Fortunately, they can't act this way anymore. Thank god.

It is good that they can't act this way any more but we must remember that leopards don't change their spots and they're still the same horrid people underneath.

backinbusiness

OP can you check again re Carers Allowance? It does affect some benefits but not all. Worth a double check I think. BiB x 

sourcrates

tigergambit said:

exponential said

I remember back during the crash of 2009 where we ran into difficulties which ultimately led to declaring bankruptcy, we took calls from the banks and debt collectors where we were literally shouted at over the phone by these people. They screamed at us over the phone for getting into difficulties and basically took the mickey out of us laughing at our poor fortune etc etc. It was a horrific experience that I'll never forget.

Fortunately, they can't act this way anymore. Thank god.

It is good that they can't act this way any more but we must remember that leopards don't change their spots and they're still the same horrid people underneath.

The FCA clamped down on two of the worst offenders, suspended their licences, fined them heavily, ordered them to undertake a root and branch re-organisation of their business affairs, which included some staff being sacked, others re-trained, a complete change of management, and a re-branding of their company names.

That sent a message to the rest to "put their own houses in order" before they too were subject to the same stringent enforcement actions.

Seems to have worked to some extent.