Unable to pay back Debt

fatbelly

Your point 2 indicates that this is a loan, not HP. If that is the case, then you can just stop paying it. The car is yours to keep or sell and the debt is just another to add to the unsecured list.

I sense you are not clear what you signed up to, and so you need to check

If it turns out to be Hp/PCP/conditional sale then you do have the right to terminate under the Consumer Credit Act and your liability is limited

kimwp

babayaga96 said:

@kimwp @fatbelly @QrizB @Grumpelstiltskin


I do make commission every month but unfortunately due to the nature of the market, the business is down and the incentives have come down. After Tax you can consider I usually get around £2.5K - £2.7K every month. 

I understand this pay is low for a Skilled Worker Visa but I have been only working since 2-3 years and the base pay is usually a bit low in the Sales field as there is scope for incentives. 

2) I can not return my car without paying some more money on top. I am looking to sell this car and buy a cheaper car to be honest but no clue how to make that possible now. Not having a car is not an option as my job demands I have a car. 

3) Yes, my rent includes most bills. 
4) I do not watch any live TV etc, No Netflix or any OTT subscriptions. Cancelled all of them.
5) Yes, I am in talks with them as speak to get it down to £25 for 2 SIMS.
6) Yes, I am cutting down my grocery costs as well. I went from £400 to £250 and I aim to go further down as well. 
7) In all reality I do not shop footwear and clothes frequently. I shop once in 6 Months when there is a sale. 
8) Yes, it is monthly as I am a first time driver and that was the least quote I could get in London.
10) The £50 entertainment I put are for in case. I have stopped doing everything that is fun just because I got no money. I stopped smoking, drinking, going to the cinemas etc.

Another important detail: I am providing financial support to my single mother who lives abroad. To get this debt out of the way, I took some loan back home and tried paying here which even after I had done, did not work due to mismanagement, interest here on the cards as well as back home now. 

I have made really bad decisions in life due to lack of awareness and my own foolishness. I am learning life the hard way I am getting there.

Unfortunately, due to all this and also the fact I have put myself in a helpless situation , this is taking a toll my personal mental peace. I want to get out of this mess. I have managed somehow to make minimum payments etc until now but now I need to accept the reality and get a solution together.

Ok, so -
Your SOA is missing payments to your mother and also payments on a loan back home?

And your SOA already has a lot cut out that you were spending on? Have these things been cut out for several months at least or have you only just cut them out?

I don't know the effect on your visa, but someone without a visa, I would be thinking it is time to open a different bank account, manually move salary and essential bills, then default (cancel the direct debits) on the debts in your old account and start building an emergency fund. Then once defaults are achieved, start making payments to the debts (debt management plan)

babayaga96

@RAS No, not working in healthcare. Unfortunately the salaries in the UK for beginners is not as good as US but the good thing is I meet the minimum salary requirements as far as Telco industry is considered especially there are different rates for new entrants. 

My visa ends August 2026. My company will pay for that and deduct it from my salary if I cannot save enough by then. 

Yes, I do need a car at any cost for my job but I definitely do not need the car I have now. It is expensive to pay, drive and maintain. I will need to get rid of it. I do not need to pay utilities. I have recently moved to shared accommodation where bills are included because I could not afford to rent a property by myself.

babayaga96

@fatbelly I checked the contract PDF document and it says in the beginning that is a HP. But it also says that I cannot sell the car without telling them and also in order for me to sell it I need to clear off the outstanding balance first. Should I share that document with you?

babayaga96

@kimwp Yes, that is correct. 

If you are referring to Council Tax, Utilities etc then since March.

Instead, can I move all the direct debits to a different bank account and default on that?

I spoke to Stepchange few days ago, they sent me a reference number but I have not given them any details at all until now. If I default by not paying anything to these lenders for the next few months, will they knock on my door? If they are likely to do that then my landlord will ask me to leave. I am asking because they are calling me everyday already for missing one month of the minimum payments. 

Also what will the lender feel if the loan or credit I have defaulted on is literally 2 months old and fresh? Will he file a legal case against me in the court?

kimwp

babayaga96 said:

@kimwp Yes, that is correct. 

If you are referring to Council Tax, Utilities etc then since March.

Instead, can I move all the direct debits to a different bank account and default on that?

I spoke to Stepchange few days ago, they sent me a reference number but I have not given them any details at all until now. If I default by not paying anything to these lenders for the next few months, will they knock on my door? If they are likely to do that then my landlord will ask me to leave. I am asking because they are calling me everyday already for missing one month of the minimum payments. 

Also what will the lender feel if the loan or credit I have defaulted on is literally 2 months old and fresh? Will he file a legal case against me in the court?

How much do you pay to your mother and to your home country loan?

You don't need to share your hp agreement, I think it just wasn't clear whether you bought the car with a loan, or it was hire purchase or a different arrangement. Which arrangement it is tells us the options available. Hire purchase I think means you don't own the car until you have paid all the agreed payments and a balloon payment as well. But I don't really know about this, I'll leave it to fatbelly.

Regarding moving the direct debits to a different account, maybe? The idea is to sever the link between the account that your salary comes into and the account that the direct debits are taken from, in case they continue taking the direct debits. If you moved your dds, the companies would probably still have your original account details.

Again fatbelly is the expert, but you shouldn't worry about anyone turning up to the door for unsecured debts (no matter how new the loans are). They are calling you at the moment because they have a duty to try to help you not default. If you are worried about your landlord knowing you are in debt, you might want to ask your creditors not to write to you, as you will probably start getting letters as well.

Thinking about your visa - normally the view is that it is better to stop paying, ignore the creditors and default as defaults stay on your credit history for only six years compared to arrangement to pay markers (which stay for six years after the debt has been paid), which will be placed on your credit record if you come to an agreement with your creditors. However, looking online, the guidance seems to be that your application will be viewed more favourably if you are taking steps to manage your debt, so yours might be the unusual case where it might be better to contact the companies and agree payments. 

Have you got anything you could sell or is there a possibility of getting a second job?

babayaga96

@kimwp I pay nearly £500-£600 including both my mother and the loan I took. 

Should I consult with an immigration advisor/lawyer before I do anything?

babayaga96

Btw, when HSBC had called regarding them extending support, I told them I spoke to StepChange, they then asked for reference number and said we are giving you a 60 day breathing space. What does this mean?

fatbelly

There is a lot of 'not quite right' information about what you can do with a car on hire purchase, and pcp is just a variation of that where instead of equal payments each month there are lower payments through most of the contract and one final 'balloon' payment at the end.

This guide is good re selling a car, and comes from a company that many use. However, it repeats the misunderstanding about Voluntary Termination

https://motorway.co.uk/sell-my-car/guides/how-to-sell-a-car-on-finance


This is a better explanation of your VT rights under CCA1974 and refers to the work that Legal Beagles has done, though I have not checked the links


https://www.thecarexpert.co.uk/car-finance-voluntary-termination-pcp-hp/

fatbelly

babayaga96 said:

Btw, when HSBC had called regarding them extending support, I told them I spoke to StepChange, they then asked for reference number and said we are giving you a 60 day breathing space. What...

There is a formal breathing space, which stepchange can and do grant, which is binding on all creditors for 60 days. 

https://www.gov.uk/options-for-dealing-with-your-debts/breathing-space

Hsbc could offer an informal pause for 60 days of their process

I am not clear who you said used those words