Unable to pay back Debt

babayaga96

And also since we last wrote on this post until yesterday I have had discussions with few people and why are all these saying it is very stupid of me to default and opt for DMP? They keep saying just consolidate your debt etc. Why do they think this is a bad idea?

kimwp

babayaga96 said:

And also since we last wrote on this post until yesterday I have had discussions with few people and why are all these saying it is very stupid of me to default and opt for DMP? They keep saying just consolidate your debt etc. Why do they think this is a bad idea?

Consolidation loans are generally considered nor a good option by most on this forum as people who take them out tend not to change their habits and carry on spending, thinking that they have solved the issue when they haven't.

But in your case, it's unlikely to be an option anyway as a consolidation loan (like any loan or credit) is given in consideration of whether you can afford it with your existing credit/debt, because you might take it out and not use it to pay off the other debt and instead just spend it.

fatbelly

babayaga96 said:

I have not paid 50% of the loan to be able to opt for voluntary termination. Hence, they are suggesting my only option is Default Termination.

Read my links posted earlier.

I will bring them back down the thread in a minute.

You do not have to have paid 50% to exercise that right. It limits your liability to 50%.'I think I said that this section is poorly understood with creditors deliberately posting misinformation.

fatbelly

fatbelly said:

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/

This is what I posted earlier

ManyWays

You can still Voluntarily Terminate a car even if you haven't paid half, you just end up owing the "rest" of the half. So you need to look at whether this is likely to be better for you than termination and sale. 

sourcrates

babayaga96 said:

And also since we last wrote on this post until yesterday I have had discussions with few people and why are all these saying it is very stupid of me to default and opt for DMP? They keep saying just consolidate your debt etc. Why do they think this is a bad idea?

Because this is the train of thought prevalent amongst those who are serial credit abusers, always thinking they can borrow their way out of debt, and 100% the reason why they spend their entire lives forever in a debt spiral.

The majority of the regulars on this forum, including myself, have been through this mill, some more than once, and we all thought the same once upon a time, before we woke up and discovered the only ones that benefited from consolidation loans, were the banks, certainly not us.

You don`t pay off debt by borrowing more money, as people don`t tend to change their spending habits, and 9/10 they end up right back in debt, but with twice as much of it.

enthusiasticsaver

babayaga96 said:

And also since we last wrote on this post until yesterday I have had discussions with few people and why are all these saying it is very stupid of me to default and opt for DMP? They keep saying just consolidate your debt etc. Why do they think this is a bad idea?

People who consolidate debt are usually serial debtors. Their cards and loans become unmanageable and they have this misguided opinion that consolidating into one payment is better. Before long without a change to spending habits plus the loan repayment stretching the budget they resort to credit again and before long they have a £15k loan plus more debt on credit cards. Some consolidate several times until they see the light or no longer have leeway in their budget.

Any bank credit scoring you for a loan will see you are overstretched already and either charge a high rate or refuse you. They won’t assume you intend to repay the other debt so you will fail on affordability. 

babayaga96

@kimwp @sourcrates @enthusiasticsaver

Understood.. I do not prefer to take a consolidated loan or even borrow money from else where to pay of this debt. I just want to stop borrowing, pay back anything and everything I can and become debt free.

From the SOA I submitted you can remove SKY and VERY as I have returned the goods and do not owe them anything. 

babayaga96

@fatbelly @ManyWays I have read these people now. Please correct me if I am wrong -

I currently owe them £9700 with one missed payment.

I send them an email saying I would like to exercise voluntary termination as per that act.

They will take hold of the car and I will still owe them 50% of £9700? 

ManyWays

They will take hold of the car and you will still owe them 50% of £9700 LESS ANY PAYMENTS YOU HAVE ALREADY MADE. 

This may not be your best option, but you need to do the arithmetic to find out. If you are confused by the options, call National Debtline on 0808 808 4000 and they can talk you through the different choices.