Unable to pay back Debt

Humdinger1

We stand self-convicted @kimwp!  It's a big area and I'm always impressed by the effortless,  elegant advice of the experts!

babayaga96

@Humdinger1 @fatbelly @kimwp @ManyWays @Rob5342

I greatly appreciate all the advice you guys are giving me. Really means a lot because I am absolutely clueless regarding all this.

I have decided to give my car back as it does not seem economical for me to keep the car. As a matter of fact it would be unnecessary burden. For the usage I have I could probably get a cheap £500 car. 

I guess I do the Voluntary Termination email to them. Then they come down, collect the car, sell it at an auction and the remaining debt becomes Non Priority and gets added to DMP, right? The remaining Non Priority Debts ex: Credit Cards and other shopping websites, I keep ducking calls and wait till I default and then after I opt for a solution on Stepchange? 

ManyWays

The car - was this HP or PCP and how long ago did it start? If you don't need it, ending the finance is probably very sensible but you may have other options excect a VT

DankVielen

babayaga96 said:

Got it. How long does the DMP usually last?

How long is a piece of string?

I believe that it all depends on a number of factors, firstly telling each creditor unequivocally that you will not be making any further payments to the account, I think this triggers some rule that makes them write off the debt and sell it.

Then each debt depends on the risk profile and appetite, in my experience going completely off radar (including social media for whole family) reduces their ability to make assumptions or judgements. Going off radar also means not showing spending or borrowing activity. These all affect the decision making process of the DC, as does you actually settling a debt at a discount.

In their mindset, if you can pay someone else off you have freed up disposable income and can afford to pay them more. In their mindset if someone lends you money, like renewing an overdraft, you can use that money to pay them off. In their mindset if you share images of your family in Spain on holiday they think you can spend that money on their alleged debt. In their mindset, all of this means they need to put more pressure on you which means they need to threaten what you care about, even though they have no real power, except the power to cause anxiety and harassment.

The third factor is what discount you are looking for, if you just want 20% to 40% then that could happen within 9 months to a year IF you get all the debts formerly defaulted (letter saying no more interest and charges, debt has been sold to Debt Consolidator) in sync.

I was initially going for 60% off, I understood that the debt was probably sold for 3% of it's value, I had no relationship or loyalty to the Debt Consolidator and all the other vermin leeches in the industry. I knew that they needed time to "get to acceptance" so in early days they would entertain the fantasy that they would recover 100% of the original value of the debt at default. This is not just about fantasy, they have to pretend to their investors that they have an asset book value, so even if they know the debt is worth about as much as a sheet of used toilet paper they keep up this pretence.

How does this translate to you? Well the Debt Manager (e.g. Capquest) will be aware of the risk profile and appetite for each of their Debt Consolidator clients and assign Debt Collector Company (DCC) in an order that matches said risks. The DM may appoint a slow slug type DCC who never talk about a reduction until they are about to be fired, the DM might give them six months instead of three. The first DCC is inevitably a slug, but some get fired in 3 months and are followed by DCC's who are talking offers in their 2nd or 3rd letter.

The first goal of the DCC is that you acknowledge the debt or make any form of contact, they can use this to say to the DM that they have started to make progress. Think of a commission hungry salesman, they can't call someone a prospect if they have never responded to direct mail, email, phone call, event invitation or anything, but if someone makes any kind of response they can at least put them on a prospect list. Commission hungry salesman like low hanging fruit, so any form of contact is a mistake until they make an actual offer in amount you are prepared to settle for and now. You can ignore any FOMO last chance before it is gone because the next DCC will make the same or a better offer.

What do I mean when I talk about Risk Profile and Risk Appetite.

Risk Profile is related to the book value of the debt which diminishes over time as long as the Statute Bar clock runs down, it also embodies the amount of used toilet paper debt the firm has on it's books, what percentage they can show (with evidence) has a potential for collection (e.g. obtaining payments on Statute Barred debt despite enforcement knee capped by FCA CONC rules).

The banks demonstrate that they have a low tolerance for bad risk profile, that is why they sell the debt as soon as they have reason to believe it will not be recoverable. The debt costs them 3% which they get back as soon as they sell it, but more importantly they can then lend to the next mug waiting in line as selling the debt to a DC improves their debt to equity ratio.

As you can see, the whole market is not about money, it is about confidence, money lent is merely monopoly money invented to allow people to play the game.

The Risk Appetite reflects how much a DC is prepared to throw good money after bad, unlike the banks the DC can't invent money and some are surprisingly tight about spending anything at all. e.g. paying for a CCJ at year 5. Again if they have had no engagement by the debtor they have no visible ROI, some will offer 95% off at this stage while others will have a false belief that someone like me who never paid them a penny 65 months is suddenly going to pay them because they get a different piece of paper with a Court Stamp. They will be painfully aware that the best they could hope for might be £1 a month for 6 further years, so £72, while people who have gone abroad or who have self discipline will not even pay that.

You have only to look at Intrum to understand these behaviours and attitudes to used toilet paper debt. They are currently in Administration, they might call it recapitalisation or structuring, but the company status in UK and Sweden is Administration (Chapter 11 type situation).

Intrum has been merged numerous times, it has been on the precipice before under former names and had to make commitments to the FCA just to keep it's licence. Yet we see still see widespread abhorrent behaviour breaching FCA CONC rules, especially on the disallowed enforcement of Statute Barred debt. It would be absolutely absurd for them to suggest that they do not know the debt is Statute Barred, it is clear that the DC's they buy Statute Barred debt from know it is Statute Barred and nobody in their right mind would buy debt if they did not know the default date and history of the debt. So they know or should have known that their activity breaches CONC rules and thus makes a mockery of the Financial Conduct Authority. A point comes where no matter how many assurances the FCA receives with promises to change their ways, new owners, pretty websites and so on, the FCA needs to not only withdraw the licence but get in there and delete the data of Statute Barred debt so it can't be sold on to yet another DC or phoenix of Intrum.

There is a legal basis for known or should have known, it is called the Data Protection Act and General Data Protection Regulations. Intrum fails on almost all of the six core principles of Data Protection Regulations

1. Lawfulness, fairness, and transparency:
2. Purpose limitation:
3. Data minimization:
4. Storage limitation:
5. Integrity and confidentiality (Security):
6. Accountability:

I can demonstrate this not only with my own evidence but evidence from others.

Intrum bought Capquest and I am looking into whether they have used the data of this company in further breach of these rules, certainly evidence online and that has be PM'ed to me seems to suggest it is worth investigation.

I believe Intrum will fail in it's recapitalisation because regulators will finally realise that the core culture is the issue and once executives start losing their jobs there will be whistleblowers, but that is probably just speculation now. We are all free to speculate and the Investor Relations Team at Intrum would obviously paid a different story.

I think that anybody considering investing in Intrum might be better off waiting for the asset sell off, with Capquest probably being the biggest tangible asset.

Honestly, if the FCA does not act severely then they might as well condone people in foreign call centres calling UK random numbers and harassing them about debt they do not have and does not exist.

I have debt that is so old that it should be criminal to attempt to enforce it, I have tried informing the DCC but that simply results in the DM appointing a new DCC, so now I am collecting evidence from others and preparing a case that I hope and expect the FCA to act on. I can show it is widespread both within specific companies and across the industry, so it remains for the FCA to set an example and truly put an end to one of the big companies who are in total violation of the FCA rules.

So how long does the DMP last, as long as it takes based on the factors above.

kimwp

babayaga96 said:

@Humdinger1 @fatbelly @kimwp @ManyWays @Rob5342

I greatly appreciate all the advice you guys are giving me. Really means a lot because I am absolutely clueless regarding all this.

I have decided to give my car back as it does not seem economical for me to keep the car. As a matter of fact it would be unnecessary burden. For the usage I have I could probably get a cheap £500 car. 

I guess I do the Voluntary Termination email to them. Then they come down, collect the car, sell it at an auction and the remaining debt becomes Non Priority and gets added to DMP, right? The remaining Non Priority Debts ex: Credit Cards and other shopping websites, I keep ducking calls and wait till I default and then after I opt for a solution on Stepchange? 

Worth popping over to the car section to see what you would need to spend to get a reliable car, a £500 car might cost a lot in maintenance.

If you really won't use it much, it might be worth considering car hire or a car club or sharing scheme instead. Or even taxis for when you need it - if the total for taxis/car hire comes under the cost of insurance, MOT, service, maintenance, tax, it might make economic sense to do it that way.

Car sharing schemes are sharing a ride, so you'd pay someone a nominal amount to get a lift on a journey they are already doing. -useful for reducing the cost of a commute.

Car clubs are where the scheme owns some cars and you can book them for use. 

fatbelly

On the car board they talk about bangernomics. If you know what you are foing then you can buy and run a car very cheaply

babayaga96

@ManyWays It is HP Loan. It started last year August 2024. I took £10,000 HP Loan with £289 per month for 5 years. I have only made payment till May 2025. The settlement amount is £9700 and the overall amount I owe them is around £14,500. 

ManyWays

ok so you have two choices (assuming the car is now worth less than 9700, in the unlikely event it is worth more, you have another one ).

The one you described, "I guess I do the Voluntary Termination email to them. Then they come down, collect the car, sell it at an auction and the remaining debt becomes Non Priority and gets added to DMP, right?"
is NOT Voluntary Termination, it is just handing back the car.

If you VT the car, the amount you have to pay is half the total cost of finance (289*60=17340) LESS what you have already paid PLUS the payments for the months you have missed 

It doesnt matter what they sell the car for, your liability is capped at a half

(I am pretty sure that you have to add on the payments for the months you have missed, I havent helpd a client in this situation for quite a while.)

You need to look URGENTLY at whether a VT may leave you with a lower debt to go into the DMP than handing back the car, because your right to VT the car ends when the lender defaults the agreement.

babayaga96

@ManyWays What would handing back to the car mean? What would I be liable for?

So if I VT - then what I will be liable = {[(289x60=17340)/2] - 289x(Months paid until now from the start of HP) + Arrears}  . Am I right?

babayaga96

@Humdinger1 @fatbelly @kimwp @Rob5342 As different creditors will default me at different times, is there a way I can request them to default me now? 

After defaulting how do arrange for a DMP especially if I default at different times?