Urgent Debt Advice

sourcrates

You have £500 plus disposable income with which to pay your debts.

If you went bankrupt, that would mean a 3 year IPA, at £500 a month, not withstanding the beneficial interest issue, I don`t think going bankrupt is the right call here.

The credit union loan should become a priority debt, unless a CCJ would not cause you any issues, as they are far more likely to go down the legal route rather than use a debt collector.

Best bet is debt management, possibly £400 a month, with £100 going into a savings pot, that`s a 5/6 year DMP more or less, less if you can get settlement offers later on.

The other option is to save all of that money monthly, ignore everything, and only respond to creditors that take legal action, in the end, the only way to force payment is by taking legal action, and maybe less than half would actually do that, you could then use the savings to settle those, after 6 years the rest would be statute barred.

Two options there for you, either is a useful strategy.

ManyWays

Where is this 600 loan your partner took for you that you are paying? That will not be seen as an allowable expense in bankruptcy.

The car finance, is this PCP or HP? When does it end? Does your partner also drive this car? 

Can you say some more about your partners house. When did you start living together and when did she buy her house? If it was after you started living together, where did the deposit come from - all from her or did you contribute any? Have you paid for any house improvements such as a new kitchen or windows? How much is her mortgage? How much does she earn? 

You have a very high cost set of debts, another option for you is a DMP with affordability complaints to try to reduce the balances on the debts. It may be your partner can also win an affordability complaint about the loan she took for you?

Callum1510

sourcrates said:

You have £500 plus disposable income with which to pay your debts.

If you went bankrupt, that would mean a 3 year IPA, at £500 a month, not withstanding the beneficial interest issue, I don`t think going bankrupt is the right call here.

The credit union loan should become a priority debt, unless a CCJ would not cause you any issues, as they are far more likely to go down the legal route rather than use a debt collector.

Best bet is debt management, possibly £400 a month, with £100 going into a savings pot, that`s a 5/6 year DMP more or less, less if you can get settlement offers later on.

The other option is to save all of that money monthly, ignore everything, and only respond to creditors that take legal action, in the end, the only way to force payment is by taking legal action, and maybe less than half would actually do that, you could then use the savings to settle those, after 6 years the rest would be statute barred.

Two options there for you, either is a useful strategy.

Thanks for the response! I was thinking a debt management plan! Can you recommend any companies to set this up for me? 

Also with regards to my credit cards should I contact them and ask them to freeze all interest and charges? Or anything along them lines? 

Thanks for your help 

RAS

Given the fact that you have to pay the debts your partner took out and the credit union debt, you'll need to manage your own DMP initially.

It's not scary, even if you think it might be. A lot of people on MSE do that, either at the beginning or the end of their DMP. Getting Stepchange or Payplan to manage it for you is an option once you've paid of the loans taken out in your partner's name and the credit union debt. Do not pay a company for something that can be done for no cost.

The reason most people self manage early on is because they want to stop making payments and save an emergency fund because they won't have access to credit. A managed DMP takes your monthly payment and divis it up pro rata from the day you start. 

Stepchange, PayPlan and companies want to start immediately and allow £30-50 per month, which is burger all use if the car needs serious work. So you end up having to halt your DMP payments, try to find the money somehow and then get back on an even keel. Stressful.

Self managing, you wait for the default, then set up a payment with the creditor, or the company they assign or sell the debt to. That reduces the incentive for the company to take you to court. Legal action costs them and they pretty much know they'll not get more if they do it. It means you can still increase your emergency fund whilst they get it together, over 3-18 months.

You've got the added complication that you need to pay off those loans and you need to agree a higher than accepted rate to the credit union unless you want a CCJ. There's no guarantee a debt charity or company will accept those loan payments, even at a reduced rate. 

sourcrates has explained the 2 main strategies. Think a bit and ask more questions. People here are used to helping and slot of them have recent experience.

Edit: Radio silence until the default is issued encourages them to default quicker, which means your credit record is repaired quicker. But not with the credit union, contact them as soon as you get the first letter.

Callum1510

RAS said:

Given the fact that you have to pay the debts your partner took out and the credit union debt, you'll need to manage your own DMP initially.

It's not scary, even if you think it might be. A lot of people on MSE do that, either at the beginning or the end of their DMP. Getting Stepchange or Payplan to manage it for you is an option once you've paid of the loans taken out in your partner's name and the credit union debt. Do not pay a company for something that can be done for no cost.

The reason most people self manage early on is because they want to stop making payments and save an emergency fund because they won't have access to credit. A managed DMP takes your monthly payment and divis it up pro rata from the day you start. 

Stepchange, PayPlan and companies want to start immediately and allow £30-50 per month, which is burger all use if the car needs serious work. So you end up having to halt your DMP payments, try to find the money somehow and then get back on an even keel. Stressful.

Self managing, you wait for the default, then set up a payment with the creditor, or the company they assign or sell the debt to. That reduces the incentive for the company to take you to court. Legal action costs them and they pretty much know they'll not get more if they do it. It means you can still increase your emergency fund whilst they get it together, over 3-18 months.

You've got the added complication that you need to pay off those loans and you need to agree a higher than accepted rate to the credit union unless you want a CCJ. There's no guarantee a debt charity or company will accept those loan payments, even at a reduced rate. 

sourcrates has explained the 2 main strategies. Think a bit and ask more questions. People here are used to helping and slot of them have recent experience.

Edit: Radio silence until the default is issued encourages them to default quicker, which means your credit record is repaired quicker. But not with the credit union, contact them as soon as you get the first letter.

Thanks for the response. What if I just carry on paying the credit union one normally each month and the 600 one my partner has she pays this for me? Would I then be ok for a DMP? 

I did contact PayPlan who were keen to get me on an IVA. 

Is there any benefit of me ringing each creditor before I default to make a payment arrangement direct? At a lesser amount? 

Thanks 

RAS

I'm confused.

You are currently paying £900 in loans which are in your partner's name and she has a mortgage to pay?

Re the credit union, speak to them asap and make a reasonable offer and they may accept 25%,30% of the normal payment without taking you to court, maybe more. 

As previously explained , contacting your other creditors does nothing to help you.

Most likely they will put AP markers on your file. An AP marker stays on your credit file stay on your credit record for 6 years after the debt is paid. So if it takes 5 years to pay it off, your credit record is damaged for 11 years.

Unless it is overwritten by a default, which is removed from your record 6 years after it is registered. Delaying the default just wrecks your credit record for longer, counter-intuitive as it may be.

Time2Go_25

So somehow the partner has got car finance at £300 per month and a mortgage all with a £600 per month take home pay.

Grumpelstiltskin

Time2Go_25 said:

So somehow the partner has got car finance at £300 per month and a mortgage all with a £600 per month take home pay.

In my mind this just doesn't add up, something is wrong somewhere.

ManyWays

Time2Go_25 said:

So somehow the partner has got car finance at £300 per month and a mortgage all with a £600 per month take home pay.

At a guess partner was earning more before having a baby  AND/OR the car finance and loan may also be "unaffordable". This seems pretty plausible, but tricky for bankruptcy, bioth because of the potential benefial equity problem and the need to keep paying the debts partner as taken out which would not be allowable expenses in bankruptcy

RAS

We don't know how long ago the partner bought the property, nor what there income was at that time?

The partner has a baby so that income could be maternity pay, or part-time work.

It's not uncommon for couples to get into a complete mess with their first child because they haven't put together savings to cover the year or so before the second parent can go back to work without huge child care costs. It costly enough for over 12 month olds.

Add that the partner has been shielding the OP from the consequences of their poor credit record. Hopefully once that loan is paid off in 8 months, they can start to recover, if they prioritise and massively reduce the fun stuff they can't afford until the debt's cleared.