Waiting for defaults

Kittymumof4

Hi, after advice here in May we stopped paying all credit cards from June onwards. 

We have been getting lots of letters, phonecalls and messages as expected but haven't engaged in any.

I've had a couple of messages saying that the accounts will default and we will be asked to pay the total sum immediately if we don't contact them. 

When do I need to take action with these? I am autistic and need a clear way of knowing what I should keep ignoring and what I need to action. 

Also, I've seen that some people make a complaint for unaffordable lending. Should I do this? If so should I be doing it now? 

Thank you for any advice. 

Grumpelstiltskin

Do not do anything until the debts have actually defaulted and either sold on or passed to another firm to collect.

This can take as long as 18 months or it can be much sooner.

Yes you can submit affordability claims at any point.

I hope you have begun to save an emergency fund now you are not paying, the longer debts take to default the more you can have in your emergency fund.

Kittymumof4

Thank you @Grumpelstiltskin. So will I get a letter from the creditors once the accounts have defaulted or will it be from whoever they sell the debt to? 

Yes we are working to build an emergency fund, we don't have much money each month to put away as we were borrowing more money each month to meet minimum payments but we have cut spending as much as possible (after posting a SOA here). We had a couple of payments for insurance and car repairs to make which wiped out the first month and a half of our emergency fund money but we're now able to put away around £300-£400 per month. 

Is there a letter template anywhere or any info about making affordability claims please?  

Thank you for your help. 

sourcrates

You should get a letter called a "default notice".

It will be sent under sec 87(1) of the consumer credit act, and will demand full payment of the arrears on your account within 14 days or the account will default, and a default will be applied to your credit file.

This is the process by which an account defaults, you should just ignore that letter, the process will complete, and the creditor will then decide what to do with the debt, it may take some time, they may sell it, they may assign it to a 3rd party, they have various options.

Whatever happens, you will be written too, so it should be clear who is collecting the account.

You can then choose to engage if you want to.

The process will be similar for all your debts.

RAS

OK, a couple of things.

You need a budget for monthly spends, which seems to be working.

You then need to make provision monthly for annual expenditure like insurance and car repairs, holidays, Christmas and birthdays, medical and dental,  which you save somewhere aside from your monthly account. Are you doing this? If not it's time to start.

What you got after that is your emergency fund, for which I'd suggest an instant access account, maybe an ISA.

Secondly, before a creditor is allowed to default a letter, by law they have to send a scary letter demanding repayment within 14 days, or else. That let's you know the default might happen soon. 

It's not the same as a letter warning you that non-involvement might result in them demanding all the money back. 

It's important to understand that the creditor's computers have a portfolio of standard letters through which they just run almost regardless. And these letters are designed to be obtuse, the opposite of what you need. So lots of vague things that might possibly happen if something does or doesn't happen.

For example, "your account may be referred for further action" means "we have more threatograms in our computer that we can send you."

Rob5342

"Further recovery action" is the classic phrase they all use, it's designed to instil fear and make you imagine all sorts of nasty things to scare you into paying but all it means is that they will contact you again.

Until a debt defaults they can't take any legal action so you can simply ignore all the rubbish they come up with, once you have confirmation it has defaulted then you can engage and start paying. 

Kittymumof4

Thank you all so much, this is really helpful and reassuring. Although I knew the letters and phonecalls would come, it's been difficult trying to work out how long I should be ignoring them for and anxiety has been building up. 

@RAS thank you. Yes we worked out a budget with help here and have pots in our bank account so have been putting money away for the bigger expenses each month, and have also organised our money so that we have pots for each major spending group such as groceries, medical expenses, etc. This is really helping us to stay within budget as we can see exactly how much money we have left in each pot. 
The insurance and car repairs had to be paid outright as they came bg July when we hadn't had chance to save any money for them but we're putting money away monthly now so when we have to pay insurance next year and MOT etc, we should have enough money in our pots to pay for it without needing to touch the emergency fund. 

I have to say I'm so glad I found this forum and that so many people are wiling to help because I wouldn't have had a clue what to do. We were about to attempt to add 65k of unsecured debt onto our already high mortgage as we thought that was the only way. 😳 We know the debt is still there and we have a long journey ahead before we become debt free, but I'm so glad we are more in control of it all now. 

Rob5342

Well done on getting started, it took me a long time to face up to the fact I had a problem and so something about it. 

It's a long journey but not quite as long as it might seem. You might be able to reduce what you owe by making affordability complaints, and once sold on you'll have the option of making settlement offers to clear the debts for a reduced amount. Also you have the option of making cca requests, if the cca can't be provided then the debt can't be enforced and you can simply ignore it. Making cca requests is best left until the debt had been sold and has been with the purchaser for a while as its less likely to be found then.