Need help getting out of debt cycle!!!

IWantaFreshStart2025

RAS said:

Technically, yes.

Only after you default
And your fail to pay something towards the defaulted debt,
And they send a letter before action to which you do not respond
And they successfully obtain a CCJ, which requires you to pay an affordable payment (which is why they will not bother if they think your existing payment is affordable).
And you routinely don't pay the affordable payment set in your CCJ (you can challenge the sum).
And .....

Basically possible but highly unlikely.  

Consumer creditor letters rely on mentioning an outcome that affects a tiny percent of 1% of debts, because

the debtor is already paying what they can afford
the cost of claiming more exceeds any benefit to the creditor

Thanks for clarifying. That makes sense. I'll definitley not let it turn into a CCJ. I'll pay token minimum payments once I get letter before action and save as much as I can as an emergency fund.

ManyWays

I'll pay token minimum payments once I get letter before action and save as much as I can as an emergency fund.
When it has got to the LBA p[oint, you usually need to make more significant payments to prevent this going to court.

If you want to make token payments, you should start these after getting defaulted, as that will hopefully prevent most debts from getting near an LBA

tigergambit

IWantaFreshStart2025 said:

I was reading my Tesco Bank personal loan agreement and it says if I keep missing payments they can take payments from my wages. Can they really do that or speak to my employer? Anyone know?

Just wanted to say that in my experience Tesco have been the most difficult creditor to deal with. They don't sell on, don't offer discounts and are quite sloppy on the admin side.

On a more positive note you can get them to accept ridiculously low repayments and they don't hassle you.

ManyWays

if the Tesco loan has only defaulted in the last few years, look at an affordability complaint

RAS

IWantaFreshStart2025 said:

Thanks for clarifying. That makes sense. I'll definitley not let it turn into a CCJ. I'll pay token minimum payments once I get letter before action and save as much as I can as an emergency fund.

Your aspirations are contradictory. As ManyWays comments, if you want to avoid a CCJ, you need to start making small payments once the default is registered.

You should get a letter from the creditor which will address one of their three options

They have sold the debt. Wait for the new creditor to write to you and set up affordable payments.

They've appointed debt collectors, ditto.

Less likely, they are keeping the debt in house, but should provide the reference number and details needed to set up payments.

It'll take 3-18 months for debts to default, so you need a new instant access ISA into which you transfer the full amount you have towards debt payments as soon as you are paid.

As you get more defaults, the amount you can save will reduce, but you need to allocate £30-50 per month after they are all in payment.

Humdinger1

@IWantaFreshStart2025 have read and subscribed.   Congratulations on all the steps you're taking.  This situation is not all of your making; irresponsible lending has played a huge part here.  You're gripping it now so please don't feel bad, just keep going.  There's a lot of non-judgemental expertise on this board and I'd listen to that.  You can do this; please keep posting. Love Humdinger 

IWantaFreshStart2025

Quick update, since stopping all payments around 4 months ago, I've started to receive default notices. Do I need to respond to this letter or wait until default is registered and I get letter before claim? Would this lead to CCJA if I don't respond or just a default?

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sourcrates

You do not need to respond to a default notice unless you intend to remedy the breach to your credit account.

Now you mention "letter before claim", in the same sentence as "default notice", one does not automatically follow the other, the lender has a few choices available to them once an account defaults, they usually sell the debt or assign it to a collector, only if you are particularly unlucky will they take action through the courts at this early stage.

But if that did happen, and you ignore the LBA, then yes, you could get a judgement by default, a CCJ granted against you, so to avoid that you must engage with them.

But from experience, Barclaycard will usually sell your debt pretty quickly, and PRA group are the usual beneficiaries of that.

SpireCaptain

https://forums.moneysavingexpert.com/discussion/comment/81911817#Comment_81911817

Thank you for posting this. It's good to see in print how they word the letters.

A third of my debt is £20k across two Barclaycards so seeing that I can gird my loins for how they'll approach it. And to be honest that's not nearly as strongly worded/scary as I thought it would be

Perhaps it's the amount of time I've spent on these threads that's made me realise the world won't end as soon as you default, life carries on. They're not as vicious in collections/scare tactics as Sourcrates faced back in the day, and you can play them at their own game. You're in charge now. You're just a number and when you default you won't be their "customer" and so they will quickly drop you like a stone and move onto to someone more profitable.

Take a breath, wait for the default to register on your Credit File, and decide how to play the game. Keep saving into your EF.

Rob5342

BarclayCard were brilliant with me. They defaulted the debt after less than three months and backdated the default to the day they had heard from Stepchamge so my credit record was harmed for the least amount of time. They also enclosed a cover letter with the official default notice telling me not to worry and that I'd be able to set up a payment plan, and within a few weeks they sold the debt to PRA.

Once it has defaulted then you can start repaying, Once defaulted they can try for a ccj if they choose, but in most cases that won't happen if you are making payments.