Writing to creditors individually

Pollyanna79

Hi,

I am currently, after advice from Business debt line, contacting my creditors individually and asking them to freeze interest and consider wiping debts off. I am also awaiting my Dr completing a DMHEF due to mental health issues.

My debt is personal debt, but as I also have a small business I needed to go through Business debt line. For various reasons I cannot do an IVA which is why I am writing to them individually.

One of my (many) credit cards is a Barclaycard. We also have a joint bank account with Barclays. I do not want this affected (haven't told my husband about the issues...). As long as I do not ask Barclaycard to freeze/wipe off debt, then they will not know about the issue will they? We are also overdrawn and I don't want them to close the account and say we have to pay that too.

I also have an overdrawn account with HSBC, but I do not have any credit cards related to HSBC, so again I do not think they will be aware of my issues, hopefully.

Any advise gratefully received.

Thanks

sourcrates

Best advice when you have credit card/loan debt with the same financial institution that you bank with, and you think you may have to default on these debts, is to stop using that account altogether, get yourself a new basic bank account, with a lender/banking group, with whom you have no other debt.

If your old account has an overdraft facility that you are currently using, then that just becomes another unsecured debt to service, sorry, but you must get hubby onboard with this, otherwise it just isn`t going to work very well.

If your going to go into debt management or any other debt solution, the very first thing you do is make certain you don`t bank where you have debts, as, although quite rare, the lender can take money from any other account in your name, to service any other debt in your name, within their group, its known as the right of "set off", they can also "call in" the overdraft at any time, and they can also close your account without much notice, or reason why, so its a gamble not worth taking.

Its all about pre-planning, getting your ducks in a row, the very first thing on the checklist to do before anything else, is sorting your banking out, it is also imperative that you adhere to a workable budget, and you can only do that if you have all of your income available, you can `t keep on using an account that is constantly in its overdraft, you need a clean slate to start with.

Pollyanna79

Ok thank you @sourcrates that’s really helpful. I do have a bank account with Chase so I’ll start using that. My hsbc account isn’t connected to any of my credit cards so I should be ok with that. I might try writing to all the debts apart from Barclaycard, so I can keep the Barclays account too. Thanks agajn

Grumpelstiltskin

Pollyanna it is totally the wrong thing to keep a bank account with an overdraft.

You cannot get this sorted on your own, you need to be honest with your husband and you can't have any joint bank accounts with him so the sooner you come clean with him the sooner you can get started.

Pollyanna79

Thanks @Grumpelstiltskin, what do you mean I can’t have any joint accounts with him? 

ManyWays

You can have joint accounts, but that means your poor credit score would harm his.

Grumpelstiltskin

You do realize that with joint account he is connected to you and it is possible he could find out you have problems if he applied for credit in his own name he could get turned down because of the association.

This is one of the reasons he should know.

The other main one is that marriage is a partnership,  sharing the bad times as well as the good.

Pollyanna79

Thank you, I really appreciate the comments and know I need to speak to him. I just wanted to get things sort of in hand first.

Grumpelstiltskin

You have to have a complete change of mindset, you need to live without credit.

The sooner you tell him the quicker you can start to sort this out.

I would say without full details forget an IVA there are other ways of dealing with the debt, we can't advise you the best way for your situation until we know your full circumstances.

ADD Start by reading this thread.

In Debt and Wannabe Debt Free? first Steps to take are here, please read, then ask questions. — MoneySavingExpert Forum

You will need to complete a honest SOA with both you and your husband's income and debts, when we can see the full family position we will know what to advise you.

Pollyanna79

hi @Grumpelstiltskin, I have done the SOA which is showing current situ - that this year husband (business owner) has only been able to pay himself £1000 per month, where it should be £2000 per month.

[font=courier new][b]Statement of Affairs and Personal Balance Sheet[/b][b]

Household Information[/b]

Number of adults in household........... 2

Number of children in household......... 2

Number of cars owned.................... 2[b]

Monthly Income Details[/b]

Monthly income after tax................ 2392

Partners monthly income after tax....... 1000

Benefits................................ 648

Other income............................ 0[b]

Total monthly income.................... 4040[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 1370

Secured/HP loan repayments.............. 618

Rent.................................... 0

Management charge (leasehold property).. 0

Council tax............................. 176

Electricity............................. 278

Gas..................................... 0

Oil..................................... 0

Water rates............................. 73

Telephone (land line)................... 0

Mobile phone............................ 45

TV Licence.............................. 15

Satellite/Cable TV...................... 0

Internet Services....................... 55

Groceries etc. ......................... 400

Clothing................................ 100

Petrol/diesel........................... 328

Road tax................................ 30

Car Insurance........................... 76

Car maintenance (including MOT)......... 50

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 0

Other child related expenses............ 418

Medical (prescriptions, dentist etc).... 20

Pet insurance/vet bills................. 34

Buildings insurance..................... 39

Contents insurance...................... 0

Life assurance ......................... 38

Other insurance......................... 0

Presents (birthday, christmas etc)...... 0

Haircuts................................ 40

Entertainment........................... 160

Holiday................................. 0

Emergency fund.......................... 0

union fees.............................. 14

school uniform.......................... 20

dentist/optician........................ 50[b]

Total monthly expenses.................. 4447[/b]

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 370000

Shares and bonds........................ 0

Car(s).................................. 8000

Other assets............................ 0[b]

Total Assets............................ 378000[/b]

[b]

Secured & HP Debts[/b]

Description....................Debt......Monthly...APR

Mortgage...................... 0........(1370).....0

Secured Debt.................. 0........(618)......0[b]

Total secured & HP debts...... 0.........-.........-   [/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Santander......................2816......78........0

barclaycard....................14978.....456.......0

asda loan......................13366.....334.......0

bed............................0.........58........0

lloyds.........................7961......189.......0

tesco..........................9008......177.......0

barclaycard 2..................5000......55........0

debenhams......................7126......181.......0

virgin.........................5398......150.......0

next...........................2541......126.......0

mbna...........................495.......50........0[b]

Total unsecured debts..........68689.....1854......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 4,040

Expenses (including HP & secured debts). 4,447

Available for debt repayments........... -407

Monthly UNsecured debt repayments....... 1,854[b]

Amount short for making debt repayments. -2,261[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 378,000

Total HP & Secured debt................. -0

Total Unsecured debt.................... -68,689[b]

Net Assets.............................. 309,311[/b]

[i]Created using the SOA calculator at www.LemonFool.co.uk.

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

Grumpelstiltskin

OK Good first try but you need the interest rates on all of the debts, some of the amounts on the SOA aren't what you really need, what is the £418 child expenses? uniform needs adding to clothing, you never buy anyone a present? what is entertainment?