When Should I Start Paying?

booandboo

RAS said:

If a debt is sold, it's not uncommon for it to disappear from your credit record for a month or two or be set to £0 before reappearing in the name of the new creditor.

Primary creditor sell batches of 1000s of debts and debt collectors buy 1000s. If one processes the transaction faster than the other, your credit record can look odd in the short-term. And it can take a couple of months for the new creditor to tell you how to pay.

Creditors are supposed to write and tell you the debt is assigned or sold, so do keep an eye open if the debt is listed as defaulted. Once a week or so, open the letters and file by creditor. 

Once debts default, you need to be rigorous about this, as there are some that need acknowledgement within 14 days. 

'Once debts default, you need to be rigorous about this, as there are some that need acknowledgement within 14 days. ' Do you mean we should contact them to acknowledge and set up payment plan? If not done within 14 days they could start CCJ process?

sourcrates

I don`t know what RAS was thinking there to be honest, but definitely nothing to do with taking legal action, that only happens in a very few unfortunate cases at this very early stage in the proceedings.

Once an account defaults the lender has multiple options on what to do with it, they may do nothing for quite a while, or they may sell it on pretty sharpish, they could just assign it to a debt collector to chase, or they may choose to keep it "in house" and manage it themselves.

Less than 1-10 defaulted debts sees legal action at this stage, the vast majority are sold to debt purchasing companies, or assigned to collectors.

Whatever they decide to do, they will write to you and tell you, there is no enforceable time limit for you to respond to their letters, if making a payment arrangement is your intention, then you do so when you are good and ready.

Legal action in the main, is only a real possibility much further down the line when a debt has been sold, and you fail to contact the new owner with a credible repayment plan, and then only after a string of standard letters has been sent and ignored, almost 87% of defaulted debts never go to court.

dprovan

sourcrates said:

I don`t know what RAS was thinking there to be honest, but definitely nothing to do with taking legal action, that only happens in a very few unfortunate cases at this very early stage in the proceedings.

Once an account defaults the lender has multiple options on what to do with it, they may do nothing for quite a while, or they may sell it on pretty sharpish, they could just assign it to a debt collector to chase, or they may choose to keep it "in house" and manage it themselves.

Less than 1-10 defaulted debts sees legal action at this stage, the vast majority are sold to debt purchasing companies, or assigned to collectors.

Whatever they decide to do, they will write to you and tell you, there is no enforceable time limit for you to respond to their letters, if making a payment arrangement is your intention, then you do so when you are good and ready.

Legal action in the main, is only a real possibility much further down the line when a debt has been sold, and you fail to contact the new owner with a credible repayment plan, and then only after a string of standard letters has been sent and ignored, almost 87% of defaulted debts never go to court.

For those 1 in 10 at the early stages that go in to legal action are there common factors for why? Does location play a part (what about N Ireland), does available assets play a role, size of debt, number of creditors, number of debts with one company, is it less likely via a managed plan with someone like stepchange? I am considering DMP and want to have a plan to offer settlements in time, but dont want to risk losing my house

RAS

There's no risk of losing your house, as this is unsecured debt.

The whole point is that you are prioritising secured debt like mortgages and paying essentials like CT and food. 

Legal action costs money and requires suitably skilled staff. These companies rely on computer generated threat o grams. You're just another number. If you are paying something, generally they ignore but ask for an increase at intervals.

And over time might decide having got back their investment that offering a discounted settlement would be more efficient than continuing to run the account. 

ManyWays

dprovan said:

For those 1 in 10 at the early stages that go in to legal action are there common factors for why? Does location play a part (what about N Ireland), does available assets play a role, size of debt, number of creditors, number of debts with one company, is it less likely via a managed plan with someone like stepchange? I am considering DMP and want to have a plan to offer settlements in time, but dont want to risk losing my house

The type of debt is important. Business debts and personal guarantees over business debts are far more likely to be taken to court. Especially if you have an asset such as a house. That doesnt to mean this will happen, but it definitely increases the chance.

Some other creditors are known to be difficult, especially if they are only being offered a very low payment. Some credit unions fall into this category. A very small number of "very bad credit" lenders do. This is why it can help if you can post a Statement of Affairs (SOA) which includes creditor names. Amex has a bad reputation around here, but I haven't seen any problems with them for years if they are being paid a reasonable amount.

I doubt location makes any difference except that some lenders are more active in Northern Ireland.

Having a house with equity is a big factor for large or business debts. With small debts, I doubt it, as RAS says most creditors like an easy life.

I suspect you are less likely to get threats of court if you go through Stepchange and are paying a reasonable amount rather than making very low payments in a self-managed plan. 

Having said all that, your house is not at risk. At worse you will get a CCJ. To lose your house there has to be a CCJ and you have to not make the court ordered payments, even then orders for sale are extremely rare. 

Rob5342

Most debts just end up getting sold to debt purchasers, they buy them in bulk for 10% or 15% of their value as an investment so the question they ask themselves is how can we make money ftom this investment. They don't need to chase every single debt for the full amount, just letting the minimums roll in can make them a decent amount with virtually no effort. Legal action is always possible, it's completely up to the company what they do and credit unions can make life very difficult, but in the vast majority of cases for common credit cards and loans people just pay what they can afford with nothing else happening. 

sourcrates

The last official figures for "orders for sale" were lodged in 2019.

Since that date official figures are no longer kept, as the numbers granted on a yearly basis are so low, something like a few hundred in 2019, out of how many thousands of homeowners with defaulted debt.

Orders for sale are what`s known as "discretionary" they can be seen by the courts as been "Draconian" and "extreme" just to satisfy a simple debt, especially if the debtor is willing to pay what is reasonable, so they are usually only granted if the debtor has shown an unwillingness to pay anything towards the debt(s) in question.

You actually have more chance of winning the lotto jackpot now than you do of getting an order for sale on your home.

dprovan

thanks, my wife and total debt is large (circa 90k) across 10 credit cards (I have 3 MBNA totalling 30k) and my wife one with MBNA totalling 7k. The remainder are 1 barclaycard each (10 & 5k) and then halifax (9k), Tesco 10k, Hsbc (9k) and virgin 10k. Are any of these more risky than the others- I am thinking MBNA as the totals are more. 

sourcrates

They are all mainstream lenders with quite similar collection policies, its impossible to say what actions any specific lender will take, all should be happy with an affordable DMP payment.

The possibility of legal action and a charging order does exist, but as stated previously, as long as CCJ payments are maintained, no further action will be taken.

SPM87

"I suspect you are less likely to get threats of court if you go through Stepchange and are paying a reasonable amount rather than making very low payments in a self-managed plan." 

this is the 2nd post you spout baseless nonsense.. you clearly must work for one of the DCAs.

OP, Stepchange get their funding from banks and Debt collectors.. they offer no safety from legal action than doing it yourself does. There is also no rule about "reasonable amounts" There are threads on here where people pay £1 for years and years and not even a single Letter of claim has been sent to them.