Help required with large Persistent Credit Card Debt. Have had a recent first Default.

Grumpelstiltskin

OK 1) Do not panic.

2) Do not rush into paying .

3) Do not pay anything before a default is issued.

You can't rush a default but all you do by paying before one is issued is slow things down, they won't default whilst you are paying.

ADD Have you read this guide?

Free Mental Health and Debt booklet - MSE

ArtyJ931

https://forums.moneysavingexpert.com/discussion/comment/81988610#Comment_81988610

So…I have received a bunch of Default Notices this week - served under Section 87(1) of the Consumer Credit Act 1974.

… If I don't pay the various amounts by the end of May, then the whole cards Balance will become due and these accounts will all Default. 

Have thy actually defaulted? These two sentences seem to be contradictory to me 🤔

RAS

These are notice of the intention to issue defaults, not defaults themselves.

By law the creditor has to write to you demanding that you pay off the full outstanding debt and you have to fail to do so before they are allowed to report a default. So there will be a scary letter demanding full payment.

This is part of the formal process of issuing the default, not an expectation that you will somehow magic up the funds to clear the debt.

They will also have to inform you of all the things that could happen if you don't pay off the full debt. Very much in the same way that before you have a medical procedure, they have to warn you it might not resolve the health issue and then list every complication that might occur because of the procedure.

It just a list of what's technically possible but probably won't happen.

sourcrates

Its typically 14 days the consumer credit act allows to remedy the breach to your account, under sec 87(1) before a default is issued.

In practice this timeframe can vary by a few days to a few weeks, and sometimes never, it will only be confirmed when the default appears on your credit report.

As a general rule, defaulted debts get sold or assigned to debt collectors, there maybe an outside chance of one or two accounts going straight to litigation, but this is actually quite rare at this stage.

theville32

https://forums.moneysavingexpert.com/discussion/comment/81988629#Comment_81988629

Hi Grumpelstiltskin, thanks for the post and reasurrance. I think I am just worried about how 'serious' defaulting seems to be on all of these cards. Also, I don't like lettign anyone down or breaking contracts/not paying people so feel bad about that too.

Thanks for the Mental Health link too, that looks interesting and I will definitely check that out some more over the weekend. Thanks!

Grumpelstiltskin

A default is normal, it's the way things are and the sooner you get one the sooner it disappears from your credit report. Do you understand how the default works?

It will disappear from your credit report 6 years from the date it starts even if you never pay another penny off it. So the sooner it is registered the sooner it goes.

theville32

Hi ArtyJ931, As others have mentioned above - I have received warnings to pay in full otherwise the cards will default in around 2 weeks time.

Thanks everyone else for the above comments.

Would it be possible to get a reminder about what would happen in the worse-case scenario, after the cards default? I have reassured my wife that debt-collectors will not come knocking on the door demanding assets to try and recover the debt.

Thanks so mcuh everyone for your time.

SpireCaptain

https://forums.moneysavingexpert.com/discussion/comment/81991468#Comment_81991468

I'm finding explaining the debt process a tough one to my sister and Mum. I even created a Google Photos folder with all the screenshots I take from this forum of people's experiences etc and they are still concerned debts will keep growing after default and that debt collectors are like loan sharks.

Stick in there and hopefully your wife will soon be singing from the same hymn sheet content that nothing adverse will affect your home and lives.

Rob5342

https://forums.moneysavingexpert.com/discussion/comment/81991468#Comment_81991468

In the vast majority of cases they'll end up with a debt collector after you default. Debt collectors sound scary but usually the first contact from them is a friendly sounding letter saying they want to help etc, and if you engage and pay something than other than the occasiional request to review your payments that's usually it. Debts often get sold for a small fraction of their value, so collectors can make a nice little profit by letting seemingly small payments trickle in and have little need to chase everything down for it's full value.

The worst case scenario is that they'll go for a CCJ in which case the court will order you to make payments at a rate you can afford. If you are already paying what you can afford then it would be a waste of time for the creditor to go for one and they know that, and if they did then you'd just end up paying what you were paying already.

In the vast majority of cases DMPs go very smoothly, there are loads of people on them here and its rare to hear about any legal action.

sourcrates

"Would it be possible to get a reminder about what would happen in the worse-case scenario, after the cards default? I have reassured my wife that debt-collectors will not come knocking on the door demanding assets to try and recover the debt".

The worst case scenario would be over thinking simple situations, and paying too much attention to false information and old wives tales.

Seriously though, I can`t emphasise enough how small a fish you are in a massively big ocean, unsecured creditors make the most noise as they know they have very little recourse for getting paid, if you don`t or can`t pay them.

The debt collection industry exits to service the millions of defaulted credit accounts that get assigned to them every year, only a very small minority of lenders take legal action to recover debts at this very early stage of default, the rest, about 97% are either sold or are passed to collection agencies as the original creditors wash their hands of them.

There are one or two companies that still knock on doors, but they are used as a means of persuading you to contact your lender to discuss payment terms, the vast majority work out of a call centre, no debt collector has any more power or privileges than you or I do, so they can ask whatever they like, and you are free to tell them no, and to please go away.