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

theville32

Grumpelstiltskin said:

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Hi Grumpelstiltskin, thanks for your coment. I have had a look and cannot seem to find the specific info I was looking for eg what to do once your debts default below. Is this able to be found anywhere on the site/forum? Thanks!
"6. It would be great to know if anyone has laid out the plan btw, on what to do when certain letters arrive from the Debt Collection companies. Sending out CCA Letters and questioning their Affordability practices. As well as how to deal with settlement offers etc".

theville32

RAS said:

theville32 said:

I have just had a very stressful chat with my wife, explaining that the most effective way of dealing with my debt is to stop paying them all, leading to the cards/loans defaulting. This caused her to freak out a bit, as she is very by the book and see's this approach as not been above board. The idea of not paying back the full debt owed seems a bit shady. It also does not sit that well with me, although I can see the advantage of clearing the debt and rebuilding my credit file as soon as possible.

It would be great if a bunch of people on here could give me reasurance that this is the best approach and is a 'legit' way of dealing with my debt.

Some of the things my wife is worried about are :

1. Can the CC comp's/Banks/Debt Collectors come after my wife? We don't have any joint accounts, although are married and living together. 

Absolutely not. 

2. Can the CC comp's/Banks/Debt Collectors seize any of our assets/property?

For unsecured debt, no. Make sure the mortgage is paid.

3. Will the CC comp's/Banks/Debt Collectors ever bang on the door, looking for assets to seize?

You are confusing two things. Bailiffs can seize assets. They are more likely for unpaid CT or fines.

If any of your consumer creditors got a CCJ and you refused to pay or engage, the courts could grant an order but it's very very rare.

There are a few companies that knock on doors, they have the same rights as next door's cat. Tell them to leave. But they tend to be used to get a debtor who's not been in touch for years to engage.

4. Will I/we have to go to court?

If you engage with consumer creditors after the debt defaults, CCJs are unlikely. Credit unions and Amex are more likely but there are several letters first and you can often negotiate a deal before they act.

Which is why we say you've got to open snail mail.

Let's deal with a few basics first, in bold, above in line.

Creditors make money lending people money. They price in risk. The ones who make them most money can pay the minimum each month and never clear the debt. 

If the debtor doesn't pay, the creditor will eventually issue defaults. They can't take any action until they do so.  

If they are not getting an income, they'll sometimes sell to a market specialist in debt, at round 30 percent of the value. They  identify the more profitable accounts and off-load the rest by the thousand, as low as 5%.

Either way, the debt company can make a tidy profit agreeing a 50% discount and lower down the chain a 20% payment would be a good deal for them.

Hi RAS, thanks for taking this tiem to answer my questions and so thoroughly. That is definitely very reassuring! It is also an eye opener to understand how these companies work and that they factor the risk of people defaulting into their business plans. It sounds like I have been their ideal customer for many years, paying the minimum payment which was mostly interest with no way of clearing the balance. Thanks so much!

theville32

Grumpelstiltskin said:

Lets start with this.

1 No

2 No 

3 No

4 Unlikely but a CCJ is not the end of the world.

Hi Grumpelstiltskin, thanks so much for your comments!

Grumpelstiltskin

It can be difficult to realize you have to completely change your mindset.

You have to realize as RAS says the firms you have borrowed money from make a fortune if you repay in full.

They build into their business model the fact that they in the end can be happy with 20% of the total you would owe including the interest you would pay.

Of course they would like to to carry on paying and they are set up to send computer generated letters, E Mails texts and phone calls.

ManyWays

6. It would be great to know if anyone has laid out the plan btw, on what to do when certain letters arrive from the Debt Collection companies. Sending out CCA Letters and questioning their Affordability practices. As well as how to deal with settlement offers etc.

As a very rough guide.

Make a monthly payment offer when a debt has defaulted. Its generally good to keep these on the low side so you can put away money for settlement offers, but probably better to pay business debts rather more.

You can send affordability complaints now (these will not apply to any business debts).

There is little point in asking for the CCA until a debt has been SOLD to a debt collector, not just sent to a debt collector to collect on behalf of the original lender. UNLESS you have received a letter Before Action from any creditor, at that point use the reply Form attached to ask for the CCA.

Settlement offers are a way down the road. Lets see how much money you have saved at that point, no savings = no chance of taking advantage of these. It is too easy to settle into making low payments but unless you save up the money, these will not help you get out of debt.

7. I was still hoping to get some help from the Forum with finding out whether my Barclays Business Card was covered by the Consumer Credit Act/Agreement? As mentioned previously, when I called Barclays Business Card they were unable to give me this inforamtion. If anyone has had experience dealing with defaulting on a business credit card it would be great to hear from you too.

It probably isnt a CCA debt but ask Barclays for the paperwork on the card if you don't have it. 

theville32

ManyWays said:

6. It would be great to know if anyone has laid out the plan btw, on what to do when certain letters arrive from the Debt Collection companies. Sending out CCA Letters and questioning their Affordability practices. As well as how to deal with settlement offers etc.

As a very rough guide.

Make a monthly payment offer when a debt has defaulted. Its generally good to keep these on the low side so you can put away money for settlement offers, but probably better to pay business debts rather more.

You can send affordability complaints now (these will not apply to any business debts).

There is little point in asking for the CCA until a debt has been SOLD to a debt collector, not just sent to a debt collector to collect on behalf of the original lender. UNLESS you have received a letter Before Action from any creditor, at that point use the reply Form attached to ask for the CCA.

Settlement offers are a way down the road. Lets see how much money you have saved at that point, no savings = no chance of taking advantage of these. It is too easy to settle into making low payments but unless you save up the money, these will not help you get out of debt.

7. I was still hoping to get some help from the Forum with finding out whether my Barclays Business Card was covered by the Consumer Credit Act/Agreement? As mentioned previously, when I called Barclays Business Card they were unable to give me this inforamtion. If anyone has had experience dealing with defaulting on a business credit card it would be great to hear from you too.

It probably isnt a CCA debt but ask Barclays for the paperwork on the card if you don't have it. 

Hi ManyWays, thanks for your comments which are so helpful and clarified a lot of points for me. 

8. Was there any other debt services that you recommend I could speak to, for a 5th opinion on this debt/default first approach for my Wife? She wants someone else to back this up outside of the Forum. Stepchange perhaps?

9. "but probably better to pay business debts rather more". With regards to this comment, if paying personal cards say £1.00 p/w, how much would you suggest paying the business CC and bounce back loan p/w?

10. "at that point use the reply Form attached to ask for the CCA". I could not fins the attachment, Could you resend/reattach please?

Update: So I have setup new personal and business bank accounts, that are not part of any of the banking groups I have debt with.

It so happens that the first payments due this month are to Barclays :-( 

Barclays Business Card (bbc) on 13/01 and Bounce Back Loan (bbl) & Personal CC on 14/01. Total = around £260.00.

The issue I have is that I have been living in my Barclays Personal Overdraft, which is £1250.00. I have to pay £1068 Studio rent today/tomorrow and this will mean that I will then have to go into the OD. This will make it difficult to close my personal Barclays account - while it is still Overdrawn. 

The only thing I can think of is to pay all the Barclays payments due on the 13th and 14th and try my hardest to get out of the OD over the next month. 

Unless you/other members think I could cancel the 2 business payments (bbc/bbl) as it may take a while for them to communicate with my personal Barclays account? The risk is that Barclays Personal then may use my 'cleared' overdraft to try and get money back for the missed Business payments...or refuse to allow me to close the personal account before the 2 missed payments are paid.

Revision: I just remembered that someone previously recommended changing Banks immediately after my next Universal Credit payment, which is 19th January. If I change/close banks on the 20th-21st January that would be the best plan to ensure UC has time to get my new bank account registered before next months payment.

That just leaves the dilema of what to do with the 3 upcoming Barclays debt payments!

Any thoughts on how to navigate all of this are welcome!

Thanks again for all your help, it is appreciated greatly.

Grumpelstiltskin

You can talk to Stepchange but they will say start a DMP now, you need to remember they get money from the creditors, so are they impartial?

If your wife is not happy suggest CAB to her.

theville32

Grumpelstiltskin said:

You can talk to Stepchange but they will say start a DMP now, you need to remember they get money from the creditors, so are they impartial?

If your wife is not happy suggest CAB to her.

Thanks for your comment. Will CAB recommend the Default 1st approach do you think?

RhiBi

I went to CAB first, what they suggested to me was to stop all payments.  In my case they are/have written to all creditors on my behalf to ask for write offs, due to my personal situation (which is another thread on here).  Their plan is for me to then go straight to Payplan and set up a DMP.  I have declined that as I want any remaining debts to default first for the reasons given on this forum.

in my experience, CAB didn’t talk of defaulting first and setting up an emergency fund.

SpireCaptain

RhiBi said:

I went to CAB first, what they suggested to me was to stop all payments.  In my case they are/have written to all creditors on my behalf to ask for write offs, due to my personal situation (which is another thread on here).  Their plan is for me to then go straight to Payplan and set up a DMP.  I have declined that as I want any remaining debts to default first for the reasons given on this forum.

in my experience, CAB didn’t talk of defaulting first and setting up an emergency fund.

From my meeting in November, that's the gist of what I was told. I mentioned stopping paying and waiting for defaults that would fall off in 6 years but the advisor didn't  seem to understand and just carried on saying it would be 19 years to pay off. To apply for breathing space and then set up a DMP first without defaulting.