Disability & Unsecured Borrowing

Altior

I do have one poser, Lloyds are currently doing tasty cashback on SIPP transfers, it's really appealing, request transfer by end of Nov 26 and cashback is paid by end of June 2027. The poser is that you have to have a bank account from that banking group, which I don't right now. And they'll only give you a basic bank account option if you apply and fail for one of their regular current accounts. And I'm not ready to let the banking world know what my real income and employment scenario now is!

So get an easy £1K cashback and wave goodbye to promo BTs forever, or gamble that I might get some refreshed deals after November. I can sit on it until November anyway, and perhaps other SIPP transfer cashback options will come to the market in that time. It is perfect timing as my Freetrade cashback is due in October.

ManyWays

However one of my larger creditors, Nat West, told me when transferring that their promo transfers maintain the 0% rate even if payments are missed.

Oh! Did they put this in writing as it sounds unusual

If you are going for a DMP you want all the defaults as soon as possible, so they drop off sooner. Delaying defaulting on 0% transfers does not actually help you at all.

Lloyds are currently doing tasty cashback on SIPP transfers, it's really appealing, request transfer by end of Nov 26 and cashback is paid by end of June 2027.

I think you maybe losing sight of what really matters. Focus on the important things and get on with stopping using the cards and sorting the debts out.

Altior

Regarding NatWest, yes indeed, very unusual! The message displayed in the app during the requests as a pop up, and I have two BTs running with them. The messaging was very clear, but it wasn't a letter or email. In the app, there was a + button along the lines of 'important information about your transfer', and one of the bullets stated (paraphrasing) you'll retain the promo rates even if you miss payments. Obviously that's highly unusual, as the important information would ordinarily be the inverse of that. But the same message displayed for both BTs, which were completed months apart.

Regarding the SIPP, I hear what you are saying for sure. In my situation, £1K tax free is a decent slice of money, an opportunity too good to easily dismiss. My thought process is that I will likely have to declare my true position soon enough anyway, perhaps for £1K it is worth it. I might not get any new BT offers anyway.

Altior

Tesco, Virgin/Nationwide, NatWest, Barclays.

Are any of the above creditors particularly awkward, either with obtaining defaults or flexing their legal biceps (or typically sell debts on to organisations who are)?

Or are any of them particularly amenable when it comes to bad debts where circumstances have changed outside of the debtor's control?

I realise it's a volume/numbers game, but I now feel like it's worth wargaming a DMP as it looks more likely than not, and decide who is better to include out of my creditors whilst I can influence it.

My primary goal is to limit interest above impact on my credit report. So I don't mind APs or risking CCJs, I would like to minimise monthly repayments and especially charges and interest. In a few years I'll be able to access my pensions, so I will be able to settle anything at that point instantaneously, it's just bridging the gap to that point, and minimising the damage in £ terms.

RAS

https://forums.moneysavingexpert.com/discussion/comment/82086976#Comment_82086976

I'd suggest protecting your pension regardless of debt. Creditors might be more amenable to discounts at that point.

Amex and credit unions are more likely to go for legal action.

But you won't be dealing with your creditors for long. A few retain debt, some assign but most sell.

So its the debt collector/buyer that often matters. And even then their strategy can change. One was notorious for offering 5-10% discounts and refusing to budge. Their finances got more challenging and loads of people settled at 50% discount.

Your best strategy is to have a decent fighting fund by the end of year 2 and to monitor discount offers. You'll get a better rate responding to offers than asking them for a deal. Maybe respond offering half what they want and negotiate from there?

ManyWays

Tesco, Virgin/Nationwide, NatWest, Barclays

All standard lenders. none of them are any "better" than average or "worse" thatn average. Customers whose circumstances change is a normal part of lending, they will not be horrified, this is business as usal for a lender.

Lenders change their policies on selling debts and who they sell them to. There is nothing here that can help you make a decision as no one keeps detailed records on this and it may change anyway.

I realise it's a volume/numbers game, but I now feel like it's worth wargaming a DMP as it looks more likely than not, and decide who is better to include out of my creditors whilst I can influence it.

Put them all in. You want new interest and charges stopped and it is better (simpler and fairer) to treat all your creditors the same.

Altior

Thanks both!

Nothing stands out particularly then.

As far as early settlement goes, I am boxed in to some extent with the CT Support/UC limits. Essentially I can have £6K max in capital, however currently £3K of that is in a locked bond until 2028. So it's only effectively £3K and I need to hold back an accessible emergency fund.

Late 2028 will be a bit of a crunch period as that is also when I lose my 2% fixed rate on the mortgage.

With regard to treating the creditors proportionately, if it's required my pencilled in plan was to default once the 0% rates expire. Which of course informs where I allocate funds in the interim. If they are basically all the same, I may as well put spare capital into the card that has the earliest expiring 0% rates (unless there was a more effective strategy). So I'm not planning to do a formal informal DMP as such if it comes to it, as I don't see much point in defaulting cards that are still 0%. Once they default I could wait for LBAs, or start paying down the balances with the new owners.

RAS

Once they default, you'd be better paying towards the debt as that minimises the risk of CCJs. You can negotiate reduced payments and discounts. But the CCJ fixes the value of the debt so discounts aren't an option.

Altior

https://forums.moneysavingexpert.com/discussion/comment/82103000#Comment_82103000

Yes, that is true.

I've set myself a challenge at the moment to get my living costs down as low as humanly possible. I've managed to get it to £455 with the help of the mortgage charter. I'm still including some branded items on my fortnightly grocery shop, but I need to make it survivable, so I'm retaining that for now.

A reasonable monthly income and expenses however would see practically nothing available for unsecured debt repayments. From what I've read, CCJ's are less likely in those circumstances and taking someone to court on disability benefits won't get them too far with modern day court processes. But I suppose I need to pick my battles wisely, and avoiding the threat of a CCJ is simpler, you are correct.

RAS

Have you talked to either CAB of any debt advisors associated groups experienced with your health problem?

You may find that some creditors will close your account without further payment if you are on long term disability benefits. But the request needs framing well and evidence to support health issues. Bit uncomfortable maybe but creditors are expected to consider affordability and it doesn't sound like they are affordable now.