47k unsecured debt, no income living on redundancy payment.

USERerrorUSER

Hi,

I have 47k of Credit card debt, that is currently about to come off its 0% deals. I was made redundant about a year ago and have been living off my the lump sum payment since then. Its down to 12k left, this is my only money, I can't get UC, I can't get a job. I am getting my DB pension next year of 20k per year + 130k lumpsum, the plan was always to use this to pay off the debt. I also have a SIPP of 130k. I can't access any of these until April 2027.

I contacted Stepchange who recommended a suspension of payments plan, as with 12k in total and 1300 per month budget for essentials and priority debts (Stepchange budget), I can't afford the CC payments.

I have to contact the CC companies myself as stepchange won't do it (I thought they would). I am extremely anxious about this and cannot bring myself to call them, I would like to email but they make it extremely hard to find addresses for them and keep pointing you to call them.

Any advice ? I'm worried that if I ring them they will want to use the 12k to reduce the debts leaving me with nothing to live on. Ideally I could make the 12k last until April and then be able to service the debts again.

fatbelly

First thing is that they won't know about the 12k unless you tell them, and why would you?

I agree that if you phone them, they will likely have more experience in giving out threats than you have in receiving them. So again, don't do that.

I also agree that you are not in a position to pay nonpriority debts. So stop all the payments. Credit cards and unsecured loans are nonpriority so that is no problem. Do you have any other kind of debt?

You don't need to ask permission or inform anyone. In fact anything you do in that regard will likely slow down the process and you want everyone to get on with the defaults and the sell-ons so you are in a position to get the best use out of that lump sum when it comes in terms of settlement deals

USERerrorUSER

No other debt, not in arrears with priority payments, and won't be as long as I can use the 12k for living expenses.

I just need to last until April and then I'm good.

fatbelly

April 2027? Sounds like perfect timing.

QrizB

I can't get UC

Not specifically debt-related, but if you were made redundant, you were previously working? Are you looking for work? Do you qualify for contribution-based JSA?

https://www.gov.uk/jobseekers-allowance

sourcrates

Yes I second the above, debt collection can take quite a long time, it can take between 3 and 6 months alone, depending on the creditor, just to get defaulted, then it goes to debt collection where you are sent a bunch of standard letters, after that most of your debts might be sold on to 3rd parties, who then repeat the letter process.

All of this can take a year, or longer, sometimes it can move quicker than that, and if any of them make a serious threat of legal action, post back for advice on that, otherwise, sit tight and do nothing, your timing should be just right on this.

As for any money you have, that is yours, no one can make you part with that simply because you have non priority debt, creditors/debt collectors/debt purchasers have zero authority or power to make you do anything, and of course common sense says you don`t tell them about it anyway, the best approach is to do nowt and say nowt, until you have your lump sum available, then you negotiate the lowest settlement possible with each one, you are in charge of this, not them.

USERerrorUSER

So I rang all my creditors today and they have given me 30 to 60 days breathing space. Stepchange have been next to useless as I can't go on a DMP cause I can't even afford a £1 debt payment according to their budget. The creditors appear to be expecting Stepchange to contact them, and StepChange are expecting me to send the creditor a letter and my budget, which is next to impossible because none of them list an address, just please telephone us!

So should I just let the breathing space expire and then ignore all the collection nonsense, until they default. If my circumstances change to be able to pay I would of course, but at this moment I can't see that happening.

USERerrorUSER

Reading round a few threads, maybe I shouldn't have been so quick to contact them, oh well is done now, will delay any defaults for a little bit.

I'm fully on board with just getting the defaults and not worrying about my credit score now. Looks like way forward is ignore stepchange in trying to setup a pension suspension and keeping in touch with creditors, instead ignore all contact from the creditors and let them all default, repeat for the sold-on debt until I'm ready to offer F&F.

Does that sound like a plan, again if I do get a job and have spare money I would look to pay but given, I would need to replenish my emergency fund first, it's unlikely I would be in any ability to pay until next year anyway, even if I was employed tomorrow, unless a got a really well paying job.

fatbelly

Yes. All you've done is delay the process by 30-60 days

Stepchange are ok but as they are funded by a rake-back from the payments you make to creditors, there is no incentive for them to expend much time or energy on you. We don't have the same criteria!

On the benefits thing, as well as CBJSA, 12k capital should not disqualify you from UC as there is a max limit of 16k. Council Tax Support is likely to be similar but each council has its own scheme

sourcrates

I know it seems like the right thing to do to contact your creditors and explain your circumstances etc etc.

In some situations, that might be the right approach, but not really in your case, you have nothing to worry about here, next year you will be in a position to settle all your indebtedness and live quite comfortably afterwards, you just have a few months to mark time until then, you don`t need debt advice, you don`t need to contact your lenders, and you don`t need stepchange either.

As explained previously, the collection process will kick into gear in a few weeks, and will go on for a good few months, you`ll get letters and phone calls etc etc, you should ignore all collection calls, take notice of anything that comes in the post, anything that may mention potential legal action, come back here for advice, otherwise, just carry on as normal and don`t worry about the debts, by next year, you most likely won`t be dealing with the creditors you have now, as your debts will mostly have been sold, so telling them anything now is of very little importance, as most lenders get rid of bad debt within a year or so.

Brie

Definitely stop paying. And when that happens they will be very pleased to write to you and there should be addresses included for you to respond, should you wish to. I wouldn't be giving them too much info if you can help it, don't allow them to call you or email and say that everything has to be in writing by snailmail.