Advice need in 66K debt.

Hopefuldadof2

Hi everyone,

Hope all are having a pleasant Monday.

I have been quietly following discussions on this forum particularly around managing debt. as from my title i am in a lot of unsecured debts mix of loans, overdrafts and credit cards. based on the information i have read on here. i decided it was better to stop paying the minimums and i had stopped paying the creditors and four creditors have defaulted so far with the remaining still attempting collection process before they decide to default.

I was hoping if anyone could answer questions I have now that my defaults are coming through.

Q1 - once defaulted how do i workout how much i pay each creditor on a DMP. i am going to do a self managed DMP.

Q2 - one of my creditor has passed on to DCA but DCA stating they've not received a default notification yet when the debt was passed over but it is recorded on my credit file as default registered. do i still go ahead and set up repayment plan?.

Q3 - one creditor has defaulted but not passed to DCA yet do i deal with them directly or allow them to pass on to DCA ?.

Q4 - one of my loans disappeared from my account but no letter nothing received from the bank confirming if it was written off defaulted or sold to DCA, the statement states sent to recoveries. do i chase this up or wait for them to contact me about it?.

I believe thats all i have to ask. any advice and guidance will be really appreciated.

cant wait to just finish this chapter of my life when credit and resolve my understanding and relationship with money so I dont fall into this situation again.

sourcrates

Answers:

Q1 - once defaulted how do i workout how much i pay each creditor on a DMP. i am going to do a self managed DMP.

That depends on your budget and available disposable income, everyone is different, you can split payments equally, or mix and match however you see fit.

Q2 - one of my creditor has passed on to DCA but DCA stating they've not received a default notification yet when the debt was passed over but it is recorded on my credit file as default registered. do i still go ahead and set up repayment plan?.

If the default shows on your credit file, along with the date it defaulted, you are good to go regardless of what the DCA says.

Q3 - one creditor has defaulted but not passed to DCA yet do i deal with them directly or allow them to pass on to DCA ?.

You will be written too, let them do all the chasing, its not your job to collect your own debts.

Q4 - one of my loans disappeared from my account but no letter nothing received from the bank confirming if it was written off defaulted or sold to DCA, the statement states sent to recoveries. do i chase this up or wait for them to contact me about it?.

Very unlikely to have been written off, usually it means its been lined up to be sold, answer is the same as Q3, let them do all the chasing, not you.

Hopefuldadof2

@sourcrates thank you for getting back to my post quite quickly.

In respect of Q1, I am looking to initially divide it equally, then apply the snowball method, however is there any particular formula of working this out? i read something on NEDCAB but cant seem to find that information again.

RAS

For you, your debts are a major issue. For all the programmed texts, letters and messages, to your creditors your debts are minor irritations that need managing using the least resource.

So debts that haven't been sold on are probably waiting until they have enough volume, maybe even decide who to contract or to whom to sell. The one that has disappeared has probably been sold but isn't get appearing on the new creditor's system.

You need to do a full SOA and live with it for a while. A lot of people trip up because they don't make monthly provision for annual or irregular spends.

Meantime, you'll be saving what you hope to pay into the DMP every month into your emergency fund. How much do you have tucked away already? Enough to pay a month's rent or mortgage?

Hopefuldadof2

@RAS thank you thats clarified it up for me. i have enough saved for 1 months around and still putting towards savings currently. I have just shy of 6k saved.

Hopefuldadof2

I am new to the forum is there any link i can access to see templates of affordability complaints and SOA, as the SOA i used so far has been stepchange version.

Brie

The ever helpful sourcrates has put together a collection of templates that you should peruse.

DFW Sticky-Provit/Statute Barred Letters, Defaults, Mental Health Help and Guidance, all here. — MoneySavingExpert Forum

Also - if there's ever going to be a chance of you wanting to do a DRO it's best to pay everyone pro rata otherwise you'll be considered to have used preferential treatment for a creditor and your DRO would fail. More info here…

Debt solutions - what is your best option?

edited to add - the link to the SOA is in my signature below

Hopefuldadof2

@Brie thank you for the links, apologise for the late reply.

i just have another question when offering a payment to a CA what if they reject the payment offer amount what would they likely do as a next step. do I have to submit an I&E.

Holsten1888

This is just my personal experience, not financial advice, but I'll share what happened to me in case it helps.

1st off change your mobile number to stop constant bombardment of phone calls and texts …This does effect you mental health with constant calls and texts .And obviously change bank account and organize the direct debits you want to crossover personally …not the service the bank provides to sort everything out

Around 10 years ago I got myself into a real financial mess with about £20k of unsecured loans and credit cards spread across six accounts. What I decided to do was stop paying, save as much money as I could, change my mobile number to avoid the constant calls and texts, and ignore most of the letters that came through the door.

Personally, I only responded if it was actual court paperwork rather than letters saying they might take me to court. I found that once the original lenders had sold my debts on for pennies in the pound to debt collection agencies, it was mostly phone calls (if they had my number) and threatening letters. These companies buy debts very cheaply, so if even a small percentage of people repay something, they can still make a profit.

Obviously, my credit file took a massive hit and my credit score was awful for six years. But when you're already tens of thousands of pounds in debt, your credit score often isn't your biggest concern anyway.

One thing to be aware of is that, as I understand it, acknowledging a debt or making a payment even a pound will reset the 6 year clock .In short ignore all letters unless going to court hopefully your 6 year default will come and go and and then debt is statute barred if you have not acknowledged debt or made any kind of token payments

Then they big thing is not to get yourself into a mess like this again !

I also put in affordability complaints and managed to get around £10,000 of interest removed. I'd definitely recommend looking into that if you think the lending wasn't affordable. A good place to start is Debt Camel, which has helped a lot of people understand their options and reclaim interest after initial complaint to company being upheld or after getting rejected on affordability complaint you send to Financial Ombudsman who will investigate

Everyone's situation is different, and what worked for me won't necessarily be right for someone else, especially if court action has already started or the debts are secured. I'm just sharing my own debt journey in case any part of it helps someone else.

Brie

https://forums.moneysavingexpert.com/discussion/comment/82064292#Comment_82064292

They may reject it and they often will want a I&E or statement of accounts. When I worked as a debt adviser we would always send our equivalent of a SOA to the creditor showing all the debts, how much money was available and how much the individual could pay to each creditor. The amounts were determined by taking the total amount available to repay debt (less an amount to allow them to save for emergencies) and then dividing it up pro rata. So you have to be honest and realistic about your budget and how much you need to spend each month. If you smoke or drink then that needs to be included in your groceries as no one is going to expect you to suddenly give up everything that makes life enjoyable. Cutting down on extravagance is expected (no more Moet and filet steak, switch to Aldi prosecco and sirloin). Likewise if selling your car/house would give you the cash to clear the debts that would be grand but you still need a way to get to work and a place to live.

Essentially though if you don't have the money available to pay what they ask for they aren't going to get it. They can insist all they want but will generally be happy to get any monthly payments as long as it doesn't cause them too much time/fuss/money.

And @Holsten1888 is correct in that if you acknowledge the debt in writing (which an SOA as above would do) then that starts the clock on 6 years of admission to owing the money. Likewise if you pay them even a penny towards it. If you ask questions about the debt (i.e. send me a CA, I don't think you have the right person, what is the origin of this debt?) that is not admission. If you say something like "well I did have a credit card with BANK" then they may try to take that as an admission so be careful about what you say and how you word things. If you admit to the debt when on the phone to them that is not considered legally binding and therefore not an real admission.

Take you time to think things through and keep coming back with questions - this is a marathon, not a sprint, no matter what debt solution you want.