In dire need of help, time to take control of debt

orangebees22

https://forums.moneysavingexpert.com/discussion/comment/82086195#Comment_82086195

I promise I know that the problem is spending.

How is best to de-link our finances? No joint account makes sense but we have a mortgage together.

Will it impact his credit if I default on my debts? I don’t have any credit cards with our mortgage provider but I think my partner does, is there anything I should be aware of?

SpireCaptain

It will have an impact on his credit worthiness (ignore credit scores as they are just a made up number). Your credit file will be shot for 6 years and it MAY affect his ability to get credit due to the linked mortgage. But I am no expert and wait for someone more qualified to quantify the effect. It may only drop his "credit score" by a hundred points or less. But it sounds like you have enough income in the household that he may not need access to credit for a few years I til your defaults become less of a negative marker.

I've held off defaulting and starting my DM) journey until my ex has secured her mortgage and we have sold this house just to minimise any chance however small my adverse markers (missed payments) will affect her mortgage application.

RAS

Having a shared mortgage will affect his credit rating, but not as much as a shared bank account. He may want to run a small credit card which is paid off in full every month. That means providers can see a pattern of good management.

If you have any debt with any bank in the same group as the joint account, they can off-set money paid into the joint account to pay off your debts. Not common but possible.

You will still be able to log in to your current provider towards the end of your current mortgage fix and select the best option from their menu without a credit check. Don't look at other providers as they will credit check.

orangebees22

https://forums.moneysavingexpert.com/discussion/comment/82086539#Comment_82086539

So you definitely think I should get rid of our joint account? We use that to pay all our bills at the minute.

RAS

It's your joint decision. But you both need to be aware that financial association with you via the joint account will affect his credit record even before you default on payments.

Simply because creditors can see that you are over burdened with debt and spending more than you can afford each month whilst only making minimum payments.

Once you stop making minimum payments, both credit records take a much bigger hit.

You might want to preserve his credit rating. Not least as your are in leasehold property and could get hit by a substantial demand from the freeholder or management company if costly maintenance or repairs are needed. You really (jointly) need some savings to cover that eventuality and if you ain't got that backup, preserve a credit avenue in case.

If you don't have it already, you need a monthly meeting both looking at all your accounts and prioritising spending or debt payments for that month and planning future spends. Want a holiday, at what cost, when and how much do we put aside each month to cover that? Need a plumber to sort out the shower? Maybe a decent supermarket pizza and a cheap bottle of plonk to celebrate when done?

Once you stop paying your creditors, you must put that money into an emergency fund so you can also contribute to any unexpected demands. As you personally won't have access to credit at anything other than a crippling rate. Probably an instant access ISA to start with?

Once you start paying down the debt, you'll be putting less into the emergency fund but you need to continue feeding a small amount even when paying off all the accounts.

orangebees22

https://forums.moneysavingexpert.com/discussion/comment/82086907#Comment_82086907

Thanks for this - and to confirm, by keeping the joint account once I default on payments, this will affect his credit record more than if we get rid of it now?

orangebees22

Sorry lots of questions, also what if he has a personal credit card with the same lender that I will default my personal credit card on? (They are not joint credit cards, just separate ones with the same lender)

sourcrates

https://forums.moneysavingexpert.com/discussion/comment/82086955#Comment_82086955

Debt is specific to the individual, in this case what you do will not affect him, just as it won`t affect me.

And talking about the effect on his credit file due to your actions, there won`t be specific markers or anything visible, it would only become an issue if he was to apply for new credit, as your file may become searchable due to your linked borrowing, and that could result in a decline.

If no new credit applications are made, there won`t be an issue, and after 6 years the record will be expunged.

orangebees22

Thanks all - All direct debits have now been cancelled.

Wondering if I have any sort of reason to submit affordability claims. Lots of the large spending occurred in the last 6 months.

The cosmetic loan was taken out in April, probably when it wasn't super affordable for me to. Paypal only this week asked if I wanted a credit limit increase which seems crazy.

Santander let me open a 2nd credit card with them in January, however I only had a minimal amount left on the 1st one (just the 0% was ending).

Don't really think I have any basis for my claims, but not sure?

sourcrates

Banks only see you as a source of income, the longer you are in debt, the more money they make from you, ideally they want you to live like this, spending their money, and repaying high rates of interest, for the rest of your life, customers for life make them the most in profit.

The fact you are now about to enter debt management would back up the theory that this borrowing was not at all affordable to you, and that you just accepted what the banks offered you regardless, now this to be fair is only human nature, the actual responsibility is on the lender, who is supposed to carry out affordability checks, some do, some don`t, some do and lend anyway regardless of the outcome.

Risks of this nature are built into every lenders policy on borrowing, so they know they will get a fair percentage of affordability complaints, it costs nothing to complain, information and template letters can be found here:

Affordability refunds from loans · Debt Camel

This link is for loans, but the same can apply to credit cards as well.