£55K in debt, need advice?

sourcrates · 16 October 2018 at 9:02PM

thetoffeeshadow wrote: »

Is it recommended to default on your debt before entering a DMP. I am finding some conflicting information online. We have never defaulted and honestly don't want to do that, but should we let ours debts default before entering a DMP?

In order to get interest and charges stopped, you must default, you have to break the terms of your original agreement, that’s the idea, if you start a DMP, you will be paying less than the contracted payment, in most cases, but this does not always happen.

When their payments are worked out, some people find they are paying more to one creditor than another, sometimes this is more than the contracted payment, so interest is still charged, it can get complicated sometimes.

Best advice is to stop paying for a few months, save an emergency fund, but all the time, keeping creditors in the loop, in fact it doesn’t hurt to write and explain your actions, and ask to be defaulted, the sooner that happens, the sooner they drop off your file.

You have to know how to work these agreements to your benefit.

thetoffeeshadow · 16 October 2018 at 9:32PM

sourcrates wrote: »

In order to get interest and charges stopped, you must default, you have to break the terms of your original agreement, that’s the idea, if you start a DMP, you will be paying less than the contracted payment, in most cases, but this does not always happen.

When their payments are worked out, some people find they are paying more to one creditor than another, sometimes this is more than the contracted payment, so interest is still charged, it can get complicated sometimes.

Best advice is to stop paying for a few months, save an emergency fund, but all the time, keeping creditors in the loop, in fact it doesn’t hurt to write and explain your actions, and ask to be defaulted, the sooner that happens, the sooner they drop off your file.

You have to know how to work these agreements to your benefit.

Hi, thanks for you reply. Would it be possible for you to give me a bit more information on how I should approach this, if we decide to go down this route?

sourcrates · 16 October 2018 at 10:30PM

thetoffeeshadow wrote: »

Hi, thanks for you reply. Would it be possible for you to give me a bit more information on how I should approach this, if we decide to go down this route?

Basically it’s a new way of looking at your debts.

You need to draw a hypothetical line in the sand, take some time out, and start again, only this time you are in charge of what happens, not your creditors.

First steps would be to stop paying, write to all your creditors and tell them you are in financial difficulties, you are not currently working nor is your wife, this situation is unlikely to change, explain about your health issues.

You will automatically get 30 days grace from collection activity, I would take a few months, save a few quid for an emergency fund, as long as you write and keep them all informed of what you are doing, most creditors will be fine.

Do a reasonable budget, whatever disposable income you have left, you split between your creditors, you can do this yourself, but it takes a little effort, if your not that well, best to contact stepchange at this point, once you have a healthy EF, and then get a DMP arranged.

Maybe follow this course of action for a while, then try writing to creditors to get the debts written off, again, explain your health issues, not working, no prospects of change etc, and just see how they react.

Template letter for debt write off here :

https://www.nationaldebtline.org/EW/sampleletters/Pages/Write-off-the-debt-%28sole-name%29.aspx

thetoffeeshadow · 16 October 2018 at 10:42PM

sourcrates wrote: »

Basically it’s a new way of looking at your debts.

You need to draw a hypothetical line in the sand, take some time out, and start again, only this time you are in charge of what happens, not your creditors.

First steps would be to stop paying, write to all your creditors and tell them you are in financial difficulties, you are not currently working nor is your wife, this situation is unlikely to change, explain about your health issues.

You will automatically get 30 days grace from collection activity, I would take a few months, save a few quid for an emergency fund, as long as you write and keep them all informed of what you are doing, most creditors will be fine.

Do a reasonable budget, whatever disposable income you have left, you split between your creditors, you can do this yourself, but it takes a little effort, if your not that well, best to contact stepchange at this point, once you have a healthy EF, and then get a DMP arranged.

Maybe follow this course of action for a while, then try writing to creditors to get the debts written off, again, explain your health issues, not working, no prospects of change etc, and just see how they react.

Template letter for debt write off here :

Once again, thank you for this invaluable information. Just one question though, Will this affect our house in any way should we decide to follow this route.

I should also point out that in looking at the debts, my wife has 2 credit cards that pre date 2007 and she is still paying them, Would an option here be to CCA these.

I will pull together a full list of all the debt in the next day or two so you can better understand where we are in this debt cycle.

Daniel1971 · 17 October 2018 at 12:02AM

If your wife is maintaining payments to the credit card debts she is admitting liability therefore it would be pointless asking for the creditors to prove they can prove credit agreements.

Debt management plans are informal so you can stop at any point and try to negotiate settlement offers.

sourcrates · 17 October 2018 at 12:17AM

thetoffeeshadow wrote: »

Once again, thank you for this invaluable information. Just one question though, Will this affect our house in any way should we decide to follow this route.

I should also point out that in looking at the debts, my wife has 2 credit cards that pre date 2007 and she is still paying them, Would an option here be to CCA these.

I will pull together a full list of all the debt in the next day or two so you can better understand where we are in this debt cycle.

Daniel1971 wrote: »

If your wife is maintaining payments to the credit card debts she is admitting liability therefore it would be pointless asking for the creditors to prove they can prove credit agreements.

Debt management plans are informal so you can stop at any point and try to negotiate settlement offers.

Making CCA requests is your statutory right under sec 77/79 consumer credit act 1978.

It’s nothing to do with proving liability, as such, and makes no difference if your paying the debts or not, the ONLY stipulations are that a balance remains on the account, and no legal action has been taken.

If creditors are unable to comply, they are unable to enforce the agreement, and the account will become unenforceable in court, so pointless it certainly isn’t.

The accounts are temporarily unenforceable after 14 days, until your creditors respond to your request.

Typical response time can vary, but is usually 2/3 months or longer.

thetoffeeshadow · 17 October 2018 at 1:39PM

Thank you for all the advice. I need to sit down and sort through everything and then we can decide where to go to from there

pecuniam_hominem · 18 October 2018 at 12:33AM

I may be going against the advice here, but I would suggest selling your home. If you own it outright and it has signigicant value (100k+), you would be able to pay off your debts and have significant change to put down a very large deposit on a new property.

IMO, if you have racked up 55k worth of debt and you have assets that you can sell to pay it off, you should do that.

GSDlover · 18 October 2018 at 5:40AM

pecuniam_hominem wrote: »

I may be going against the advice here, but I would suggest selling your home. If you own it outright and it has signigicant value (100k+), you would be able to pay off your debts and have significant change to put down a very large deposit on a new property.

IMO, if you have racked up 55k worth of debt and you have assets that you can sell to pay it off, you should do that.

No he shouldn’t in any way follow your advice. The guy has been diagnosed with cancer, his wife has had to give up work to look after him. He should follow the unenforcability route with as many of the debts as he can (certainly the wife’s) and explain about the cancer to the other creditors to get the rest written off. He should NOT sell the house. What totally poor advice.

Did you even read his post? He’s got cancer, they are on benefits, wife doesn’t work. Yet you say use a large deposit as a down payment from house sale proceeds? Of course, someone is going to give him a mortgage in those situations yeah? They would end up in rented accommodation, tax payer funding the rent and if the worse should happen, the wife has no security whatsoever in temporary contracted rental accomodation. That’s if she can find a job after years as a carer for her sick husband. Maybe read posts properly before posting in future. And of course whilst going through gruelling treatments he needs to be worrying about landlords serving him with notice to quit potentially every six months.

Are you working for a bank or credit card company? as your advice seems geared in their favour not in the best interests of the original poster. He asked for advice not a moral lecture.

Wishing you all the best, both of you. Follow the advice of Sourcrates and also get yourself over to the all about debt forum ... search in google etc x

pecuniam_hominem · 18 October 2018 at 10:01AM

We fundamenally oppose each other in regards to debt. I won't apologise for my advice.

He racked up the debts before he had cancer. Whilst I feel sorry for this diagnosis and which him a full recovery, I am unsure as to why you think he shouldn't pay back his debts if he has the assets to pay for them.

Please don't preach to me about reading his posts, I read it in full. I also do not work for a bank or other financial instituation.

I am just a guy that see someone who has racked up debt, has the means to pay it back but won't. As I said before, I wish him the best of luck healthwise. I see many other people on here in a much worse financial situation, with no house or other assets to pay down debt. At least he can pay his debt back and still be pretty comfortable.

£55K in debt, need advice?

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