Hi All




I want to remortgage but have considerable cc debts at moment, and some investment properties, so my current bank, nationwide have said they will not take on the remortage request. If I can remove the cc debts, how long do they stay on credit history, so I can try to remortgage agin once they have gone? Or is it the investment proproties that I have that will be impacting my remortgage request? Nothing is secured on the house, and I have £190k equity in the house with only £110k to pay. Mortgage is currently with Halfix.

Hi Suzy

Thanks for posting.

I’ll try and answer your questions as best as I can, but firstly I know it can be difficult to talking through your situation and discussing the debts might be something you’ve not done before and it can be a big step but at StepChange we’re more than happy to help and support you to a solution.

Firstly it’s important the budget is right for you. If you’ve important costs you need to budget for then your budget needs to reflect that. A budget is there to support any solutions you might decide to go ahead with to give it the best chance of success and reduce the chance of further action from the creditors. When you speak with an advisor at StepChange let them know, our phone advisors will help build the budget with you.
Depending on your budget and the costs you have we might recommend a token payment option until your finances improve.

To answer question two, we’d advise to treat all creditors fairly, if you’ve stopped making payments to one creditor but continue to pay off others it can be seen as preferential treatment, as we don’t know what solutions we’d be recommending yet making preferential payments can effect some solutions so we’d suggest not to do this. You can ask all the creditors for a temporary hold while you’re exploring your options. You can find a link to asking for breathing space here.

You’ve asked about the interest free loans, again we’d advise on treating all creditors fairly. When you ask for a hold/breathing space most creditors will stop interest and charges for this period anyway.

To answer the third question, it depends on the type of debt as to whether we’d be advising to ask for a hold. If the debt relates to a contract that you need the use of then we’d advise you to keep this in place or find a cheaper contract that you could move to. For example if you stop paying your phone contract you won’t be able to use the phone, you could find a cheaper contract or sim only and then cancel the old contract. You could then ask for a hold on the old contract if there was any debt left owing.

We’d only suggest asking for a hold on non-priority debts. Continue paying the mortgage, secured loans, and vehicles on finance as the risk of not paying these is much higher than debt such as credit cards, unsecured personal loans, catalogues etc.

Making reduced payments to unsecured debts won’t impact you mortgage as such, even if they are with the same provider as some unsecure debts, however making reduced payments to creditors will impact your credit file which could impact the interest rate that’s available to you.

Credit Union debts can be stopped so this will stop coming from your wages. If this debt isn’t linked to your employer then it won’t impact your employment even though it’s deducted from your wage. Some employers provide advances; this type of debt could impact your employment. I’d suggest checking the impact with your work first by speaking with your HR department or payroll about the deduction.

All debts would need including in tailored debt advice, however it depends on the situation and type of debt as to how it will be affected based on the solution. There are many types of debt solution. In general we advise to include all debts however this is something we can discuss in more detail when you call in.

When you make reduced payments to your creditors or miss payments whether you are in a repayment plan or not it means the creditors could take court action and issue a CCJ. This is greatly reduced if you’re in a managed solution as creditors are more likely to do this if they aren’t receiving any payment.

You’re making really positive steps forward in finding a solution to the problem debt. I really would advise calling in so we can discuss the queries you have in more detail and help you look at the options available to you.

You can find our contact details here.


Thanks
Rachael

Hi

Thanks for your message.

It’s likely that the amount of unsecured debt is having a significant impact on you being able to re-mortgage. I’m not sure how much this is but depending on different factors as well as the outstanding unsecured debt this is likely to have a big impact on being able to re-mortgage.

If you were able to pay your credit cards off then it’s likely that your credit file will improve. The debt will show that it’s been settled in full on your credit file, most notices on credit files stay for six years from the date it was updated. However, with it showing the debt has been repaid it’ll unlikely have a negative impact on re-mortgaging.

Less unsecured debt will likely benefit a re-mortgage application, however without knowing more about the situation it’s impossible to say exactly.

I’d suggest speaking with an impartial mortgage advisor who’ll be able to give you a better understanding of what’s affecting your application and the options available to you.

You can find the details to StepChanges Financial Solutions team here.
.
Thanks
Rachael

I have had a letter from one of my debts they have sent a default notice.
I am on a DMP, but this actually makes me feel sick.
I don't know what to do, will I end up on court?

Hi there

Thanks for posting.

This is a standard part of the debt collection process, creditors have to send you a default notice just before they're about to terminate your original credit agreement. If you're on a DMP, and creditors have accepted your payments, you don't need to do anything about the default notice.

You can end up with a county court judgment (CCJ) for a debt on a DMP, but if a creditor has accepted your plan, it's very unlikely they'd seek to take further action against you. If you have any further concerns during your DMP, I'd recommend you contact the team that's looking after you at whichever organisation is managing your plan.

I hope this provides some reassurance.

Allen

We are currently on a DMP....a long way to go but we have equity in the house. If we moved it would mean we could pay off our mortgage but sadly not enough for the debts. However this would obviously mean we had more money to pay our creditors.....I am desperate to clear the debts ASAP ....any advice please. Many thanks

Any advice from the agencies would be fantastic

Hi,


You would be best advised to ring them, for more detailed advice.

Hi there,

Thanks for your post.

If you’re on a debt management plan (DMP) with us, when you move house you just need to let us know your up to date address and any changes you’ve had to your budget. If it means you will free up more money to pay your debts that’s great; you’ll then be able to clear your debts a lot more quickly.

You don’t need to worry that selling the house will only clear the mortgage and not your debts as your mortgage is always the priority. If this move means you’re going to become mortgage free then I’m sure your creditors will be happy to see their payments increase as a result.

I hope this helps.

Kirsty

Hi

I am currently paying around 23% of my income out as debt repayment and although I am managing month to month - no defaults at all I am living off a ridiculously low budget, I can't afford to put anything in my budget except bills and food and petrol - there is no room for anything like haircuts, leisure, dentist, I can't even save for christmas etc I have 3 children and I feel really bad

I have 2 jobs already so additional income is out

My head tells me to plough on but my heart wants my children to have some treats - what can I do?

Nat

Hi Nat

Thanks for posting.

From my experience, a lot of people end up in this situation, really trying hard to keep debt repayments going to try and protect their credit rating and of course honour the agreements that were made.

It sounds like maybe if you did a budget with us to include even modest amounts for normal and important living costs like dentist, opticians, hairdressing and a little bit of leisure that you may not be able to keep up to your repayments.

In this situation you have a choice of keeping going as you are, if you think things should get a bit easier, or potentially looking at a debt solution where you break your agreements but likely reduce what you pay out now, making life a little easier.

You can register with us by calling our Helpline (for initial contact only) on 0800 138 1111 or completing the online Debt Remedy tool: www.stepchange.org/DebtRemedy

We can then assess your situation, present your options to you, and you can make a choice of what you'd like to do.

I hope this helps.

Allen

Thanks Allen

In September my water bill is going down to £45 from £98 and my gas and electric is up for renewal so hoping to make some small changes there, alsoI have been repaying an overpayment for tax credits and thats an extra £30 a month. I am scared of the options available most suggestions have been bankruptcy or an IVA which I am not sure i want to take out.

Thank you its good to talk to people online without feeling awkward on the phone

Thank you so much, that’s really helpful. I really struggle on the dmp. I feel constant anxiety about it ....I have read on another thread that SC told others that they had to clear the debts before the mortgage....I am concerned about doing things right. I wouldn’t cope with things going wrong. We do tend to get different advice from SC....That worries me....

Hi Nat

Thanks for your reply.

You don't have to go ahead with any particular solutions, we'll simply present all the available options to you and you'll be free to choose whatever you'd like to do out of those options.

We can also address any concerns you may have with any solutions presented.

I hope this makes sense, and hopefully we'll speak with you soon.

Allen

Hi there

Thanks for posting.

I can't imagine any scenario where we'd advise to prioritise unsecured debts over a mortgage, and I'd be really surprised if anyone from StepChange has posted that anywhere on here. If you find such a post, please highlight it on here so we can look into it.

If you've heard any other conflicting advice, please let us know and we can look into it for you. Feel free to send us a private message if you'd like to.

Best wishes

Allen

Many thanks. It was on another thread that someone said they were told to pay creditors before using house equity to move.
It concerned me as it has to be the right thing for us to do.

Basically if we sell our house for a smaller one making us mortgage free is this ok? We would then be able to save like crazy to make offers. Sounds like a plan???? Or is it too easy????

Hi again

That situation is a little different to paying debts over mortgage. Speaking generally, if you're up to date with debts then it's absolutely no issue for you to sell, buy somewhere without a mortgage and then be better off each month, allowing you to clear your debts more easily. Even when you're in arrears with debts, like here with the DMP, reducing your outgoings in this way is only going to help your creditors.

There's nothing to say that you have to use house equity to pay off debts when moving, either way. I can't advise you whether saving and making offers is a viable option without seeing a budget and having a full understanding of your financial situation. However, it sounds likely that such a move would make you better off monthly, hopefully freeing money up to increase your DMP payments, meaning you'd become debt free quicker.

I hope this all makes sense.

Allen

Hi i was wondering if you could offer some advice please? I have had several loans after falling into a payday trap and it got to the point i could not afford to pay. Rather then stick my head in the sand i contacted the five creditors and 3 accepted a reduced monthly payment plan. Myjar stopped all interest and asked for less then i offered, Satsuma would only take a token payment of 2.00 per month after seeing my income and expenditure form and this was passed on to the complaint department as i was told yesterday that it will be investigated for irresponsible lending as given my income they would not have lent me. The third company that accepted is fernovo. I borrowed 200.00 off them which was with 66.00 interest to be paid 88.00 pm. I managed the first payment by borrowing but i was unable to afford the following payments. i contacted them within enough time stating i was not able to afford this and can they help in regards to a payment plan. They failed to respond, including my request to cancel the cpa. i had to contact my bank to do so. They finally contacted me on the day payment was due, to inform me i will be recieving a late charge, yet i had given them enough warning that i didnt have the funds. eventually i was able to speak to someone and they agreed a repayment plan without looking at my income and expenditure and failing to see if this was affordable. I have since found out that they have added an extra 175.05 on top of the loan SINCE i took out a repayment plan. Are they allowed to do this, i have no idea what it is for. I have seen the repayment plan they have put in place and as it stands the majority of the monthly payments will be going to this new charges and interest they have put on. I have gone from owing 176 with the original interest to owing 264 since asking for help with my finances. Can you please advise?
kind regards

Hi we are struggling with our debts at the moment and in last 10 years feel like we are in a debt spiral which we cannot get out of. 5 redundancies between myself and my husband resulted in wiping out all savings. Unexpectedly fell pregnant, nursery fees and child costs and home improvements resulted in spiralling debt. At present return to full time employment is not a possibility as we are going through a special needs referral for our child.
My age 41 husband 48
O/S mortgage 62k
Overdraft 1750
O/S LOAN 5850

Credit score in the amber.

We ensure our bills are paid and have never defaulted on any payments but I am noticing that we are eating more into overdraft.

I have done budget and myself and my husband we do not go out or eat takeaways and do not have and extravagant lifestyle.

I was thinking of remortgaging but tied into until Dec next year 1,237.06 penalty fee for early repayment. I was thinking of moving loan on to 0% credit card but o/s loan to high to do that. Current loan repayments are 160.00 per month and was considering shopping around for better rate but worried amber credit score will go against us.

I really want to get debt from.around our neck but somehow lower repayments and make them affordable.

Hi there

Thanks for posting.

The payday loan company can still add interest and charges onto the loan if you're not paying the original contractual payments, up to a cap of 100% of the amount originally borrowed. So if you borrowed £200, the maximum you can have to pay in total is £400. I can't be completely sure from your post whether the amount charged now has exceeded this?

If the amount has exceeded £400, or you're unhappy with anything they have done you can make a complaint to them in writing. Please bear in mind that if the charges added are within the 100% and were what you signed up to when taking out the loan, grounds for a complaint could be questionable; but as I say I don't know the full facts to say either way.

If you need any further help and advice, we can provide this for you free of charge. Please have a look on our website to see how to get started: www.stepchange.org/Contactus

I hope this is helpful.

Allen