Spent, spent, spent now in trouble

[billypre]

Hi all, glad to see you are all doing well with you issues and having read through mountains of threads i better crack on with what i am here for.

I have a friend (ex-family in-law actually) who is in trouble. They fell into the usual spending trap of a young couple with new child, new home etc and got a whack of credit. They started with one catalogue and had the credit limit increased and so bought more etc etc then took out a new catalogue etc etc.

This has all been since 2008 so all enforcable. Problem is they now have too much debt and not enough income.

Now, i'm not judging them as i'm sure lots of us have been here, including me in my younger days. They realise what hey have done but now the money troubles are seriously out of control and i told them i would see what their options are.

I dont know specific amounts just now but i do know they have 5 catalogues totalling about 6k. 2 of them are at 1.5k and 2.5k and the others are all under 1k. They have actually continued paying what hey could but have been getting hit with lots of late payment charges over the past year etc but have still continued to spend on the catalogues, even up until as recently as last month because all their spare cash goes into paying catalogues that when they do need something they have no choice but to spend more on the accounts as its really their only avenue to buy things. Catch 22 for them.

So, what are their options ? Should they just write to each individual catalogue with an I&E and ask for reduced payments ?

What will happen to interest/charges etc and their credit file ?

Should they keep paying every penny they have spare ? Should they stop paying and try get a default.DCA involved/ then try for a F&F offer in future for a small amount ?

Personally i feel the catalogue companies are partly to blame for this situation as they continued to increase their credit despite late payments etc which they surely must have seen that they were having trouble paying on many occasions. Of course, ultimately, it is their own fault.

I've told them firstly to stop worrying and i will do what i can to help, as i dont want them getting overly stressed about money as they also have other major problems non-finance related which gives them enough to worry about.

[Numpty Monkey]

Re: Spent, spent, spent now in trouble

Hi Billy

without knowing all the incomings or outgoings , wether they own(mortgage) thier home assets, its a difficult one to call.
A DRO could be a possability,
or maybe a DMP they can do it themselves, with a bit of help.
But without the full picture it's hard to sugguest the right option

You could use this letter Hold Action to give your friends a bit of breathing space,
and time to join here
and give them time to join thier local Freecycle/Freegle , its a way to get secondhand goods for free,
good if you need some some things to tide them over

[billypre]

Re: Spent, spent, spent now in trouble

Yeh, i'll have to try get more info but i dont want to seem like im prying, plus i know how embarrassing it is but i suppose if they want to face up to it they just have to be honest with me so i can help (or get help for them)

Thanks for the freegle info, never heard of hat one before but will have a look myself and let them know. They dont have t'internet so doubt they will know either.

They are in council house or rented off an association im sure.

[caspar]

Re: Spent, spent, spent now in trouble

For that amount and with it being catalogues I'd guess a self managed DMP will be the way forward. May be worth starting with CCCS or similar to get offers accepted and charges frozen etc.... then just take it over themselves - no need to tell the creditors. They then have control, but get the benefit of the reputation of CCCS to get it started.

[billypre]

Re: Spent, spent, spent now in trouble

Here's a bit more info now at last :

Am i right in thinking all these companies are the same "umbrella" of shop direct ?

Littlewoods
Balance - £650
Last Payment - Last month
In arrears and getting £12 per month charge - no interest


Choice
Balance - £882
Last Payment - Last month
Up to date but interest being added


Simplybe
Balance - £433
Last Payment - Last Month
LAte Payment charges in arrears £12 per month plus interest charges

Very
Balance - £2735
Last Payment - Last month
In arrears and getting £12 per month charge plus hefty interest charges

Additions
Balance - £1650
Last Payment - Last month
In arrears and getting £12 per month charge plus interest charges


Also found out that they havent paid their electricity or gas bills for 3 months as they are trying to pay the catalogues. Same applies to council tax. I have told them to ALWAYS pay the utilities first as these are PRIORITY !!! Think it sunk in.

They have 2 credit cards which they took out in 2008/2009 which total about £650 total but they are with vanquis and aqua so the charges in interest arent great.

Speaking to them on Saturday their and they really are in a state. I done a makeshift I and E and after paying rent, council tax and food etc they are left with about £180 a month spare and the total minimum payments for all their catalogues and credit cards is a whopping £636 a month. This is largely made up of interest and charges too so fighting a losing battle.


So, a self made DMP or CCCS best way to go ?

What happens if they just stopped paying them ? What would be the ramifications and consequences ? Or indeed what would be the benefits ? Do you think it would be possible to save up their £180 a month and hope they get defaulted, DCA'd and then offer a F&F ? Or will these catalogues just take them to court ?

[Undercover Elsa]

Re: Spent, spent, spent now in trouble

Hi,
Agree with Caspar...the companies will take more notice if they start out with CCCS, plus as soon as your friends advise them that they are consulting a DMC they will have to give them 30 days grace to sort it out.
Much depends on how they value their Credit Records. If (as they probably should in their current situation) they have, with your help, a lightbulb moment and realise that you can't feed your family on a shiny clean CR, then they'll be a long way to truly tackling these lowest of the low priority debts.
I personally would cease payments to them immediately and let them default me so they know that I really am financially strapped, and once defaulted more options for interest free reduced payment options usually open up. Debtors are classified by these companies according to whether the problems are long or short term, and they react accordingly. Long term means more chance of interest freezes but also more chance of credit ref trashing and being passed to a debt collector. (Not always bad! They are usually incompetent and more desperate to deal than the OC)

I digress.... Once I'd stopped payment I'd divert whatever cash it releases to bringing the priority bills in line. It will take some time for the defaults to kick in and the threats to start, so maybe a few months without paying the catalogues will sort out the priority debts. THEN I'd approach CCCS.
Takes a lot of bottle and a thick skin to do it this way though. If they're not ready for that, they could just miss 1 month and go straight to CCCS.

Just my opinion, as ever,

Shepherdess x

[Never-In-Doubt]

Re: Spent, spent, spent now in trouble

Here's a bit more info now at last :

Am i right in thinking all these companies are the same "umbrella" of shop direct ?

1. Littlewoods
2. Choice
3. Very
4. Additions

5. Simplybe

no's 1-4 are all SDG (shop Direct) whilst 5 is HSD (Home Shopping Direct).

Also found out that they havent paid their electricity or gas bills for 3 months as they are trying to pay the catalogues. Same applies to council tax. I have told them to ALWAYS pay the utilities first as these are PRIORITY! Think it sunk in.

Woah, they're playing a risky game doing that!

They have 2 credit cards which they took out in 2008/2009 which total about £650 total but they are with vanquis and aqua so the charges in interest arent great.

Yep, agreed...

What happens if they just stopped paying them ? What would be the ramifications and consequences ? Or indeed what would be the benefits ? Do you think it would be possible to save up their £180 a month and hope they get defaulted, DCA'd and then offer a F&F ? Or will these catalogues just take them to court ?

If they cannot afford it then maybe a default and F&F offer in time would be the best way forward here - however the £600 they save each month should be saved for any future F&F's - bear in mind though that they would be defaulted. Therefore if they are tenants, no big deal - homeowners, worth considering a dmp.

[billypre]

Re: Spent, spent, spent now in trouble

Thanks Nid. Forgot to say, they are tenants, thats a definite. I agree about the missing leccy and gas etc and it always amazes me how people still dont realise how these should always be priority number 1 compared to much much lower debts like catalogues !!

The reason they have been trying to pay the catalogues is that they were under the impression that if they didnt pay then the catalogues would send bailiffs round in a matter of weeks and they would take everything they have.

First thing i've told them is to get in the black with the utilities and c tax. I've told them to ring them all up and ask to pay a percentage of arrears on top of their ongoing utilities bill to catch up. The £180 thats left has taken into account this.

One thing i dont want to do, and have been very careful with my words with them, is that they think they are going to have it easy and that i (or we) have a magic wand.

Would this be ok to say to them :

Call utilities and ctax and arrange a repayment of arrears.

Stop payments on the catalogues and let them default after a few months non-payment.

Keep all additional income aside (i may ask them to give it to me to put in a savings account) so that they have available funds for a F&F if available further down the line.

Let them know that their credit file WILL be shattered.

Kepp me informed of any letters etc they receive and not bury anyting away.