Huge Debt - What are my options please

[Roger]

Thanks Roger
I have already opened the safe bank account.
I have also closed the joint account between me and my wife, to keep her credit rating separate.
I am not hugely worried about credit rating now, as i have figured that it will take a hit either way. Not that it is great at the moment.
I am expecting bit more income towards end of year, so I am not sure. Do I try to keep afloat till then and then try snowballing etc.
Or should I go for DMP and not worry about default.
Confused......

Statute Barred is 5 years in Scotland and 6 years in England.
Be aware that the clock doesn't start from non-payment. Recent Cases are from the Default Notice.
Any acknowledgement of Debt (that's what a DMP does) restarts the clock!!

AAD usual say wait until the Debt is sold because DBA are more open to shall I say negotitions (if this is what you intend).
In the End the choice will be yours, my own preference, is sitting on my hands for 6 years, whilst saving up a treasure chest.
Not pleasant to stop paying and without communication!! batten down the hatches and await the harassment from Phone Calls, Letters etc..

In the End the choice will be yours BUT don't assume that these debts are automatically EN.

I wish you and yours all luck and success. Nobody here judges but each Case is unique.

[DebtIssues]

Statute Barred is 5 years in Scotland and 6 years in England.
Be aware that the clock doesn't start from non-payment. Recent Cases are from the Default Notice.
Any acknowledgement of Debt (that's what a DMP does) restarts the clock!!

AAD usual say wait until the Debt is sold because DBA are more open to shall I say negotitions (if this is what you intend).
In the End the choice will be yours, my own preference, is sitting on my hands for 6 years, whilst saving up a treasure chest.
Not pleasant to stop paying and without communication!! batten down the hatches and await the harassment from Phone Calls, Letters etc..

In the End the choice will be yours BUT don't assume that these debts are automatically EN.

I wish you and yours all luck and success. Nobody here judges but each Case is unique.

So would your advice be to go for DMP and wait for the debt to get sold?

[Warwick65]

I think we are in a rather grey area at the moment regarding what might happen if you miss a payment or two. The FCA are busy throwing out rules and guidance , you might have seen it in the papers. Although I think it makes Hitler look reasonable, the Daily Heil (Mail) does have some good stuff about debt. I think this is because your income demographic is it’s target audience.

Because of these new rules and guidance we can not tell what may happen if you miss a couple of payments. All creditors should treat you with forbearance if you tell them your in a mess.

Depending on where you live (access to branches) and just how you feel about tech , Metro and Starling are good as is. Virgin money who are Clydesdale and Yorkshire bank as well as B .

Thinking long term having a bank which will offer banking , saving and maybe credit cards is a good idea.

After years where no one would touch me , I now have a Virgin money bank account, a B credit card ( no overseas transaction fees) and Starling who let me take some cash out in Europe charge free.

[Warwick65]

Just to say, I can only tell you my opinions and experience as I am not debt guidance authorised. Same with the rest of us to be honest

[JustAboutMad]

Thanks Warwick65 and The Tech Clerk

I was reading on the forums - someone had suggested better to get into DMP after being defaulted. I did not quite understand that, can someone please explain. Does this mean that I stop paying without any communication? or keep paying something? What kind of communication should I do in such case with the creditors?

Basically on your credit file you have payment markers from each lender that usually go from 0 = account up to date, then 1-6 (in my experience) which correspond to the number of payments you have consecutively missed (i.e. 1= one missed payment , 5= Five months in a row missed). On month 6 of no payments, lenders usually send you a default notice. This is a letter stating you have defaulted on your account and at this point they usually, sell your debt on to a debt collection agency (DCA) and trash your credit file with an 'account in default marker'. Note a default notice is a different thing to a default marker on your credit file, but the date should generally correspond.

A few points to note here:

1. Once you have 'defaulted' on the account, they usually stop charging interest and sell it to DCA for like 10p in the pound.
2. The 'DEFAULT MARKER' stays on your credit file for 6 years from the date of final SETTLEMENT. Not from the date you originally defaulted.
3. A debt becomes statute barred 6 years after you last acknowledge it. ie make a payment towards it or admit you owe it to anyone.
4. Once a debt becomes statute barred, no-one can demand any payments from you. It basically disappears (sounds simple but it's not!)
5. For the 5/6 years running up to the statue barred date you will be hounded with calls & letters threating bailiffs etc from likely more than one DCA as they usually get fed up when you don't respond and resell your debt to yet another DCA. Who starts the whole chasing process again.
6. At any point during this process anyone of these lendors or DCA's could take you to court and enforce payment through a CCJ, you will be threatened constantly throughout.
7. This is where the CCA request and unenforceable agreements come in to play. If it turns out that any of the agreements are unenforceable, then at no point can you be taken to court and forced to pay the debt. Hence its unenforceable.

So basically you send off the CCA requests, and worst case scenario, it turns out all of your debts are enforceable, now main points to consider are:

1. How long your credit file is going to be destroyed for, (remember it's six years from date of settlement).
2. What is the minimum you can get away with paying back.

From my understanding, when you enter into a DMP, you are basically agreeing to pay your creditors what you owe them, IN FULL, but at a reduced rate based on what you can afford at this moment in time, and it will be reviewed at a some point.

On that basis, and it would be really helpful if someone else could clarify this point (as it is also relative to my current situation) you are not actually defaulting on the accounts, and I would imagine it will show something like 'arranged payment' on your credit file. They can potentially continue to add interest, (grey area currently due to new FCA rules on Persistent Debt) and the AP status on your credit file will continue up until the date of settlement. It will therefore be visible 6 years after you've finally settled these debts, so potentially killing your credit history for 12 years (6 years of paying, plus 6 years after that for the DMP/AP status to disappear) from the situation you have described.

Therefore the benefit to defaulting on agreements in your current position is:

1. The interest will be frozen after around 6 months
2. DCA's can buy 10k of your debt for 1k therefore they tend to be more open to negations on an actual ' F+F = Full and final settlement figures'
3. Due to your salary, if you chose not to pay some of these debts for a few months it would enable you to save money towards those 'final settlement figures'
4. This method trashes you credit file for 6 years after you pay the last settlement figure, which is likely far earlier than any DMP based on your debt & salary.

There are other benefits to this method, in that you can choose who to pay and who not to pay.

As far as any contact with lenders is concerned. It all needs to be in writing. No point in having any conversations over the phone in my experience. Everything you do needs to be accountable.

Not being judgemental, but the person at the other end of these debts receiving your budget details, is likely to be on no more than 20k and not really going to be that sympathetic IMO considering your salary.

I'm basically going through a similar process right now, which is why I'm on here atm, but my household income has recently been reduced to less than 2k per month, and I have 6 dependants! I don't see how your figures stack with 2 kids on your salary and the 'chance' that your wife could be in work soon. I'm all up for anyone getting away with not having to pay greedy bankers, but I can't see how those figures would work long term on a IVA or DMP.

The other option to consider if your wife will be in work soon, currently has no debt and would qualify for credit, would be to bounce some of your debt over to her on balance transfers etc, and then seriously sit down and deal with snowballing to clear them. That way there is no adverse credit situation for anyone.

Just putting my thoughts out there. Not giving advice to be followed without further investigation. Just opening up further discussion

[JustAboutMad]

What will happen if I miss 1 or 2 months of payments for each creditor? or some of them - this is to generate some cash in the system which I can then possibly use to pay off some of the smaller cards and possibly starting snowballing effect.

Should I write them to say that I am in financial difficulty and can they freeze interest or should I just let the payment miss? Then I can pay again next month.

But what would be the impact e.g. if I miss one payment, will I need to pay for 2 months next month or does that one missed payment goes to the end of the period.

I am thinking if I can do this 3 times in next few months, it can possibly generate cash for me to start snowballing on the credit cards.

Please advise.

If you miss a month you will owe 2 months payments plus a £12 fee for each month you are late and extra interest. If you miss a month on any of the cards that are currently on 0% they will cancel the 0% deal and charge you the standard interest rate on the amount you owe.

If you are considering this route, you really need to make a list of lendors, credit limits, current balances, standard rates, when 0% deals run out etc. Only when you have all of that written down can you work out where you need to focus your cash for snowballing.

[DebtIssues]

Thanks Warwick65 and JustAboutMad, really helpful comments.

One question - if I go for DMP on reduced payments, can I then at some point revert back to full payment? How does that work?

Thanks

[Warwick65]

Basically on your credit file you have payment markers from each lender that usually go from 0 = account up to date, then 1-6 (in my experience) which correspond to the number of payments you have consecutively missed (i.e. 1= one missed payment , 5= Five months in a row missed). On month 6 of no payments, lenders usually send you a default notice. This is a letter stating you have defaulted on your account and at this point they usually, sell your debt on to a debt collection agency (DCA) and trash your credit file with an 'account in default marker'. Note a default notice is a different thing to a default marker on your credit file, but the date should generally correspond.
Not always but yes quite often very similar dates. It is the remedy date of the default notice that is important where limitations are concerned (Assuming you don't make any further payments)

A few points to note here:

1. Once you have 'defaulted' on the account, they usually stop charging interest and sell it to DCA for like 10p in the pound.
   
   Stooping interest and charges is something you have to negotiate. If it a loan, in my experience , they asked for the full amount I would have paid if the payments had run to term- as for selling the debt on, it varies. Yes some sell as soon as they are defaulted, some even seem to sell without a default which is rather naughty and some wait. It took RBS nearly 5 years from default to sell my two credit cards on. However, yes they do sell them on for very low amounts and sometimes you can make quick full and final offers which are accepted. If you make a full and final offer, the wording is very important as you don't really want to acknowledge the debt.
   
   Look at it from a business perspective, if they buy a debt for £1000 and two weeks later you offer £2000 , they have made a quick grand for little or no work- even more appealing if you are either not paying or only paying token sums. If you do make offers, say something like a relative has offered to make these payments for me , otherwise they might wonder why you have a spare £2K.
2. The 'DEFAULT MARKER' stays on your credit file for 6 years from the date of final SETTLEMENT. Not from the date you originally defaulted.
   
   NO - The default comes off your credit file after 6 years, paid or not. If however, you are in an arrangement to pay (AP marker) That could stay on until the debt is cleared)
3. A debt becomes statute barred 6 years after you last acknowledge it. ie make a payment towards it or admit you owe it to anyone.
   
   To be safe it is 6 years from the remedy date of the default notice - or last payment or acknowledgement, whichever is the later.
4. Once a debt becomes statute barred, no-one can demand any payments from you. It basically disappears (sounds simple but it's not!)
   
   In England and Wales they can keep asking long after it is barred. What they can't do is get a CCJ , however, if they were to issue a claim and you didn't defend it they could then get the CCJ leaving you with the onerous task of having it set aside.
5. For the 5/6 years running up to the statue barred date you will be hounded with calls & letters threating bailiffs etc from likely more than one DCA as they usually get fed up when you don't respond and resell your debt to yet another DCA. Who starts the whole chasing process again.
   
   In my experience , the first year was the worst , after that they would come in flurries - almost as if your name came to the top of the list again. I did get a few more letters as they approached the 6 year mark but nothing heavy.
6. At any point during this process anyone of these lendors or DCA's could take you to court and enforce payment through a CCJ, you will be threatened constantly throughout.
   
   True - but is it is unenforceable it is unenforceable. Also, even if you don't have a defence you can often make arrangements before it gets to court
7. This is where the CCA request and unenforceable agreements come in to play. If it turns out that any of the agreements are unenforceable, then at no point can you be taken to court and forced to pay the debt. Hence its unenforceable.
   
   Sorry but NO again. That is a little simplistic, if it is UE they can and do issue a claim but if you can defend it they can't win. As an example, I had a claim issued against me for a Capital One debt of about £5K. The agreement looked good but thanks to Di and Jo and a very nice man called Tom , the claim failed because there was no Default Notice .

So basically you send off the CCA requests, and worst case scenario, it turns out all of your debts are enforceable, now main points to consider are:

1. How long your credit file is going to be destroyed for, (remember it's six years from date of settlement).
2. What is the minimum you can get away with paying back.

From my understanding, when you enter into a DMP, you are basically agreeing to pay your creditors what you owe them, IN FULL, but at a reduced rate based on what you can afford at this moment in time, and it will be reviewed at a some point.

On that basis, and it would be really helpful if someone else could clarify this point (as it is also relative to my current situation) you are not actually defaulting on the accounts, and I would imagine it will show something like 'arranged payment' on your credit file. They can potentially continue to add interest, (grey area currently due to new FCA rules on Persistent Debt) and the AP status on your credit file will continue up until the date of settlement. It will therefore be visible 6 years after you've finally settled these debts, so potentially killing your credit history for 12 years (6 years of paying, plus 6 years after that for the DMP/AP status to disappear) from the situation you have described.

This is where it gets complicated. In the good old days , once the creditor knew you were in a DMP they should default you. Now they do not have to and this is where the horrible AP (arrangement to pay ) marker is used- see above.

Therefore the benefit to defaulting on agreements in your current position is:

1. The interest will be frozen after around 6 months
2. DCA's can buy 10k of your debt for 1k therefore they tend to be more open to negations on an actual ' F+F = Full and final settlement figures'
3. Due to your salary, if you chose not to pay some of these debts for a few months it would enable you to save money towards those 'final settlement figures'
4. This method trashes you credit file for 6 years after you pay the last settlement figure, which is likely far earlier than any DMP based on your debt & salary.

There are other benefits to this method, in that you can choose who to pay and who not to pay.

As far as any contact with lenders is concerned. It all needs to be in writing. No point in having any conversations over the phone in my experience. Everything you do needs to be accountable.

Not being judgemental, but the person at the other end of these debts receiving your budget details, is likely to be on no more than 20k and not really going to be that sympathetic IMO considering your salary.

I would say it is likely that it will all be worked out by algorithms, the people on the phone do not usually have the power to make decisions. - All about the routinisation of work ,and bureaucracy ; if you are a sociologist think Weber , Bauman and Ritzer

I'm basically going through a similar process right now, which is why I'm on here atm, but my household income has recently been reduced to less than 2k per month, and I have 6 dependants! I don't see how your figures stack with 2 kids on your salary and the 'chance' that your wife could be in work soon. I'm all up for anyone getting away with not having to pay greedy bankers, but I can't see how those figures would work long term on a IVA or DMP.

The other option to consider if your wife will be in work soon, currently has no debt and would qualify for credit, would be to bounce some of your debt over to her on balance transfers etc, and then seriously sit down and deal with snowballing to clear them. That way there is no adverse credit situation for anyone.

Taking on more debt to repay others rarely works and as for the salary, we have no idea of the outgoings of 'debt issues'. Housing 1000, maybe high CT, maybe heavy transport costs- have you seen the price of rail season tickets?. So please, can we be a little more supportive and a little less judgmental.

Just putting my thoughts out there. Not giving advice to be followed without further investigation. Just opening up further discussion

I have just given a few thoughts in red above

[Warwick65]

Thanks Warwick65 and JustAboutMad, really helpful comments.

One question - if I go for DMP on reduced payments, can I then at some point revert back to full payment? How does that work?

Thanks

IF this is your plan then I would ask your creditors for a period (say 6 months) of reduced payments . It is still very likely to harm your credit file but could reduce the pain of long term DMPs or whatever. This is the area for professional debt advice, I have a lot of respect for National Debt Line although they might suggest bankruptcy.

[Roger]

Its a Reality check that we have all had to make. The sober taking control of debt and all that it entails.

Debt is global big business.
Yes debts sold for pennies in the pound BUT can also be off set against TAX (face value). Which is why often the % rate actually goes UP where they perceive unsustainable DEBT.
DCA increasingly pursue for the FULL face value.
Being on a DMP doesn't mean that the Debt won't be Defaulted and Sold.
DEBT is profitable business (not a Charity) BUT misery for the debtor!

CCJ? Well have you any Assets? Any Capitol? because this is also a factor of consideration. Of what use is a CCJ if there is no money to pay it?
Trashed Credit for a determinated period is part of your consideration especially including a DMP.

You are and will discover that its easy to walk into Credit BUT the minute you become a BAD or at risk DEBTOR relationships quickly change.

The important thing is understanding the risks and imprecations of your actions.

Each Case is different but in the End what you do or don't do is up to you.

[February17]

Hi,

Also my wife and kids are not yet British citizens and there can be impact of my BR on their application as I understand.

Another question, how long will it take for your wife and children to get a British passport. Is it few months or a year etc ?

The reason I ask is that family is the number one priority and if the passports are only a few months away you might be able to carry on as you are for a while until the passport applications are approved and then battle the debt so that you don't risk any passport problems.

[JustAboutMad]

Thanks Warwick65 and JustAboutMad, really helpful comments.

One question - if I go for DMP on reduced payments, can I then at some point revert back to full payment? How does that work?

Thanks

It's currently a grey area. Due to the new persistent debt regs, DMP's should really not need to exist from next month, so.....

I've gone from employing 4 staff and turning over £4500 per week to being forced to sign up for universal credit at £1600 a month. I've been researching all of this for the past few weeks and basically my conclusion to date is. Being on a DMP will likely appear on your credit file as AP = Arranged Payment. However, you need to declare to everyone that you're on a DMP. On the otherhand, if you contact your creditors directly, with an income and expenditure sheet, they now need to show you 'forbearance' due to the new PD rules, and therefore you can effectively negotiate your own arranged payments based on what yo can afford. So basically you can get the interest frozen etc on your credit cards, it will still show up on your credit file as an Arranged payment 'AP' but you're not actually on a DMP.

To answer your original question, you can choose to pay your creditors any amount over the agreed minimum payment as you so wish. This will obviously reduce the balance faster, but it will not reinstate your original credit terms. Once you've breached the agreement and you pay less per month than the original agreement, they are never reinstating you cards.

[The Tech Clerk]

Another question, how long will it take for your wife and children to get a British passport. Is it few months or a year etc ?

The reason I ask is that family is the number one priority and if the passports are only a few months away you might be able to carry on as you are for a while until the passport applications are approved and then battle the debt so that you don't risk any passport problems.

wait until they get their passports, immigration etc are Bxxxxxxx as I well know?