Mortgage Questions - Remortgaging with Debt Collector Debt and New Debt

[Orb]

Mortgage Questions - Remortgaging with Debt Collector Debt and New Debt


Hi, I hope someone can shed some light on this as we seem to be in an odd situation and we can't work out the way forward.

We have some historic debt that is with 3 debt collectors: Link Financial, Lowell and PRA.

• This debt amounts to about £40k
• It's all 'on hold' - we are not currently paying this off
• We have been with StepChange in the distant past on a DMP, which ended in 2018 I think, as we didn't have sufficient funds

We have a mortgage with Nationwide, which is up to date, no arrears or defaults.

We have no arrears or defaults on other bills either.

Our credit rating on last checking was really good - 80 or so out of 100

Over the last 6 months myself and my wife have both gained good employment and have a combined decent income - so we are looking to move our financial chess pieces around to sort things out again.

We bad car luck recently and both of our vehicles became uneconomical to repair. In desperation we attempted to get a loan for 2 'new' vehicles, and to our surprise we succeeded


OUR PLAN

We would like to remortgage, to take out a sum to pay the new loan off and then agree a settlement with the existing creditors, so we'd finally be back on our feet

We can afford this but fear we will be penalised with higher interest rates if we are not careful about how we go about this, which would very likely mean it would not be affordable and hence would scupper our ability to deal with our debt at all.


QUESTIONS:

Are mortgage companies likely to 'see' the existing debt and new debt and refuse us, or offer us higher rates?

I'm currently poised to have mortgage advise consultation from 3 sources:

• a local mortgage advisor
• our current mortgage lender
• StepChange mortgage advisor

Who is best to talk about this in detail with - any of the above or someone else?

I'm concerned that speaking with a StepChange mortgage advisor could scupper future possible DMP plan arrangements as income/expenditure figures could be different - for a DMP we will be brutally honest about outgoings to ensue we are not signing up to something that is unaffordable, but for mortgage advice we could realistically minimise some outgoings to make things more affordable, if it will make the difference to getting a remortgage that will allow us to deal with all our debt.


Similarly, talking to our mortgage lender could be risky - if we start revealing other debt to them, there may be no backtracking.


In theory we could also attempt looking at partial settlement of the old debt, with the new loan money, as we haven't used it for cars yet. Then we'd look to remortgage after that . But as we understand things, this would leave 'partially settled' marks on our credit file and they would be a problem for mortgages / remortgaging??



In my mind, we need some specific advice on how to proceed as we feel we have all the resources to sort this out now, but we're aware that certain things getting triggered would work against us unnecessarily preventing us from dealing with the situation.


Feeling paralysed and at the whim of the mortgage company - really feels like a make it or break it moment.

Are we over stressing about this?


Apologies for the big post!

[Still Waving]

Hi

What you are basically asking for is borrowing advice. We don't do that here.

You are also suggesting misrepresenting your outgoings to improve your chances of getting a remortgage, which could land you in more affordability problems.

Perhaps you should consider whether you absolutely must have two cars.

[Orb]

Thanks for your reply


I'm not suggesting misrepresenting outgoings - if it means we can deal with our debt once and for all we'll go all in, if it means years of DMP we have other matters to take into consideration which changes things. They are two very different prospects.

If this isn't the forum for this sort of advice, could you or someone else please suggest where we can go for such advice - it's more about understanding the best way to proceed than 'mortgage advice'

Thanks

[Roger]

Still Waving
Correctly says we do not give borrowing advice.

You have expressly mentioned Debts
We have some historic debt that is with 3 debt collectors: Link Financial, Lowell and PRA.

• This debt amounts to about £40k
• It's all 'on hold' - we are not currently paying this off
• We have been with StepChange in the distant past on a DMP, which ended in 2018 I think, as we didn't have sufficient funds

This raises questions because you state DMP ended 2018 (plus 6 years plus 1 month points of course to becoming possible Statute Barred 2024/5)

What AAD would suggest is that you create a Diary for each of these three Debts so that these can be looked at and if necessary commented on individually.
Which may help you

Type of Acc:
Date Commenced:
Approx Balance:
Date Last Paid:
Current Arrangement:
Status:

[Still Waving]

Still Waving
Correctly says we do not give borrowing advice.

You have expressly mentioned Debts
We have some historic debt that is with 3 debt collectors: Link Financial, Lowell and PRA.

• This debt amounts to about £40k
• It's all 'on hold' - we are not currently paying this off
• We have been with StepChange in the distant past on a DMP, which ended in 2018 I think, as we didn't have sufficient funds

This raises questions because you state DMP ended 2018 (plus 6 years plus 1 month points of course to becoming possible Statute Barred 2024/5)

What AAD would suggest is that you create a Diary for each of these three Debts so that these can be looked at and if necessary commented on individually.
Which may help you

Type of Acc:
Date Commenced:
Approx Balance:
Date Last Paid:
Current Arrangement:
Status:

"It's all 'on hold' - we are not currently paying this off"

"We have been with StepChange in the distant past on a DMP, which ended in 2018 I think"

This doesn't explain what 'on hold' means, nor does it say whether any payments or acknowledgments have been made since 2018.

If the Stepchange payments were not affordable, surely Stepchange could/would have renegotiated repayments?

[Still Waving]

Mortgage Questions - Remortgaging with Debt Collector Debt and New Debt

In theory we could also attempt looking at partial settlement of the old debt, with the new loan money, as we haven't used it for cars yet. Then we'd look to remortgage after that . But as we understand things, this would leave 'partially settled' marks on our credit file and they would be a problem for mortgages / remortgaging??

Does this"old debt" even show on your credit file any more? Your credit score would suggest that it doesn't.

[Orb]

Thanks both for your replies

"Does this"old debt" even show on your credit file any more? Your credit score would suggest that it doesn't."

I don't know, I'm pretty sure it was there when I last looked. I will check and along with the diary info, mentioned below, will feedback.

"We have been with StepChange in the distant past on a DMP, which ended in 2018 I think"

This doesn't explain what 'on hold' means, nor does it say whether any payments or acknowledgments have been made since 2018.

If the Stepchange payments were not affordable, surely Stepchange could/would have renegotiated repayments?

"on hold"
We haven't paid anything off these debts for years as we haven't been able to afford to, they are not formally in any kind of 'hold' state. I don't know off-hand when we last paid anything, but it was some years ago, perhaps as long as 2018.

We have had communication with each of the creditors over the years and also very recently, trying to keep them updated periodically - nothing by email or letters, all phone calls.

Stepchange put us on a minimum £1 a month to each creditor as we couldn't afford repayments, that ran for perhaps a year, then SC simply contacted us to say that as our circumstances hadn't changed they can no longer help us, or to that effect, and cancelled the arrangement and left us. Sounds odd and felt extremely odd at the time, considering they were our only source of help and it then meant we had to contact the creditors directly.

"This raises questions because you state DMP ended 2018 (plus 6 years plus 1 month points of course to becoming possible Statute Barred 2024/5)"

I'm clearly naïve about dealing with these debts - I hadn't heard of Statute Barred till I read it here. I now understand that a debt is legally written off after a certain time period under certain circumstances. Getting the debt details will help answer this of course....


Diary

I will look into each of the debts to understand the history etc as you outlined, and post here...

Type of Acc:
Date Commenced:
Approx Balance:
Date Last Paid:
Current Arrangement:
Status:

What do these mean pls:
* Type of Account: Is this about where the debt was from - loan, credit card, etc or ??
* Current Arrangement: Is this about arrangements for payment ??
* Status: ??

Thanks again

[Night Monkey]

We have had communication with each of the creditors over the years and also very recently, trying to keep them updated periodically - nothing by email or letters, all phone calls.

It might also be worth adding the date of last contact you had with any creditors if you can find that information, even a phone call has the potential to restart the SB clock.

[Still Waving]

A debt can become statute barred if the debtor has made no payments nor acknowledged the debt for a period of approx 6 years. Phone calls are often recorded, and notes of the conversation probably made, so they could be seen by a court as acknowledgment of the debt. So I think you should assume that you have been restarting the period required for statute barred status. BTW, the debt does not become legally written off (in England) when statute barred, it still exists, it just can't be enforced via the court.

The usual diary format is
Type of account (eg Credit card, Bank overdraft, other loan)
Original creditor
Date commenced
Current approx balance (rounded)
Date last paid (approx)
Are you on arrangement or not paying
Status (eg formally defaulted)
Current owner of debt (ie has it been sold on by original creditor)
Who is currently chasing you

It does seem odd that you couldn't afford £1 per month for these debts, yet were running two cars. Strange too, that you own a property yet apparently no creditor has applied for a charging order on the property. Also strange that, if your financial position is as you say it is, you were able to get a recent loan.

[Orb]

Thanks for replies again


Re. SB.
I'm not looking to qualify for that and it sounds as though we wouldn't anyway - much rather settle the debt....so I won't be looking at that any further. Thanks for the info on this though


To clarify - we could afford £1 per month per debt, but StepChange decided that as we'd been on that amount for a period and there was no change in our circumstances, they could no longer help us. We have been receiving outside financial help to keep us above water....and we weren't running 2 vehicles at that time. No idea about 'charging order', and yes as I said in the original post, we got a loan recently, much to our surprise, and yours. Regarding the loan, we were basically testing the waters to see what avenues were open to us and found we got accepted and received the funds.

I appreciate from outside there may be more questions. Please just ask if something seems implausible or incorrect or is just unknown/unstated so far - we are sincerely endeavouring to find a way forward that deals with our debts, but a way that doesn't leave us in a worse situation.

The original cause of having debt which we couldn't afford was redundancy from a well paid career, followed by a long period of unemployment and 'mental incapacity'. As I've said, fortunately things have changed, hence we are looking to move on

Regarding the 'debt diary' info, when I have it, should I post that here?

[Still Waving]

Probably best to keep it on this thread (for the time being at least) as all the info will be in one place.

(I have to say that I personally have doubts about your story, but don't let that put you off.)

The only help we might be able to give you would be suggestions as to what we would do relating to your old creditors, but first we need more info.

[Still Waving]

"Does this"old debt" even show on your credit file any more? Your credit score would suggest that it doesn't."

I don't know, I'm pretty sure it was there when I last looked. I will check and along with the diary info, mentioned below, will feedback.

I think the first thing I would do is to check and be sure whether or not the old debts appear on the Credit Reference Agency reports.

[Orb]

Probably best to keep it on this thread (for the time being at least) as all the info will be in one place.

(I have to say that I personally have doubts about your story, but don't let that put you off.)

It does put me off and is obviously not not helpful for someone being vulnerable and seeking help.

It would be best if you state your doubts so I can clear them up for you.


In the meantime, I'll report back with info I find checking credit ref agency when done.


This thread which sounds similar to my situ - not paying DMP for years, and apparently a clear credit file/good credit score....
https://all-about-debt.co.uk/forum/m...ortgage-advice

[Still Waving]

It does put me off and is obviously not not helpful for someone being vulnerable and seeking help.

It would be best if you state your doubts so I can clear them up for you.

I'll keep them to myself for now, so as not to put you off further.

Report back when you have checked the CRAs.

[Roger]

Still Waving
Has been sensible and cautious. Better to be pessimistic and rational! Much more helpful to you I think

Here is your weakness and your problem!
"..
Over the last 6 months myself and my wife have both gained good employment and have a combined decent income - so we are looking to move our financial chess pieces around to sort things out again.
..
We would like to remortgage, to take out a sum to pay the new loan off and then agree a settlement with the existing creditors, so we'd finally be back on our feet

We can afford this but fear we will be penalised with higher interest rates if we are not careful about how we go about this, which would very likely mean it would not be affordable and hence would scupper our ability to deal with our debt at all...
.."

Home Owners and outstanding possibly NOT Statute Barred ( because of speaking to DCA's at the phone)
What is to stop one seeking a CCJ against your earnings and even better your property?

You clearly need to create a AAD Diary for each of the three Debts don't you?