Debt

Someone I know has a large amount of varied debt which they have no immediate hope of paying back. They are being actively pursued to pay it back but cannot they are not a homeowner and have no assets.

I was aware of various business who claim to be able to have these debts wiped or something. What's that about?

That's called an IVA – effectively the creditors agree to wipe the "unaffordable" debt off and freeze all interest and late payment fees. The IVA provider will assess income and expenditure and the surplus cash is then paid to them to distribute to the creditors.

The IVA company will take a HUGE chunk of the monthly payments as fees, so effectively the creditors only get around 25% of the debt repaid.

It takes 5 years and is not an easy option, although probably the most morrally correct (instead of bankruptcy).

If you mate wants a referral to a good trustworthy debt adviser send me a email (in profile) and I'll pass you his details.

Get them to talk to the Consumer Credit Counselling Service. Check CCCS web site[/url]

Don't do anything without advise.

IVA. Individual Voluntary Arrangement.

I know nothing about them though.

PM sent

citizens advice bureau and other charitable organisations will give the the advice for free and will not have the conflicting interest of trying to sell you something.

DO NOT let your friend go to one of the debt management businesses – they are a rip-off and don't solve the problem, and only exist to make money for themselves!

As suggested get your friend to go to their local CAB or other charitable debt advice service – see http://www.adviceguide.org.uk/index/your_money/money_management_index_ew/help_with_debt_index_ew.htm for further advice.

I think your referring to the current crop of companies who are offering to wipe your debt out completely by going over the credit agreements and looking for problems with it, thereby rendering the agreement null and void. They are all over the place and generally charge a fee prior to looking at your loan agreements.

IVA's are ok if you have assets to protect, such as a home.

If you have no assets and no hope to pay it back, go BR. Will cost you about £600 and you will usually be discharged in 12 months.

Are these the twunts that call with automated messages then hang up when you ask them who they are?

If you have no assets and no hope to pay it back, go BR. Will cost you about £600 and you will usually be discharged in 12 months.

Ah yes. rack up debts and then take the easy road out – very nice.

I have to deal wth a large amount of people who have accounts at court or have bailffs on their way round. It’s saddening that so many of these situations could have been avoided if the person with the council tax debt had gone to the council rather than these at best, poor performing and at worst dangerous businesses. Of them all, I would say absolutely avoid at all costs Christians Against Poverty.

Coffeeking, easy to judge eh?

I bet you would NEVER do it? 🙄

Ah yes. rack up debts and then take the easy road out – very nice.

Not really, and not to be taken lightly – plus all lenders know the rules and have already factored in the level of non-repayment – why do you think, for example, credit card rates are 20%, when the BoE rate is 0.5%?

I wouldn’t recommend bankruptcy for (an asset-less working person) for £5k debt, but probably would for £25-50k.

Get them to talk to the Consumer Credit Counselling Service. Check CCCS web site

As Spence said… CCCS are supposed to be the good guys.

CAB is best bet but you (he) MUST keep talking to all the creditors or they will take action. Ask them to suspend interest so that the debt doesnt grow any larger and try and set up a repayment program. No matter how small it shows a willingness to pay and makes it harder to take court action for recovery.

What did he buy with aforementioned credit? Sell it?

The best thing is not to rush into anything. If they want to heat taken off for a while whilst they can think, tell them to talk to Pay Plan (Click here)[/url], they are a finance industry funded service to help people with Debt Management Plans. THEY DON’T TAKE A SINGLE PENNY AND ARE A FREE SERVICE, THEIR ADVICE IS EXCELLENT AND THEY WILL ARRANGE EVERYTHING FOR YOUR FRIEND.

Effectively their credit rating will be starting to crumble now anyway, and ultimately bankruptcy might be the best option if they will never be in a position to repay the money, but to give them time to look properly at every option, Pay Plan will take the heat off and help loads.

I have recommended them to clients quite a bit recently and some people have have their monthly repayment reduced by a massive amount. They are not writing the debt off, just getting the creditors to accept a massively reduced amount. The debt will actually start to rise over time and will still need to be dealt with, but in the short term PayPlan are the best option to cease the constant chasing.

Let’s not judge how they got into debt, recent economic circumstances have left some people with no options.

Friend has to change their ways as well, no point in seeking help & advice now only to be in the same boat in another 5 years, which is what seems to happen when people struggle to control their spending.

Problem with trying to sell assests that have been bought on credit is 1) person might not own them (still subject to credit agreement)
2) They won’t make back what he paid for them, never mind paid for them plus interest charge.

If he has anything like a car on HP payments that is killing him, once he has made half the payments he can had the vehicle back to the supplying dealer/credit company and walkaway free of any obligation. He needs to write to the finance house to tell them he is doing so and must make the car available to them at anytime, commonest thing to do is to tell them the car will be at XXXXX motordealers from 12/12/2010 after 9.00am for collection. Finance companies hate this, the car will usually be sold at auction for a fraction of the real cost to recoup some losses.

Someone I know has a large amount of varied debt which they have no immediate hope of paying back. They are being actively pursued to pay it back but cannot they are not a homeowner and have no assets.

Ireland?

Someone I know has a large amount of varied debt which they have no immediate hope of paying back. They are being actively pursued to pay it back but cannot they are not a homeowner and have no assets.

I know I’ll be flamed for this, but your ‘mate’ should seriously consider bankruptcy. If they can’t pay their debts now, I dare say they’d not manage a debt repayment plan as the terms and fees can be very punitive. You can end up 3 years down the line, no further forward and with bigger debts.

First call should be to CAB or CCCS though.

Moneysavingexperts bankruptcy forum (for all debt advice not just bankruptcy) is a fantastic place for expert non-judgemental advice…

http://forums.moneysavingexpert.com/forumdisplay.php?f=136

CCCS…
http://forums.moneysavingexpert.com/showthread.php?t=1639589

Another course of action for smaller sums is a debt relief order…
http://forums.moneysavingexpert.com/showthread.php?t=1385275

I know I’ll be flamed for this,

Nah, never been in that situation myself but I suspect I’d investigate the bankruptcy option in the OPs case

Get them to the CAB, they’ll probably put them in touch with Begbies Traynor who will sort everything out for you. It is not as painful a process as you think it might be.

Ah yes. rack up debts and then take the easy road out – very nice.

This chaps’ experiences are a ‘good’ read for anyone who really wants to ‘tough’ it out…

http://boards.fool.co.uk/gostevie-november-2010-update-12101036.aspx

And he started off at nearly £40k in 2001, and thought he’d be debt free in 6 years…

http://boards.fool.co.uk/debt-stocktake-6861630.aspx

he still owes £10k, and its not through want of trying. Many, many times he was advised to for for bankruptcy.

Monksie

what’s wrong with Christians against poverty?

A friend is in trouble and has had these recommended..

my experience:

55k in debt (serviced without fail till i lost my job), have no assets – got loads of hassle from collectors…

went bankrupt

All the hastle stopped – discharged in 5 months – getting my life sorted now and don’t owe a penny for the first time in 20 years!

Consider bankrupcy only if the debt is significant… and don’t get any credit EVER again.

Have we done this:

http://gawker.com/5696300/what-200000-in-student-debt-looks-like

The average 2009 college grad had $24,000 in student loan debt. But in today’s debt-wracked world, some have it much worse. Meet one of the outliers: 23 years old, more than $200,000 in student loans, begging for help.

Kelli Space is 23. She graduated from high school in 2005, and went to Northeastern University—”the first person in my family (including extended family!) to attend college,” she says. Unfortunately, that may have deprived her of the opportunity to have someone tell her that the American college dream isn’t all it’s cracked up to be. Kelli emerged in May of 2009 with her diploma, and this:

– * –

That, friends, is goddamn frightening. (For an undergrad degree. The total was boosted by summer classes, books and miscellaneous expenses, and a year spent studying abroad.) Kelli writes us:

The severity of my situation goes a bit deeper than “I owe this money, help me” – I am actually forced to live with my parents (forced = I am lucky! But…) as the monthly payments for just my private loans are currently $891 until Nov 2011 when they increase to $1600 per month for the following 20 years… attached is my payment plan. I also mentioned I have a job – which is great! And I probably have my college education to thank for that! Except there is still no way to make these monthly payments, and live on my own as a contributing member of society. Neither of my parents, nor I, really knew how this would pan out — unfortunately — and now that I’m here, I see no real light at the end of the tunnel.
She’s so desperate that she’s set up a website soliciting donations from the public, TwoHundredThou.com, with the vague hope that it might go viral like that “Million Dollar Homepage” thing did. Her donations so far total ten cents. To Kelli’s credit, she’s not unaware of how that sounds; she accepts responsibility for her predicament, and acknowledges that there are surely more worthy charities out there than hers.

But she’s desperate. She currently owes Sallie Mae alone nearly $190,000. At 23, that’s a hell of a lot of debt to stare down. So even if you don’t donate to Kelli’s debt relief effort, take her cautionary tale as proof that knowledge is not, in fact, priceless. Sometimes it’s much too expensive.

your mates a loser

Mugboo. Worse than useless. They get it wrong EVERY single time, take ages to do anything while being completely aware that the clock is ticking and agreed deadlines for various stages of recovery are passing, fail to send payments according to negotiated schedules which renders the repayment plan void, charge the debtor for their services that actually makes the situation worse and don’t do anything that the client can’t do themselves for free.
If I was up to my neck in debt, I’d draught up an honest and proveable income and expenditure breadown, prioritising my outgoings as:
Mortgage/Rent
Long term perscription costs
Groceries
Council Tax
Utility bills
School Transport costs
All other debts
Send this and an offer of payment to each creditor showing how much you are offerng to all so they can each see what is going on.
The ONLY places I would be going to for offical help would be the council’s Welfare Rights Unit and as above CCCS.
CAB are larely staffed by well meaging volunteers with a legislation book but little idea of what can and what can’t be done. Treat them with extreme care.

joolsburger – Member
Someone I know has a large amount of varied debt which they have no immediate hope of paying back. They are being actively pursued to pay it back but cannot they are not a homeowner and have no assets.

I was aware of various business who claim to be able to have these debts wiped or something. What’s that about?

Posted 4 months ago # Report-Post

Talking to a dedt manager a few years ago, she said they would pursue people who owed a few thousands to the ends of the earth as they had a chance of getting it back, but people who had run up multiple debts,and had no house or decent car, would be pursued , and then after a while the debt would be written off, as it was uncollectable, or sold to a debt colection agency for them to try and get it sorted.

She also said debt protection insurance was a nice little earner for the company she worked for as nobody claimed it and got it, to many little rules to make it unclaimable.

your mates I’m a loser tosser

HTH

Blimey resurrection… It’s not me by the way, really not!!

I think it was a – now deleted – spam post that resurrected it

While were on though, how did he get on with things?

Cheers Monksie, sounds like good solid advice.

It so happens her parents came to her rescue. Lucky girl. 🙄

Worth checking out http://www.iva.co.uk or iva.com they seem to have a good reputation for advice.

As others have said CCCS are good, but they can take a month to sort things out. The rules on Bankruptcy change as of Dec 1st, as currently it is easier to do BR than an IVA, which is currently seen as the harder way to pay back a percentage of the debt.

Yes the IVA company takes a percentage to deal with the proceedure, but they are the barrier between creditors and debtor and once proceedings take place the creditors have to abide by the rules of the IVA.

My experience is zero, but i do have an ex who went through this, and while its tough and i repeat very tough to get through, you do get the satisfaction of a debt free bank balance, and in 5 years time the rest of the debt is written off.

Would highly recommend investigating the resources and use the above links as they will help. Always go in prepared!

In 2007 I was self employed, I had a growing property management business and borrowed £50K from a certain bank from Scotland with a Royal tinge to it to expand my business, it was scaleable and I had got into a lot of debt building the business and had split with my partner and had to set up a new home at same time.

After I split up with my long term partner and the bank started putting me under pressure to sign a guarantee to secure the loan against an asset, which I didn’t have. I’d sold my house 10 year earlier and had paid the profit against my then ex’s mortgage (no equity deed) so they were stuffed.

They decided to get nasty and when I transferred the bank account to another account with same bank they took the money out of rents that had come in on the first of the month. I sought advice and was told to go bankrupt.

I went down for £130K in total, but not a single late payment in my life. I was balancing massive debts but the money I’d borrowed was starting to pay a dividend, if they’d waited 9 months they could of had the lot back. They turned me over big time.

My advice is as follows:

Don’t use anyone else other than CCCS! CAB are far too overworked to cope, period.

Don’t pay for an IVA! The insolvency practitioners on these schemes make huge commissions and they are driven to get a client on a five year plan, a £30 a month ‘managment fee’ over 5 years means there’s £1800 less paid of the debt you owe. They are very restrictive and if you fall on better times 18 months in you still have to go through the rigmarole of asking for permission for credit and it’s NEVER given. All parties in the IVA have to agree to changes and they’f rather have more money for them than allow you to take on more credit.

My bankruptcy was discharged in 11 months and within 18 months I had a SIM only contract which started to build my credit, I now have iPhone and credit card with £500 credit limit. It’s made me appreciate money more but my circumstances were exceptional and the bankruptcy was very technical, the Official Receiver ended up getting the money bank from the bank as they had taken the money from a client account, which is illegal.

All of the creditors were only paid in 2010 after a lengthy process.

There’s no shame in being bankrupt, Alan Sugar, Simon Cowell are a few of the famous BR’s. The only down side is you won’t get too much credit for 5 years and you have to put up with comments like this:

PM me if you want my number to talk about it, but either way, it won’t kill you and will make you stronger!

only one thing to add, and i know this is an old thread so not of immediate relevance, If you are a member of certain professions, accountant for instance, be aware that bankruptcy may result in you losing your licence to practice and hence having job issues.

So, those who have been bankrupt, when you became solvent again, did you attempt to pay any money back to those you owed it to?

…and if not, how does it differ from stealing a large amount of money?

I would be very nervous taking debt advice from anyone who has gone bankrupt…

There are lots of companies out there who will all have different interests, and motivations for providing debt advice. Have a good look around and you will find people who will assist you for free.

…and if not, how does it differ from stealing a large amount of money?

If it’s the creditors who have forced the bankruptcy, I’m not sure I’d be too worried. I had an interesting problem with Barclays many years ago, not an issue for being bankrupt but they were not particularly nice and had basically invented the problem. When businesses are honest, you’re comment will be valid.

Don, if Barclays had lied and made up a problem they would never have been to successfully petition for bankruptcy, would they.