PayPlan Advise Please...

jo5ephedward5 · 21st August 2006, 11:52

Hi,

I’m about to star claiming my bank charges back – I expect these to be in the region of £2-3000.

My problem is I currently owe around 22K in unsecured debt so the refunded charges will make a minimal impact, and truths be known I’ve had no spare money for so long I’ll prolly waste it on a holiday and some new stuff!

I have been affording the payments on all my debts for some time (about 3 years) but every month is a struggle – if I was to go into a Debt management like Pay-Plan how would It effect my credit file…I am up-to-date with all payments and haven’t missed a beat for 2 years but living in London now and only have £20 a month after bills to have a life with isn’t going very far lol...

Having said that I would like a mortgage when these debts are gone…at the current payback rate that’s only 2 years, so should I just struggle on and pay them (as credit file will look good and I’ll be debt free in 24 months), or should I look into a pay-plan and pay for longer (and if so will it screw up my credit file) – decisions decisions.

what are peoples thoughts and are there any alternatives?

opalfruits · 21st August 2006, 12:26

Any kind of reduced payment will be noted on your credit file. This will be wiped clean after 6 years.

jo5ephedward5 · 21st August 2006, 14:09

will it show as a negative though or will the payment total reduce and the period extend (i guess not as a new loan agrement would be needed as oppose to an ammendment to an existing)

elsinore · 22nd August 2006, 00:16

In some respects, jo5ephedward5, you're in an enviable position. You're up to date with your repayments and you have a clean credit file (you have seen your credit file, I take it?).

If you have aspirations to obtain a mortgage then the sooner you clear your debts, the sooner you will be able to apply with confidence.

If you opt for the Payplan route, your creditors are not bound to accept your proposals for reduced payments. Even if they did, as you have said yourself the debts would take longer to settle and your credit file would have derogatory entries.

I think you should stick with it. Concentrate your efforts on getting your debts reduced by reclaiming your charges. Your creditors will either credit your account with the refunds or send you a cheque. If it is the former, then you will be clear in less than 24 months. If the latter, well that will help to make life more tolerable in the meantime

Elsinore

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