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Loss of employment, £50k plus in recent debt, help needed to plan the future


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Good morning CAG team,

 

Firstly, want to start by saying what a fantastic resource and collection of knowledgeable people you guys have created here. You guys helped me around 2008 to reclaim my bank charges and since then I have been on top of my finances.

 

I had debt issues as a youngster (now 40) due to lenders pretty much throwing money at people back then without any concern as to whether it could be repaid, I managed to get myself out of that debt by repaying it and have since maintained a fantastic (900+) credit score.

 

As much as having the great credit score is a good thing, it comes with it's own risks (ability to borrow ludicrous amounts of money) and I've fallen foul these last 24 months to a point where I am now desperately concerned about my situation, made worse by being served my notice in my current employment.

 

During 2018 I started to run up my debt as I borrowed to help friends and also my Mum having health issues that were not being cured but simply managed by the NHS, I forked out for multiple private sessions hoping to get her some relief, all with a view of repaying as I had always done, I've always paid my debts since leaving school. This borrowing continued into 2019 with house repairs, car issues and on and on, wife gaps in employment etc.

 

The debt has been affordable for me upto now as I've a reasonably well paid job, however that has now come to an end and I leave that employment in 3 months time. With only 3 paycheques remaining and no jobs that will match the salary available. I find myself in a very stressful situation of needing to plan ahead and I need your guys' assistance for this.

 

None of my accounts are in default nor had any missed payments on my credit file, all debts were taken after the start of 2018.

 

I have 3 loans:

Tesco Bank £8600 remaining

MBNA £4350 remaining

Halifax (my current bank account provider) £13,000 remaining

 

I have 5 credit cards with remaining balances:

Tesco Bank £8750

M&S Bank £9100

MBNA £11000

Virgin £4000

Halifax £2800

 

This is a ludicrous amount of debt and I'm disappointed I didn't see this earlier, as although it was affordable on the salary I have been earning, it is not affordable on a market rate salary for my trade and given recent organisational changes at work, I will no longer be gainfully employed.

 

I have seen some quotes for secured loans and additional mortgage with my current lender (a dual mortgage that runs in parallel over 25 years) to cover the debts, all of which are extremely expensive and leave me potentially vulnerable to losing our family home in the future if for any reason we are unable to pay, which given our mental health and children's age, is not an option we wish to pursue.

 

I need help on how best to approach these debts and welcome your advice. Part of me wants to default all of them due to the amounts however I'm not sure where this would lead long term, we live in our own home with a mortgage and equity in the home would just about clear these debts if we were forced to sell however that is a last resort for us.

 

I feel unclean and disappointed I am at this point given my age and wish for this to go away as quickly as possible while maintaining some dignity.

 

I appreciate I've typed alot and hope you guys are willing to discuss this with me as to my options on minimizing the impact I expect over the coming 12 months (due to loss of employment) and potentially to write off anything I can through defaulting/F&F offers etc.

 

Thanks in advance

 

 

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well the 1st thing you need to do is protect where the money you presently have and will get goes too.

pers, i'd advise and plan for the worst from day one.

 

get a parachute account opened which is not linked through group ownership to anyone you currently have credit or a mortgage with. then transfer out the actual money you have in your current bank to there AND DO NOT set up any DD's bar p'haps your priority debts like rent/mortgage, gas, electric, CTAX etc against that parachute account.

 

it is an extremely bad idea to ever think of turning unsecured consumer credit debt into a secured one so throw your thoughts of a 2nd mortgage or a secured loan out the window.

 

i've moved you to the debt self help forum, there are numerous stories here for you to read, though most, regarding say things like CCA requests, won't be relevant because your debts are all very recent.

 

go look in the debt collection section of our library from the pro rata letter and use that route to manage your debts under a small repayment amount plan each going forward.

 

lastly and linked back to my initial thoughts. i agree with your action of getting every debt defaulted and marked as such on your file ASAP, that way in 6yrs things will start to look up in terms of credit. that might well take 3-4 of paying nothing until each does issue a default notice and carry their threat out. for now on all consumer credit debt, just cancel all DD's and use the months until DN to get things in order regarding pro rata.

 

dx

 

 

 

 

 

please don't hit Quote...just type we know what we said earlier..

DCA's view debtors as suckers, marks and mugs

NO DCA has ANY legal powers whatsoever on ANY debt no matter what it's Type

and they

are NOT and can NEVER  be BAILIFFS. even if a debt has been to court..

If everyone stopped blindly paying DCA's Tomorrow, their industry would collapse overnight... 

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If I  had the spare cash, I might have bet dx wouldn't be long before replying :) thank you, straight to the point as always!

 

I've spent many hours reading on this site. Yours and others previous replies have absolutely answered what I need to do next, the content on here is like no other site. I guess for my own experience/therapy and to maybe help other's in the future like me; I would create my own thread and as we've both mentioned, the age and size of my debts differs from most other postings.

 

A few questions I haven't found answers to quite yet:

- as my debts are fairly new and alot of them over £10k, can I expect any special treatment in terms of them hunting me down or wanting to take it to court straight away?

-is there a possibility they could seek to force me to sell our home?

-given the amounts owed, whats actually the worst that can happen from here? I understand they aren't criminal but I'd like to know worse case in your guys' experience.

 

I was very weary of securing further debt against the house, I'm pleased I didn't and that the consensus is I shouldn't - I definitely won't!

 

I will go ahead and read up the section you mentioned and update this thread on how it goes should I not get employment. Thanks again

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Agree with everything so far, certainly do not secure anything against your property

 

Firstly forget the unclean and disappointed, it's not like you owe the money to your best mate. To your Creditors you are just a number on a spreadsheet. 

 

Worst case scenario? Default on everything, and get a barrage of letters from mainly powerless DCA's (Debt Collection Agencies). Maybe nothing will happen, maybe at some point in the next 6 years you might get a Claim form to try and take you to court. We can advise you with that here if it does.

 

What would I do? As someone who's been through this mess. Get your calculator out and work out your essential expenses. Work out what you have left over to offer the cards and loans etc, offer them a token amount and ask them to freeze interest until you find another job.  It may be that because of the pandemic they will offer you a payment holiday anyway. 

 

If you are really worried you can still ask your mortgage company for a six month payment holiday also, I did it, and it really helped me get back on track after losing my job.

 

Mortgage, Council Tax, Food etc so you know what you need to live on.

 

Get rid of any expensive cars, spend a grand on an old Focus or Corolla

Get rid of any expensive mobiles, Buy a cheap PAYG on a second hand phone

 

 

Start looking for another job now, even if it's half the salary. Try and recover money from any friends you have 'helped'

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We could do with some help from you.

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Thank you London for your insight.

 

I guess most people when in this situation wish to pay nothing.. I certainly am near that point as its either 6 years of repaying debt, or 6 years bad credit. Of course the morally correct would be to repay and I've no one else to blame but myself.

 

Having read many stories across the web, I guess I'd like to enter into token payments, rebutting reviews where possible with a view to pay off once they start talking about F&F settlements, however I wasn't sure on the journey to get there given the amount owed and my equity in my home. Whether due to the amounts they would keep them open forever while paying token payments and hence even things like statue barring timer would never start.

 

The question is to taken payment and hope for settlement discussions in the years to come or not pay anything at all hoping they sell the debt where settlement is easier with DCA's...? thoughts on this please?

 

I guess they can never use FORCE and that gives me some sense of security and ultimately is all I care about - is my home safe, are my kids fed and happy, can we afford our priority bills and forget everything else.

 

Car is a banger :)

Have a bike worth £3k which will absolutely be sold soon

Friends - Yeh, I'm too generous I guess, I didn't specify a lending agreement but I know they will give me some return in the future when it looks better for them, they are aware of my situation and I will be asking for the return favors.

 

If I may ask London - you say you've been here before.. to the same amount of debt as me? how did your token payment journey go? did they eventually settle with you or did you get employed and repay in full? finally, anything you would do differently looking back that I can learn from?

 

Thanks

 

Parachute account created, awaiting details and will get my wages paid into there for the next 3 months.

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Firstly, you will find another job! You can probably ask for a payment holiday , due to Covid. This will buy you 3 to 6 months time without any worries or credit file problems
 

In fact you have 3 months and you might find another job within that time and all this will be moot.

 

I had far, far more debt than you, nothing particularly bad happened, I ended up with a few CCJ’s but that was my own fault. I didn’t defend them. Around 70k of it went Statute barred years ago.

 

Nobody repo’d anything. You are in a far better situation than you think. Concentrate on your essential expenses!

We could do with some help from you.

PLEASE HELP US TO KEEP THIS SITE RUNNING EVERY POUND DONATED WILL HELP US TO KEEP HELPING OTHERS

 

 Have we helped you ...?         Please Donate button to the Consumer Action Group

 

If you want advice on your thread please PM me a link to your thread

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Agree, I am absolutely employable even if not in my trade of choice - thanks for the encouragement.

 

Interesting, appreciate you elaborating a little there.

 

Ultimately, as mentioned above, provided no one can and force a sale of my house, then I'm game for anything, paying it off preferred although defaulting and not paying another penny also sounds attractive naturally. Given how fraudulent the industry is I do not have a moral issue with not paying the debt and I can afford 6 years bad credit.

 

1 - Parachute account, DONE

2 - Update employer pay details, PENDING

3 - Cancel all DD for consumer debt, DONE

4 - Decide whether to token payment (perhaps worthwhile even if just initially), PENDING

5 - If yes to above, send Pro Rata payment letter from the library, update if/when circumstances change

6 - Get a good credit score again in the future but never borrow again like I have, ONGOING LIFE NOTE

 

I can't thank you enough guys and I will certainly donate to the site at my next opportunity

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Hey why not ring up each of your lenders and ask if they will give a payment holiday due to losing your job because of Covid. See what they say? If it affects your credit file etc.

 

That’s what I’d do! 

We could do with some help from you.

PLEASE HELP US TO KEEP THIS SITE RUNNING EVERY POUND DONATED WILL HELP US TO KEEP HELPING OTHERS

 

 Have we helped you ...?         Please Donate button to the Consumer Action Group

 

If you want advice on your thread please PM me a link to your thread

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Yep, you're right. Funny how it's the most simple things we miss when looking to our own advice - I would have told a friend to do exactly that! yet here I am, having to be told... Funny ol' world

 

Thanks again London, it's quite the list but I can certainly get through them all before the week is out, then at least I'm more informed. What's the worse they could say right? change is afoot either way (they don't need to know that yet though) but asking questions shouldn't show my hand.

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No worries about showing your hand. I went for a mortgage holiday for 6 months. Not only did it not go on my credit file but I managed to get onto a lower interest rate afterwards so my payments actually went down. 

We could do with some help from you.

PLEASE HELP US TO KEEP THIS SITE RUNNING EVERY POUND DONATED WILL HELP US TO KEEP HELPING OTHERS

 

 Have we helped you ...?         Please Donate button to the Consumer Action Group

 

If you want advice on your thread please PM me a link to your thread

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