Can't keep up with debt repayments what should I do

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whattodo17
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by whattodo17 » Thu Nov 15, 2018 2:56 pm
Please can you advise me what you would recommend?
My hours have been reduced so I can't keep up payments. I have done the debt remedy tool on Stepchange and asked lenders for breathing space.I intend to increase my income so that I can make payments again.
I owe 37,000 and my surplus has reduced to 200. I also jointly own a property but using that is not an option.
if I'm earning enough to resume payments after the breathing space period , will I have to pay double to cover missed payments or can I just carry on with all agreements being extended by a month.
If I'm not earning enough after the breathing space period, what would you recommend? Stepchange suggested token payments, a DMP or an IVA.
whattodo17
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by whattodo17 » Thu Nov 15, 2018 3:00 pm
Sorry I can't see how to edit a post so am posting this.
To clarify, my monthly surplus is £50 for the time being.
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Foggy
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by Foggy » Thu Nov 15, 2018 3:26 pm
If this is a temporary blip you could contact each creditor yourself and agree reduced payments for the next few months. How they deal with "catching up" would be up to each creditor.

If the situation continues £50 would be too little for an IVA. Maybe a DMP in the short term until money improves then convert to an IVA then.
whattodo17
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by whattodo17 » Thu Nov 15, 2018 3:36 pm
Foggy wrote:
If this is a temporary blip you could contact each creditor yourself and agree reduced payments for the next few months. How they deal with "catching up" would be up to each creditor.


Thanks Foggy. I am in the process of that now. All are offering 30 days with varying policies on freezing payments and/or interest and/or correspondence.

Stepchange advised that if payments weren't back to the agreement after 3 months, creditors would be entitled to file a default. I have 2 questions regarding this eventuality.

1 - Does this mean after breathing space you need to pay double to cover the missed payment, otherwise your account will stay in arrears then trigger a default at 3-6 months of paying one month behind?

2 - If a lender registered a default then what would be the point in paying further? It seems letting defaults expire takes 6 years, compared to 11 (5+6) years for an IVA to be off record.
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Foggy
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by Foggy » Thu Nov 15, 2018 3:48 pm
1 - Does this mean after breathing space you need to pay double to cover the missed payment, otherwise your account will stay in arrears then trigger a default at 3-6 months of paying one month behind?

This will depend on what the individual creditors policies are. As long as you stick to any agreement they should not register a default.

2 - If a lender registered a default then what would be the point in paying further? It seems letting defaults expire takes 6 years, compared to 11 (5+6) years for an IVA to be off record.

The default status is only a warning to other lenders on your credit status -- it also signals the breakdown of your relationship with the creditors, who will then to pursue other methods of enforcement / collection. In an IVA your credit clears at 6 years from the start and defaults should be given the same start date, so all will clear up at 6 years (assuming the IVA has been finished) .
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