Hi,

This I was wondering if anyone can advise on how best to approach my current situation that I'm in. I have several debts that have been defaulted (some around 4 years ago). These debts were due to my ex-partner using credit cards (nominated card holder on my account) and a loan that I took out for her business in my name (£26k).

Although these have all been passed to Debt collection agencies of different names (lowell, Metropoliton collections, Regal) I have arrangements with them that have been maintained fully, and at each 3 month review I have managed to increase the payments to them (if only by a couple of pounds). Some have not asked for an increase at all.

I have a main bank account which is in good order, and has a consolodation loan attached to it that is 60% paid off with no missing payments. (The consolodation was from my student overdraft while at University) I have been given a cheque book back, and debit switch card which I have worked hard to have back. I do also have a credit card with Vanquis, that is well maintained and clear (so much so that they keep increasing the limit every 3 months!)

My concern is that recently I have been getting calls from the collection companies insititing on increased payments some as much as 500% increase, others threatening to default the account and pass to a court for collection, and on one occasion one has threatened to come to my home (Shared house, rented accomodation) and take all the goods from my room (i actually dont own the TV and other items as the house is brand new and fully inclusive!)

I have thought about an IVA, but as I am meeting all my payments with the debt collectors, I cant see the advantage, and looking a my credit report online, in 18 months or so most of the defaults will no longer show as they will be 6 years old! my credit rating is still pants, so a loan to cover the outstanding debt is not an option. My folks are 65 and 66 respectivly and they cant help at all.

I know if I undertake an IVA, then it will blemish me for 6 years, but not sure how much disposable income I have to have to qualify for an IVA, or if the debt people will accept it! Im also not sure what impact that will have on my current bank account, and how this will effect me in the longterm.....its been a struggle already and the thought of having another 6 years of this will drive me nuts!

Any help or advise would be fantastic, this has been keeping me awake at night, and am desperate for some help!

Thanks

Hi devil999,

Sounds like you're in a totally rubbish situation.

Firstly, my congratulations (sounds a bit strange) but the fact that you're not walking away from this and even in the current climate are increasing your payments shows real commitment and character. Your action to date has been admirable.

I can't offer financial advice (only a financial adviser is legally allowed to do so - although I do have financial advice training) however I would offer some information and thoughts.

If you are making agreed payments and especially if those payments are greater than the rate of interest accrual then it is totally out of order for the agencies to harass you. Theoretically you could even get an injunction to stop them contacting you, but that seems a little unlikely.

Since they "bought" your debt (or have been paid to recover it) then they are affected by the costs of institutional borrowing. The current economic turmoil means that companies are very worried about "bad debt", especially as many of their "debt insurance" measures will ultimately not be able to pay out as the "insurers" probably can't actually afford to. As such they want as much money as possible as soon as possible and if they have to pressurise some customers to get it then some of these agencies are probably not very bothered by that.

IVAs - I hate these products. If you owe more than £15k, then you can enter an IVA (you can't be forced to) and essentially they tell you how much of your earnings you have to live on. Often this is very very little and people slide further into debt. The other similar option is bankruptcy, which from the consumer's perspective can financially be a better option as you no longer owe, can get on with your life and the impact on your credit rating will likely last a similar period to that of an IVA.

I would like to encourage you to explore another option though. There are organisations out there that will help you by representing you with your creditors etc and can keep things manageable for you. Advice on debt can be got through your Citizen's Advice Bureau, debtline www.nationaldebtline.co.uk or another group (regardless of your faith) called Christians Against Poverty, (they won't try to convert you - I have a friend who works for them and I have always been impressed, but I am in no way trying to break moneysupermarket's forum rules by promoting them - thin line here!) which offers (I think) the most help. All I would say is please talk to some of these people before going any further.

Hope this offers some encouragement and useful options.

mr tom.