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Alex J.
Alex J., Solicitor
Category: Law
Satisfied Customers: 3497
Experience:  Solicitors 2 years plus PQE
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HiWe have £45,000 unsecured credit card and overdraft debts

Customer Question

Hi

We have £45,000 unsecured credit card and overdraft debts between my wife and myself from when we went through a bad patch 5 years ago. We have passed the debts over to PayPlan to manage and we are paying them £500 pcm but it doesn’t appear to be going anywhere.

We have now decided to put our home on the market to clear the mortgage and a £25,000 secured debt we also have against the home and to release some money. We are moving to Spain because we have work there and we can live for much less and we could also have an extra £20,000 - £40,000 from the sale but we need as much as possible to get set up in Spain.

What can we do about the £45,000 debt we have in the UK that PayPlan are “supposedly” handling for us, Is there a scheme where we can make a partial offer to clear it, could we just go to Spain or are there any other options?

Our credit rating in the UK is now ruined so we don’t intend to return in the near future because we will be off the housing ladder.

Thank you for any advice.

Regards

Gary McDonald
Submitted: 3 years ago.
Category: Law
Expert:  Alex J. replied 3 years ago.
Hi

Thank you for your question and welcome.

Is Payplan part of an IVA arrangement?

Kind regards

AJ
Customer: replied 3 years ago.

Hi Aj


 


No it's a Debt Management Plan (DMP)


 


 


Best Regards


 


Gary

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

Unfortunately the £45k is an unsecured debt. If you stop meeting the monthly payments then the creditors are likely to take action against you.

This could result in your bankruptcy in the UK or them pursuing if they can find you.

You can try and negotiate the debt down, but in order to do this they will likely want to see a statement of your assets.

When you move to Spain will you be able to afford £500 per month?

Kind regards

AJ
Customer: replied 3 years ago.

Hi


 


We could afford it but it would make things tight. Could it be changed to an IVA and would this make a difference?


 


Regards


 


Gary

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

The problem with an IVA is the fees are very expensive, you need your creditors to agree to it and you will have far less control over the monthly repayments.

This is really an alternative to bankruptcy and should be considered very carefully.

A starting point would be to try and negotiate with your creditors to see if any of them will accept a lesser up front sum. If they know you have a house they are unlikely to write it off.

What could you afford each month?

Kind regards

AJ
Customer: replied 3 years ago.

Hi Aj


 


Do you think once the house is sold and we inform them we are emigrating that they would be more inclined to accept an offer and should this be done through PayPlan or directly?


 


Regatrds


 


Gary

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

In my experience (especially with banks and credit card companies), you are more inclined to have an offer accepted if you make an offer based on affordability. The problem you have is they will want to know how much you sold your house for.

Whether you should do it through payplan depends on what you have agreed with them? Have they taken responsibility for negotiating with your creditors?

Kind regards

AJ
Customer: replied 3 years ago.

Hi Aj


 


I have heard the adverts about the government scheme to to clear off up to 1/2 the debts and when originally disusing it with PayPlan they gave the impression that we could eventually pay half the amount off to clear the debt. Is this just for an IVA arrangement?


 


If we moved to Spain and couldn't pay what would happen whilst we are in Spain?


 


Regards


 


Gary

Expert:  Alex J. replied 3 years ago.
Hi,

Thank you.

Firstly it is not an IVA, an IVA is much more and require an application to court.

I would really need to know what pay plan have negotiated with your creditors. It may be that they have negotiated the debt down.

If you are in Spain, they may be able to pursue you there but they will need permission to serve you proceedings outside the Jurisdiction and even then they would have to find you.

If you left without telling them they may be able to serve proceedings on your last known address in your absence. You do not want to be made bankrupt in your absence because a trustee in bankruptcy has power to pursue you all over the world.

First step is to confirm with payplan exactly what they have agreed. See then if you can negotiate the fee down to something more affordable?

I look forward to hearing from you.

Kind regards

AJ

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