{"id":2472,"date":"2014-01-06T11:26:18","date_gmt":"2014-01-06T11:26:18","guid":{"rendered":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/?p=2472"},"modified":"2019-02-20T11:43:56","modified_gmt":"2019-02-20T11:43:56","slug":"cant-pay-my-debt","status":"publish","type":"post","link":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/cant-pay-my-debt\/","title":{"rendered":"Can’t Pay my Debt"},"content":{"rendered":"\n

In the current recession many of us are asking ourselves this question. Many more of us are afraid to ask the question and simply adopt the ostrich solution \u2013 stick our heads in the sand.<\/p>\n\n\n\n\n\n\n\n

\"\"<\/figure><\/div>\n\n\n\n

The truth is that doing nothing is no solution. If we cannot pay our credit card bills<\/strong> then chances are that there are other bills not being paid either: mortgage, rent, utilities, car HP, loans, overdrafts and so on. However, let\u2019s assume that all other bills are being paid and that only payments of credit card bills are falling behind. Let\u2019s assume we have a number of credit cards, each with a fairly generous spending limit and that the cards are at various stages of being maxxed out and you are unable to keep up with the monthly debt repayments.<\/p>\n\n\n\n

There are various courses of action (or, if you like, inaction) that \npeople may adopt. Here are a few of them. Some of them have some merit \nand others are positively fraudulent.<\/p>\n\n\n\n

  1. Make no payments on any of the credit cards.<\/li>
  2. Make minimum payments on some of them.<\/li>
  3. Cut up the cards and stop using them.<\/li>
  4. Obtain loans (at lower rates of interest than the cards) and with the proceeds pay off the credit cards.<\/li>
  5. Obtain a new card (or cards) on a balance transfer\/zero interest basis.<\/li>
  6. Max out all the cards and then petition for bankruptcy.<\/li>
  7. Re-mortgage a property releasing equity and clear some or all of the credit card debts.<\/li>
  8. Contact an insolvency practitioner and seek a financial solution<\/li><\/ol>\n\n\n\n

    Let\u2019s look at the consequences of some of these actions (inactions):<\/p>\n\n\n\n

    1. If a credit card bill is not re-paid at all then the debt \nincreases as the card provider adds penalties and interest on a monthly \nbasis. The credit facility will be withdrawn in due course and the \ncreditor will take steps to recover the debt by presenting a statutory \ndemand for re-payment, obtaining a CCJ, petitioning for bankruptcy or \nother recovery action.<\/p>\n\n\n\n

    2. If only minimum repayments are made then the debt can still \ncontinue to grow even if spending ceases on the card. Ultimately making \nonly minimum repayments can lead to the creditor taking recovery action \nsimilar to the situation when payments cease completely.<\/p>\n\n\n\n

    3. An excellent first step. At least the bleeding will stop. However \nuntil we settle the credit card bills, interest and penalties will \ncontinue to be applied by the creditors. Cutting up credit cards can \nprovide a temporary respite but it doesn\u2019t tackle the problem of being \nunable to re-pay the debt. It just postpones the evil day, so to speak.<\/p>\n\n\n\n

    4. Obtaining a low (or lower) interest loan can be a partial \nsolution, provided we have sufficient disposable income to service the \nloan and we stop using the credit cards altogether.<\/p>\n\n\n\n

    5. Again this is just a temporary respite. Even if we can obtain such\n a card, the debt still has to be paid off and after the interest free \nperiod, interest rates and penalties on the new card can be higher than \nbefore. Currently, creditors are being more restrictive in the issuing \nof such cards.<\/p>\n\n\n\n

    6. Definitely a no-no. To borrow money \u2013 which is what using a credit\n card is \u2013 with no intention of repaying the debt is fraudulent and \ncould lead to criminal prosecution.<\/p>\n\n\n\n

    7. This could be a solution or partial solution. However, there needs\n to be equity in the property to start with. Even if there is equity in \nthe property, a lender may limit the amount at which it will provide a \nre-mortgage to say 85% or less of the current property value. Because \nproperty values have reduced sharply in the last few years, the amount \nof realisable equity may have reduced sharply. It may be that no \nprovider will offer a re-mortgage at all. Even if they do, the interest \nrates may be unattractive and there may be additional costs to bear, \nsuch as the cost of obtaining a valuation. The existing mortgage may \nalso be subject to an early re-payment penalty, if moving from the \ncurrent mortgage provider and the term of such a penalty has not yet \nelapsed.<\/p>\n\n\n\n

    8. If you are concerned as to what will happen to you then consulting\n with an IP is the best initial course of action. A reputable IP will \nlook at all of your financial circumstances (and not just your credit \ncard bills) and will advise you on all of the options open to you. You \nshould incur no costs in obtaining this advice. Options include entering\n into an Individual Voluntary Arrangement (IVA), engaging in a Debt \nManagement Plan (DMP) or even petitioning for your own Bankruptcy (BCY).\n There may be other options available as well. You can choose the best \noption for yourself and you will have more control over your financial \nfuture than you would if you default on your credit card bills and do \nnothing or choose an inappropriate course of action. Ultimately, you \ndecide what will happen to you.<\/p>\n","protected":false},"excerpt":{"rendered":"

    In the current recession many of us are asking ourselves this question. Many more of us are afraid to ask the question and simply adopt the ostrich solution \u2013 stick our heads in the sand.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"","_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","footnotes":""},"categories":[6],"tags":[],"class_list":["post-2472","post","type-post","status-publish","format-standard","hentry","category-general-debt-articles"],"_links":{"self":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/2472","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/comments?post=2472"}],"version-history":[{"count":3,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/2472\/revisions"}],"predecessor-version":[{"id":2501,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/2472\/revisions\/2501"}],"wp:attachment":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/media?parent=2472"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/categories?post=2472"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/tags?post=2472"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}