Author Topic: Can't pay back my unsecured loan, overdraft and credit card - F&F offer?  (Read 9443 times)

elitr6

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Hi all,

I dug myself into a deep financial hole a few years ago when I took out 2 unsecured personal loans (6k each) from LTSB (with PPI), plus a 2.5k credit card and 2k overdraft. I very quickly couldn't afford the repayments so was passed to the collections team who arranged for 160pm repayments for both loans. The credit card and overdraft were rolled into a debt consolidation loan for 4.6k (7.1% interest, total repayable 5800 at 70pm). I worked hard and paid off the original loans in one go within 2 years, and have never missed a payment (started nov 08) on the debt consolidation loan. I changed job, my salary increased and I started banking with HSBC who gave me a 1.5k credit card and 1k overdraft. All was well until I was made redundant in April 09. I left the UK for good in June 09 and have now settled in France. Since feb of this year, I am in full-time employment and although I'm earning less than a quarter of my old London salary, am a million times happier!

I'm supporting my girlfriend and my brother who are currently out of work and things are getting tight. Net income is 1042EUR (=860GBP) and rent is 670EUR, excluding bills. It doesn't leave much for 3 people to live on, let alone repay debts from a former life. We should get a lodger soon but he'll only pay 200EUR max.

I reckon I could get together 1500EUR from selling some classic car spares I have here. This money could be used to make a full & final offer to both HSBC & LTSB but I have no idea how to go about it. Ideally, HSBC would get the bulk of it as the overdraft was only used to make repayments to LTSB, thus robbing Peter to pay Paul.

How should I go about this? Neither banks have a french address or phone number for me. I have a french bank account and don't care about my (already terrible) uk credit rating. Should I tell them I can't pay anymore and let them stew for a few months?

Thanks!

E

Steven Jackson

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Hello E
 
To clarify, from what you have said, your current debt outstanding is still around £4.6k to LTSB and c£2500 to HSBC totalling c£7000. Is this about right?
 
Given you have not made any payments for a year or so, it may well be possible to offer a full and final settlement to your creditors. No advantage to let them wait any longer if you ant to give it a go.  You would need to prepare a financial statement outlining your current financial situation thus proving your inability to pay which you could email / post over to them.
 
As you are in France and chasing you would be difficult and expensive, the creditors might well jump at the chance of a settlement. The only problem is that I suspect that 1500 euros may not be enough to get the job done. However, the alternative is that you could still declare bankruptcy in the UK at a cost of £600 and you could use your cash for this. This would get you debt free and the likelihood is that they would get nothing. Using this a a bargaining chip might mean you can swing something.
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elitr6

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Thanks Steven,

I'm still up to date with my payments but this month will be difficult. I'm no longer resident in the UK so I don't think I can declare myself bankrupt there. Although I won't point that out to the banks.

The main question is: do I tell them that I can't afford to repay anything now, or should I let the penalty charges and interest build up for a while first and then jump in with a final offer?

C

Steven Jackson

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Hi there
 
You can certainly declare yourself bankrupt in the UK even though you are no longer a resident. As long as you have lived in the UK within the last 3 years (which I believe you have) then this option is open to you. You would just have to present your petition in person at the high court in the Strand (London). I have worked with a number of people who have done this very successfully.
 
In  terms of whether you should wait to make a full and final offer or not, I had not realised you had been maintaining your payments to date.  Given this, it would be difficult to agree a full and final settlement immediately. As you cannot afford to maintain the payments from now on, the best thing to do would be to stop making them and perhaps just make token payments of £1 for a few months. If the creditors have not received their payments for a while, they will then be more open to negotiating a settlement deal.
 
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elitr6

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Thanks Steven. Bankruptcy isn't really an option as I'm already managing a small business. Even if the french authorities never find out, I don't want to be worrying about it for the rest of my life.

Should I write to both banks then and explain my financial situation, offering token payments for now?

Steven Jackson

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Hi Elitr6
 
I do think approaching the banks is a good idea but you need give them some back ground info showing what you can pay.
 
The way to approach this is to put together a simple financial statement showing your monthly income and living expenses. Once you have this, you will be able to calculate your disposable income - the amount left over once your living expenses are paid for.
 
You should base the offer of payment you suggest to your creditors on your disposable income. Include a copy of your financial statement when you write to them.
 
Ultimately they will not be too happy. However, simply start making your proposed payments. As the old saying goes, "you can't get blood out of a stone".
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