Debt Questions

The Pitfalls To Look Out For In Debt Management

debt consolidationIf you didn’t already know it – debt management is a huge growth industry. There are more of us experiencing debt, and there are more of us who are experiencing the pain of repaying that debt. As with all growth industries though, there are some who are involved in debt management who have less scruples than others do. For this reason, it is always helpful to keep one eye open for some of the pitfalls you may come across in debt management.

Pitfalls of using a credit/debt counseling service in debt management

It should be stated at the outset that most credit/debt counseling services are reputable. However, there are those who make their living help to manage the debt of defaulting debtors – and they do little to “help”. As such, if you are thinking of seeking the assistance of a credit/debt counseling service, keep in mind the following:

  • Always try to use a non-profit credit/debt counseling service.
  • Make sure the credit/debt counseling service is registered.
  • Check that the debt being managed by your credit/debt counselor really needs to be managed. The reason you need to do this is because most credit/debt counselors who are not non-profit will charge you a commission and monthly fee on the overall debt being managed; therefore they have an incentive to boost your total managed debt amount.
  • Make sure that your credit/debt counselor is working in your interests, not your creditors; for example, have they tried to obtain a reduction (sometime known as “haircut”) on your interest rate and outstanding interest repayment amount?

Pitfalls when doing your own debt management
If you decide to manage your own debt, rather than using the services of a credit/debt counselor, make sure that you keep an eye on the following:

  • You are not paying any hidden fees for restructuring your debt or making early repayment of your debt;
  • That the overall Annual Percentage Rate of the interest repayment is less than you already pay;
  • That any security you provide is not going to be lost.
  • Where you consolidate debt, that by putting all your eggs in one basket you are not giving your new creditor complete power over your financial affairs; for example, what happens if they call-in the refinanced loan? If you have lots of creditors, it could be harder for your creditors to achieve this.
  • That your overall total repayment amount is not going to be significantly higher than if you continue paying the debt now – albeit in areas. This should be carefully reviewed even if your monthly repayments are significantly less. For example, if you now pay £1,000 per month for 1 year, you’ll end up repaying less than if you have to pay £500 per month for 3 years. Although the second system may sound more attractive when looking at bottom line, when you consider the total period you have not actually done yourself any favors.

Whatever you decide to do, please make sure that you have at least one conversation with your local consumer affairs bureau before you embark on your debt management program to get some guidelines of whether or not you are doing the right thing.

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Dealing with debt collectors

Debt collection agencies are leeches who make no positive contribution whatsoever to society. The finance industry is morally degenerate, banks and credit card providers want to have their cake and eat it. If they make a mistake the taxpayer pays for it. However if you make a mistake you pay for it big time.

If the banks were prepared to work with people in financial trouble, so many problems could be solved.

Debt collectors use telephone harassment as one of their major weapons. Everything they do breaches the OFT guidelines and breaks several laws, and yet no one will ever do anything about it.

Below are a series of videos that will help educate you on how to deal with Debt Collection Agencies

Debt Collection Agencies – Background Part 1

Debt Collection Agencies – Background Part 2

Debt Collection Agencies – Banking Security 1

Debt Collection Agencies – Banking Security 2

Debt Collection Agencies – Communication Security 1

Debt Collection Agencies – Communication Security 2

Debt Collection Agencies – Telephone Harassment 1

Debt Collection Agencies – Telephone Harassment 2

Debt Collection Agencies – First Contact 1

Debt Collection Agencies – First Contact 2

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Paying back CCJs?

I have been paying back a county court judgement (ccj) for over 2 years. I now want to pay it back completely to allow my credit score to start improving, will this work or am I best off just paying it back monthly which will take me 2 more years?

The reason I want to improve my credit score is that my mortgage fixed term ends in 2 years and I want to get a good rate if I change lenders. Could I get an early settlement amount from the solicitors?


You may be able to get an early settlement, although its not as likely as a normal debt. With a normal debt, they offer a lower amount to encourage the person to pay up. With a CCJ, you have been ordered to pay anyway, so they don’t need to offer incentives. Some do though, so its worth a try.

Its not going to make that much difference in terms of credit whether you pay now, or over the coming months. When you pay in full, you can have the CCJ marked as satisfied, but it does not come off your credit file. Having it satisfied is better obviously than it not being, but either way it still has a big negative effect on your credit. You aren’t going to be clear until 6 years after the CCJ was added to the credit file.

It is probably best though to clear it, purely because its one less bill to pay, and you do get a sense of release when its paid off. You can then put it behind you and move on.

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Mortgage company debt

Can a mortgage company ask for a debt be repaid that is over 10 years old since anythings been paid?


They can ask you for the money at time, until the debt is cleared.

However, under the Statuate of Limitations Act, if there has been no contact between a debtor and a lender for a solid period of 6 years, then the debt can no longer be taken to court to get payment. As a result, if the debtor refuses to pay there is nothing that can be done, as there is no way to force them to pay. In this case the debt becomes statuate barred.

Its actually down to the lender to prove that the debt is not statuate barred.

However, if there is anything which counts as contact, then the statuate barred protection is lifted, and the 6 year period starts all over again.

As a result, on any communication you have to be very careful and state that you do not acknowledge the debt, and don’t sign any letters, just print your name.

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Debt is this right?

Does debt cease to exist if 6 years have passed since it was last asked for?


The debt does not cease to exist, however after a solid period of 6 years of no contact between the debtor and lender the debt becomes statuate barred.

This means that although the debt still exists, the lender cannot take the debtor to court to recover the debt. In real terms this means that if the debtor refuses to pay, theres nothing the lender can do it about it.

You have to be careful, as in any fresh contact in which you acknowledge the debt will break the statuate barred status and the 6 year period starts again.

As a result, in any letters you should put that you do not acknowledge the debt, and don’t sign them. Don’t mention anything about payment.

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How do you clear a bad credit history from my current address?

The previous people who lived here before me were in so much debt they had a bad credit history.Whenever I want to get a catalogue or anything similar they wont let me as they just look at the address. Is there anyway I can clear it from my address so i can get catalogues?


Although years ago bad credit history was linked to an address, and a person with bad credit living there could affect everyone else at the same address, it was stopped a couple of years ago as its was so unfair.

Now debts are only linked to a person, not to an address, and the debts move with the person. Anyone living at an address does not affect anyone else there, unless they are tied in some way like husband and wife.

Unfortunately, this means that there is something wrong with your credit rating. It may be that you simply haven’t had much credit before, so you are an unknown quantity, or there is a mistake on your credit file, or something on there you didn’t know about.

I would get copies of your credit file from both credit agencies, experian and equifax, to make sure the info on there is correct. If its not you can write to them and get it amended.

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Debt Advice – £12,000 loan

I’ve got a £12,000 loan with HSBC which I’ve been paying for the past 24 months. Following being made redundant in September last year, I was unable to keep up with the re-payments.

After 6 months of unsuccessful negotiations with HSBC via the Citizens Advice Bureau, HSBC have now referred this case to their ‘in house’ debt collection agency (Metropolitan) I believe they are called. This took place yesterday!

My question is…what to the best of your knowledge are the EXACT steps the debt collection agency will take to recover the money and what are their powers to get the money back (repossesions, coming into my house, court) etc.

Thanks for your time and ill add extra info as requested.


No matter what you do do not refuse to pay your debt. Let them know you can pay only a specific amount, debt collection agencies will take on the debt which means you will owe it to them rather than HSBC. Wait until they make contact with you and explain the specific situation to them.

Bailiffs can not come into your property and take things without a court order, which courts do not hand out like confetti. If the loan is a secured loan on your home then they could repossess but this is not automatically done

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Debt advice – settlement offers?

A few years ago I applied for 2 credit cards and a loan, I was given more than I could pay back, and I was too busy enjoying myself to realise…bad bad idea.

Anyway, for the last 3 years I have made small payments to the 3 companies, and this isn’t likely to change as I don’t earn much. For example, I pay £10 a month on a £3000 debt. The interest has been frozen on these debts.

My parents have offered to give me £4000 to try and settle the debts. Each company will be offered 50% of the amount I owe as full and final settlement. The total I owe is £8000.

Has anyone got any experience with making these offers? Am I deluding myself thinking that there may be a chance they will accept these offers? I would be grateful of any advice.


If you’ve been in arrears and also under control with the debt recovery departments, there’s every possibility they’ll accept your offer of 50% total and final settlement. Especially if the lenders have now referred your accounts to a different firm for collection.

Be sure you put your offer in writing, explain that your parents definitely will bail you out with half the money, obtain acceptance in writing, and more importantly ensure you get a letter confirming the account is closed and that the credit reference agencies have been notified. You should follow this up in a few months to check your files have been amended correctly – they won’t be wiped but should show as “satisfied”.

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Serious debt advice needed?

I need some much needed advice, I had a fashion catalogue which I always paid but since losing my job its been hard to make the payments and they have threatened me with visits from bailliffs can anyone advise me if the are allowed to do this as I was told that they cant for this kind of debt. any help will be very appreciated.


In theory no they can’t, they have to take you to court and be awarded the right to bring in bailiffs.

A court will generally not allow this to happen if you’ve made an attempt to pay them even if its £1 a week. Write them a letter (make 2 copies and send one to them recorded) stating that you are currently experiencing financial difficulties and can’t afford to pay the repayments but will offer £x a month to clear the debt as soon as possible. State that you would appreciate it if they froze any further charges to the account.

Legally they can not decline your attempt to repay if its reasonable. so long as you make an attempt even if they say no a court won’t order in bailiffs.

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Can anyone give me some advice on debt?

My son has recently started getting letters demanding payment for a debt that is approximately 11-12 years old. So he has been told….
He has no idea what this is for and the previous debt collection office couldn’t tell him so he asked them in a telephone call to provide this information.
They have not responded and he has now received the same demand from another debt collection agency.

Can someone still try and collect on this after so long without giving any information as to what it is?


In England the Limitations act means debts expire after 6 years (Scotland is 5 years)

The exception is secured debt (12 years) and county court judgments which can be pursued at any time – along with crown debts.

The debts can still be chased and it isn’t illegal to do, the debt collector would have bought it very cheaply.

Do not admit the debt.

Ask the debt collector for proof of the debt and if it is indeed 11-12 years old write back a “without prejudice” letter pointing out it is statute barred.

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