Credit cards - defaults

Stolly · 30 Dec 2017 at 10:01

asking for a friend, really !!

So she’s got 4 cards. She can’t keep up minimum payments on all of them. Maybe just 1. If she keeps up payments on that, and defaults on 3 what happens?

She’s convinced it’ll default too and won’t even phone up to ask. I’m not sure so I’m asking.

BDEE · 30 Dec 2017 at 10:05

Advise her to contact stepchange.

Stolly · 30 Dec 2017 at 10:18

BDEE said:
Advise her to contact stepchange.

They look good, thanks ! Have done.

Freakbro · 30 Dec 2017 at 10:18

The three she defaults on will report it as a default on her credit record each month, the one she doesn't default on won't

I'm also dreading to think what the balances are if she can't even make min payments :eek:

Fuzz · 30 Dec 2017 at 11:35

Freakbro said:
The three she defaults on will report it as a default on her credit record each month, the one she doesn't default on won't

I'm also dreading to think what the balances are if she can't even make min payments

Well if she earns zero (from say losing a job) I guess the minimum payment could be a fiver and she still couldn't afford it

!

jpmonkey69 · 30 Dec 2017 at 12:17

The main thing is that she needs to properly check her situation with each CC company to see if she is going to default the payment.

If she is, the CC company may be willing to help her by freezing the account until she is able to pay. If they are not willing to do this then she can speak to a debt help Charity who may be able to contact the CC companies on her behalf, who may then help if they didn’t before.

It’s important not to allow her to bury her head in the sand about this; the debts won’t go away and if she defaults she will find that the fines and charges will make the debts even more unmanageable, and thus begins the cycles of toxic debt.

Don’t be tempted to help her get this sorted with your own money...
Unless she is paying off a large sum it will just be swallowed by interest and charges, this is where trying to get that accounts frozen is best, she won’t be able to use the cards but the CC companies won’t charge interest as long as she pays something back per month.

The idea of just paying a minimum payment on a large CC balance is silly - the debt will take many many many years to pay back (if at all!) and is an incredibly expensive way to borrow money.

Get her to look at https://www.moneysavingexpert.com/credit-cards/minimum-repayments-credit-card

lunar · 30 Dec 2017 at 12:26

How about transferring all the money from the credit cards onto one card, which has a zero interest scheme usually for 6 months. But there is a munimum payment that must be nade each month, else the 0% interest is removed

Scam · 30 Dec 2017 at 12:35

Loan her money to help. Bound to go well.

***No personal attacks***

VincentHanna · 30 Dec 2017 at 12:35

You can't do 4 balance transfers to one card, and they are hardly likely to give her a 0% interest card when she already owes lots of other card lenders.

BDEE · 30 Dec 2017 at 12:49

VincentHanna said:
You can't do 4 balance transfers to one card, and they are hardly likely to give her a 0% interest card when she already owes lots of other card lenders.

Yes, you can.

And having other cards won't stop her getting one.

However having too much owed compared to her income and missing / late payments is likely to stop her being able to do so.

That said, I wouldn't recommend doing so if she is in difficulty and step change would be a better option.

VincentHanna · 30 Dec 2017 at 13:01

Not at the amounts I would imagine we are talking

She would need a 20,000 limit

BDEE · 30 Dec 2017 at 13:16

We have no idea what the amount she needs as it has never been mentioned how much she owes?

It doesn't hurt to say "oh, I didn't realise you could do that", you know.

VincentHanna · 30 Dec 2017 at 13:19

BDEE said:
It doesn't hurt to say "oh, I didn't realise you could do that", you know.

Are you kidding? This is the internet

Stolly · 30 Dec 2017 at 15:34

I think she’s got between 5 and 10k on credit cards, no other debt. I called stepchange myself and asked the general question about not making minimum payments on 3 out of 4. They confirm that the remaining card will not go into default if it’s kept in good standing. Good to know.

neil_g · 30 Dec 2017 at 16:00

Does it really matter either way? As her credit rating is going to take a massive nose dive and/or she'll just end up with the bailiffs around if she continues to miss payments.

Screeeech · 30 Dec 2017 at 16:06

As above

One default will absolutely wreck a credit rating for 6 years, the mere presence of a default on a credit file will almost certainly make it almost impossible to either get credit at all, or be forced to use poor credit providers with insane interest rates. If she's going to get 3x defaults - well she can forget getting anything for the next 6 years, I don't even know if you could get a mobile contract with 3 defaults..

If I were her I'd be selling everything I owned in order to make those payments, and also speaking to the bank about re-financing the debt, she's still in with a chance of re-organising things, before she gets hit with 3x defaults, at which point all options that don't destroy her credit file will be gone, afaik

glenimp617 · 30 Dec 2017 at 16:23

can't she talk to the bank and get a loan to pay all credit cards off?

or failing that, and I know this is drastic....but before she damages her credit rating can she remortgage and take some equity to pay off her debts?

mrochester · 30 Dec 2017 at 16:42

Stolly said:
asking for a friend, really !!

So she’s got 4 cards. She can’t keep up minimum payments on all of them. Maybe just 1. If she keeps up payments on that, and defaults on 3 what happens?

She’s convinced it’ll default too and won’t even phone up to ask. I’m not sure so I’m asking.

Absolutely the worst things she can do is bury her head in the sand and pretend it's not happening.

Speaking to each credit card company and explaining the situation will help. She can ask them to [consider] freezing the interest and arrange a realistic payment plan that she can reasonably stick to.

If she feels she cannot do this herself, as above, she should contact a debt-management charity such as Stepchange or Christian's Against Poverty.

glenimp617 · 30 Dec 2017 at 16:44

Credit card companies will help where possible as the last resort is selling the debt on which they don't like doing.

mrochester · 30 Dec 2017 at 16:51

TheOracle said:
Credit card companies will help where possible as the last resort is selling the debt on which they don't like doing.

The debt, even if not the full amount, is almost certainly worth more to the credit card company themselves rather than selling it on to a debt-collection agency for pennies. They are usually reasonably accommodating and almost certainly much less hassle than a debt-collection agency.