Why you should fear the MMR!

I think your maths is flawed. If I borrow £2000 and pay £50 in the first month and £30 goes to interest, therefore £20 comes off the £2000 which is 1/100th as the sum owed decreases, the ratio will be the same, so 100 months is just over 8 years, and if i paid it back by equal payments of £50 - it would be even shorter.

What do you do when you can't afford the minimum payment monthly? You should always approach card companies at an early stage if you get into payment difficulties. Once you start missing payments without explanation, companies can very rapidly escalate their tactics, eg going straight to default and for a few months without payments, calling in the County Court. If on the other hand you explain your predicament, you can usually arrange a payment plan (below or well below the stated monthly minimum) and can often get the card companies to suspend interest and charges, provided you can prove you are unable to meet your card commitments fully. You must not however include costs of foreign holidays, future home improvements or car replacement in your budget. Priority spending is food (including pet food), essential clothing and footwear, utility bills, taxes, tv licensing, council tax, fines, rent and mortgage payments. Essential travel costs, insurance and health eg medicines, necessary glasses and dental care costs are also included. Note to submit a pro rota budget, and income for yourself only, pro rota to the family budget/income, as card debts are individually, not jointly liable. You can't include any costs for children over 18 though, unless they are unemployed and only have JSA, or if they continue with FE, not Higher Education. This would make things more difficult to prove financial difficulties especially if your income is the higher income in the family. If your income is much lower say a quarter or less than a spouses, proving your income is insufficient to support high monthly card repayments is going to be much easier, and if you lose your job and have very little income, you can arrange to pay just £1 per month per card company, with interest and charges stopped until/if you find work. Arrange this immediately you lose your job. It may take a month or two or more to get interest and charges stopped though. Single persons without house equity can get charity companies such as CCCS to negotiate for them with one monthly payment via CCCS. Where a partner earns over £15000 pa gross, or there is a mortgage or property owned outright individual negotiation with each card company will be needed. You can complain to your telephone provider if a card company or collection agency try phoning at unreasonable hours, eg evenings or on Sundays. I would always ask and insist companies only deal with me in writing, to avoid phone hassles. Remember that Collection Agencies may be affiliated to card companies, but as they handle debt collections for them, they can be quite aggressive in their tactics. You will also need to inform card companies and collection agencies that you revoke their right under common law for them to call at or access your land/property, and that such action would amount to trespass. This will prevent representatives from the card companies/ debt collection agencies from calling and being a nuisance at your door. You will need to re-submit income/budget/ affordable payments proof to a collection agency if the debt is passed on by a card company. It will help considerably if you consult CCCS debt remedy anonymously and free online. It's a bit of a hassle to fill in all your details, but they provide printouts from a PDF your remedy booklet, from which you can print budget and income details etc. to send in. I would also send in a medical paper from your GP confirming a medical condition eg if you are long-term and unfit to work (GP might charge you £10), proof of income/ pension and proof of incapacity benefit / other benefits (photocopies are fine!). For some reason Credit card companies expect you to have contacted a debt solution organisation. Don't worry though, CCCS are a charity, work for free and deal with you anonymously if you wish. Certainly DON'T go to a company like Debtline who charge fees! Your rights under OFT regulations mean you can INSIST that you only pay what you can comfortably afford each month. You should cancel direct debits and use your own payment method, eg standing order which card companies CANNOT adjust. You might need to phone card company customer service to get the account number and sort code for a standing order. You use the card number as the reference. Or send a cheque monthly. Payments will need to be pro rata for the extent of each separate debt. (eg if debts were in the ratio 7 to 2 to 1 to different companies you split the affordable payment into these parts. ) Cards issued by your current account bank, savings banks or mortgage companies are a bigger problem if you can’t get card balances transferred elsewhere. Banks have a right of access to income and savings if the card is issued by them. They could in theory withdraw overdraft rights and take all the money from these accounts leaving no income or savings until the bank card debt is cleared. Mortgage companies could add card balances to a mortgage making repossession more likely and accruing major extra interest and fees. If you can’t transfer these debts elsewhere, avoid defaulting on these cards and treat them as priority debts. Even if you are in default with a number of card companies this will only affect getting credit/loans. Things like utility companies, phone and mobile companies and insurance companies checking credit ratings are based on a number of factors, eg fixed abode, length of time at present address, property ownership, regular incomes, present/ previous type of employment and such-like. You are also allowed to make credit arrangements to eg pay off insurances etc monthly. Card companies CANNOT insist that you increase your monthly payment if it is all you can afford. If they persist, quote OFT regulations and say they have no right to charge you more than you can afford. They may well continue to ask for further payment but you can LEGALLY refuse to pay anything extra as long as you pay something each month, however little (ie £1 or more). It is vital that you make this payment amount that you can afford EVERY MONTH ON TIME. Also make it clear in every phone call and letter that you contacted them for assistance as soon as you knew you'd be in financial difficulty, and be polite but repeat that they are treating you very unreasonably given you eg heart condition and that such treatment could exacerbate eg your heart trouble and leave them open to legal action against you from resultant stress. This SHOULD make them back off a little bit! I would also point out to them that other companies have both a short term plan and long term plan where interest and charges are stopped for people having genuine financial difficulties. Ask why this is not the case with them! I would ignore most telephone calls from them and only answer them by phone every few months and then only if you contact them and it is essential to clarify something. It is IMPORTANT to resubmit budget and income details at least 12 monthly and 6 monthly if they ask for this. It is also VITAL to reply promptly to any letters from them. Unfortunately, as to abating interest and legitimate debt collection costs they deal with customers on a case by case basis. It also depends on the extent of debt to them, and other debts, and degree and depth of financial difficulty. KEEP writing to them asking them to stop charging interest and other charges, saying each time that you simply cannot afford to meet them. If all else fails I would write to the company directors asking for you to be treated fairly and reasonably. Some card and collection agency staff can be stroppy, verbally aggressive and make unreasonable demands over the phone, or sometimes even in writing. You will need to stand up to them and insist on your legal right, ie to pay what you CAN actually afford each month. Obviously if this doesn’t cover interest, you should point out that they have nothing to gain, except causing you very unnecessary financial pain in pursuing charging interest. it is possible over time that that they might bring in or sell the debt on to an outside debt collection agency. But you have exactly the same rights ie to only pay what you can afford and not be forced to pay more. It IS NOT A CRIME TO BE IN DEBT. Check online (look for complaints!) or with the CRB if an agency (or solicitors) are affiliated to the card company or a separate company. Put any complaints about mistreatment in writing to the card company or agency. They must reply within two weeks and if you are still not satisfied, it can be put to the financial ombudsman. At the very least complaining, regularly if need be, should keep them partly at bay! It is possible in some instances to get compensation, if your complaints are strong ones and justified. At worst it could go very eventually to county court, but again they CANNOT force you to pay beyond your means. If after a CCJ (county court judgement) bailiffs were to arrive, they have no right to forced entry without a warrant (unless previously invited in, which DO NOT DO) though open doors or windows might allow them entry whether you are in or out so be careful with this. It would be wise though if it ever reached this stage to park individually owned cars (for single people) away from the property or securely in a garage to avoid them being seized. Do be aware that once in default (ie not making 'required' minimum payment) you MUST NOT run up any other credit card debts with any other credit company. (Legally this would then constitute fraud as not having the means to repay). You are allowed though to keep a card usable for emergencies, where any ‘new’ balance is completely cleared by the end of the month, or very shortly after. You will get strongly worded letters eg they say they will take you to court if you don’t make back-payments, and card statements will continue to show accrued debt re minimum payments. But in most cases, provided you pay each month what you can afford (or a minimum £1 monthly if budget exceeds income) they are unlikely to take further action, at least in the short term. In the long term a charge may get put on a house for if sold eventually. If your debts are with several card companies and each debt is far less than the value of a house, they cannot get the house sold to clear card debts. This is one reason why it is essential to pay monthly mortgage payments in priority above card debts. While card companies and collection agencies may put pressure on or try to make things uncomfortable for you, they cannot get more than you can afford from you each month. The best tactic if future financial problems are possible/likely is to spread card debts around as many different card group issuers as you can, as although there is more hassle/paperwork later, each company is owed less, and they know other companies have equal rights over debts. Debt is individual, so does not affect a wife/husband if the other is in debt, except as part of the estate if one of a couple dies.People with families should and must get life cover to sort for this possible eventuality. Property in a marriage is considered jointly owned, making action by bailiffs (except for HP debts) much more difficult than with single debtors. Credit ratings for others (including spouses) living at an address shouldn’t be affected at least not unduly, provided some kind of regular payment is being made by the individual debtor. IVAs are less obtainable if you have a mortgage/house ownership, cost up to £1500 to arrange and are only suitable if debts are long outstanding over several years or more. Also they are not always granted as companies vote whether to accept them, and if they are rejected the fees still stand. If the debt is just with one or two companies an IVA is very unlikely to be suitable. The problem with house ownership and IVAs is that after 4 years a second mortgage has to be obtained to clear remaining card debts. Bankruptcy or partial bankruptcy is expensive (up to £800) and is entirely a last resort as all property (including a mortgaged or part mortgaged house) has to be surrendered.

Cliff, as others have said, cust the abuse of MMR. It neither helps you look good nor clever!