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Importance of Being on Electoral Register

QUESTION

Please can you give me some advice on restoring my credit, I have no CCJ’s or defaults but my wife had a break down and never sent off the election forms, please can you tell me if and how I can get around this problem. 

Reply

The registration of both your names on the electoral list is important where credit is involved: but only the named borrower is relevant in each case. In some cases, you will lose points where automated scoring is used, and in high volume credit companies the time it takes to manually administer the loan proposal is not cost effective: i.e. coming back to you with a query as to your non-listing on the register would be unlikely. Using your own bank/building society should not prove any problem as these lenders are (at the moment) more inclined to provide a personal service than, say, a lender that you are using for the first time.

I suggest that you:

a) Telephone your council to find out the quickest way to get your name on the electoral list,

b) Telephone lenders in advance of any loan application and ask them to suggest the best way to deal with your problem: they will probably all be different - some may refuse outright. My own lender experience has been to request Council Charge documents, and to see if you have a credit record established at your address. If the borrower is also the mortgage holder the need for electoral information is of secondary importance.

Can I get my creditors to freeze interest on my debt?

QUESTION

I am currently in the process of negotiating with my creditors, in an attempt to resolve a financial "sticky patch". I am currently in. Some of my creditors have agreed to freeze the interest on the outstanding amounts, but others have not.
The ones that agreed to do so, I just asked them to. Is the normal policy when attempting to get interest charges frozen, just to ask, or is there some standard format in having interest frozen.

Reply

First, creditors do not have to freeze interest. A bank will have an overdraft rate of interest (and a horrendous unauthorized overdraft rate), a money lender will have protection under the Consumer Credit Act to charge default interest, and businesses can charge 'late payment interest' after 30 days from invoice date.  

The interest that continues to be charged on debts that are 'substantially' overdue, old or impossible to pay off fall under the grey area of what is 'fair and reasonable'. If you have a £700 debt and monthly interest of £5.01 and you are paying £5 per month you will, obviously, not discharge the debt. And more importantly, as it is the debt will take about 12 years to clear without further interest being added.

The term of 3 years to settle just about any consumer debt seems fair and reasonable - unless your situation changes. Lenders that set up repayment terms of 20+ years are more numerous than you would expect. It is fair and reasonable to offer all creditors a repayment plan that will end on the third anniversary - again unless the situation changes. I would like to see the freezing of interest as a mandatory action and there is some agreement from a number of lenders/creditors.

Another way of dealing with the interest is to offer, say, £5 per month until you 'sort things out', and then recommence paying interest and a larger monthly payment when you can. But if you do not approach the lender they cannot refuse in the first instance.

Is there any Recourse Against Poor Debt Management Companies

QUESTION

I wonder if you can answer a question for me my daughter has recently gone to one of these private debt management companies you hear about claiming allsorts of things reductions etc. do they need a consumer credit licence to practice or as in this case can any cowboy full of promises that left her in a far worse state. I would be most grateful for your help in this matter

Reply

Debt management is one of the fastest growing industries in the world today. The ability to communicate over the Internet has increased the catchment area and made the regulation of these companies/individuals difficult. It is an absolute must that all those involved in debt adjustment/negotiation are licensed by the Office of Fair Trading (OFT): it is not unreasonable to ask to see their licence.

This week alone I have received 20 e-mails about debt help. The reply e-mail address is to a free internet service provider (ISP): like FreeServe, and the web site is also provided by a free ISP. This type of service will undoubtedly charge up front fees and are unlikely to provide any real help: I suspect they are unlicensed.

Any debt help you receive should not have up front fees just for talking to someone. As to the original question, I would ask for a copy of the companys OFT licence, and whether they have one or not report their activity to the OFT (a licence does not mean you can be negligent). Write to all creditors asking them to give you some time to organise more help and choose a debt adviser that is known.

"Debt is a prison sentence, sometimes worse"

QUESTION

I have a poor credit rating insomuchas a company I had agreed a debt repayment programme with registered a default because the payment was not the same as the original payment I had taken out with the initial debt. I was unaware that companies could do this and had only just come up from my life sentence of 6 years with a CCJ and only managed to keep my credit clear for one/two months because of the registered default. The only way to get the default off I am told is to pay the debt off, problem being I don't have a spare £700!

Next I have a store Visa card with an agreed repayment plan of £31 per month - I have discovered that at a reduction of £31 per month the exisiting debt of £1,103 will take 8, yes 8 years to clear as the debt only reduces by £9 per month and the rest is going on interest and insurance and I have worked out that at the end of the 8 years the debt of £1,103 will have cost me £3,400 or thereabouts!

I want to borrow (again) - to clear the £700 and the Visa £1,103 and raise a little extra to do desperate home improvements (eg need a new toilet as my exisiting one floods around once a week - nice task to come home to after a hard day's work!, I need fresh guttering, I have rotten back window frames, my shed is leaking as it needs a new roof, not really too expensive home improvements but coupled with my above debts and other little loans I have worked out that if I don't borrow to clear the £700 and the £1103, these will take me 8 years to clear at their current reduction rate so I will still be in debt so I might as well take out a loan for £5K over 10 years pay these off, be able to buy a cheap car or repair my existing one and raise money desperately needed to do my little home improvements.

Please respond to this email, as I don't want to take any further silly actions which are going to put me longer in debt and because of my poor credit rating it seems that if I borrow again the actual repayment cost of a loan would be near on double? Any suggestions or help?

Reply

As you say, “only just come up from my life sentence of 6 years” just for some individual to send you a Default Notice thereby giving you another 6 years of credit application hell. I am disgusted at the simplicity of creditors to affect a persons credit rating by issuing a Default Notice. I have been the creditor in many such situations and seem abuse of the system beyond belief. If you are saying in your message that the creditor defaulted you after your arrangement, I would tell them to remove it NOW! The only reason I can think of for sending the default is so that:

A) The creditor can take immediate legal action should you not adhere to the debt arrangement, but once you adhered to the payment arrangement the default should be scrapped, or removed from all credit reference agency files.

B) Or that they terminated the account (i.e. the agreement is no longer in force whereby you pay x amount per month, but that the whole balance is payable immediately and they accept a payment proposal). To terminate the agreement the creditor must send you a Termination Notice. No notice means no termination. Ask for a copy.

By the way the default information will not be removed if you pay in full: you can only get a note placed beside the default saying ‘satisfied’.

As to your existing debts. You cannot suffer further from your existing creditors: unless your situation changes and you fail to ‘play ball’ with your creditors and up your monthly payment. With a £5,000 loan costing between £140 - £175 per month over 5 years (you probably, if passed, paying the £175 per month). One year at £175 per month is £2,100, enough to clear your debts if you put this money into paying off your current creditors. 

Personally, I would take the opportunity to settle all debts and maintain a credit balance with my bank. I would send a letter to my bank outlining what I was doing and say that you are looking for their support in providing a loan in twelve months time. This last bit is not advice, just an observation. With the many problems you have with your house and car it is likely that you will not have sufficient money to rectify the faults to a satisfactory level: satisfactory would mean not having the same builders in within 12 months. One of the biggest mistakes in money management is to attempt to repair faults that will reappear: sort out the faults on your house and car when you can afford permanent solutions. 

I know the above is not exactly what you want to hear, but it is the quickest solution and the best option from a personal finance view. A loan is tempting in the very short-term, but will quickly turn into a millstone of little or no benefit. 

Will past debt affect my business credit rating? 

QUESTION

Like some of the postings on your site I have a bad debt record. This was caused by a relationship break-up that left me in a terrible situation, whilst I don't look to administer the blame to everyone but myself there are some valid reasons. However, my ostrich impression did not really help the situation!!

I am now nearing thirty and have a default and a few CCJ'S to my name all within the last six years. Could you answer the following questions for me? I would be very grateful!

Firstly, is it true that after six years my name will automatically be clear? Secondly. I have some tremendous opportunities available to myself through contacts in the computer trade to earn a great deal of money through self employment. I don't need to borrow or raise capital, I just need a business banking account and the ability to process customers credit cards. Will my previous default stop me from doing this?

Reply

Default
The default will automatically fall off your record on the 6th anniversary of the default date. You might want to consider adding a 'note of correction' describing the circumstances that caused the debt and that you are dealing with the debt...