What happens if you just stop paying your debts?

[heyhey]

I am in debt and was using credit consumer councilling service but my curcumstances have changed and I have even less money. 2 companies are applying for CCJ's and I am just wondering what ultimatly happens if you can't repay your debts.
Obviously this is not what I expected to happen in my life and I feel like I have really F**ked up.
Thank you

wont you have to go bankrupt?

can you go to the CAB?

It is best to sort something out, with CAB or trading standards or whoever, putting your head inthe sand and hoping they will go away is never good idea, some may go for CCJ's some will send round the baliffs. They will not mess around and will sell your stuff for pennies which won't go far to paying off your debts.

PLEASE don't just stop paying. It really will make things worse. If you can show that you have made reasonable offers to pay what you can afford, the courts will go much easier on you.

The CAB are fantastic at dealing with debt - and free. CAB link

Thanks everyone. I'm fed up.. I'll keep paying something

Sorry to hear you are in this position, I have been there and it is always best to have the CAB or similar on your side. There are tens or thousands of others in the same boat so you are not alone.

If you have to wait to see a CAB advisor it can be helpful, IF you are feeling confident enough, to ring up and talk to a person at the organisation demanding money and explain that you are in severe financial difficulty and would really like to sort something out. I always try to be polite and respectful (imagine how much dogs abuse they get) and this usually works wonders.

If nothing else, they sometimes have the power to stop the endless and often automated stream of letters that end with bailliff visits and once you can agree a payment scheme (even a fiver a month or less) you can arrange a standing order and forget about it.

Hope that's helpful

Sorry that should be tens OF thousands.

Sorry to hear about that heyhey. It really helps if you can prioritise your debts. If you are in arrears with you council tax pay that first. You can go to prison for non-payment. After that comes your rent or mortgage, for obvious reasons. Utility companies come next, and credit card companies come last. It doesn't matter if the credit card companies phone you up and give you grief, paying them is your lowest priority.
The other thing is not to worry. I realise that it's almost impossible to do this, but even though things have gone really badly, there are worse things in life, honest. Even if you end up in the worst case scenerio - where the companies take you to court - no court will make you pay back what you haven't got.
I would second the advice to go to the CAB as well, they are really helpful and can give you a lot more advice than an amateur like me.

The key is to make all your creditors aware that you are trying to meet your debts.

You have two options:

1. If you think you can resolve your debt, and could switch some of it to 0% rates (although it sounds like your credit rating may be too poor already), you could "snowball" your debt - that is pay minimum payments for everything except your highest interest rate debt, which you throw anything spare at. (Martin Lewis explains it really well, and has a calculator to show you what you could achieve www.moneysavingexpert.com)

1. If you are past that, and in real trouble, work out what you can afford in total to put toward debts. Work out how much each creditor represents of your debt. Split the cash between them proportionally, and write to each creditor explaining your circumstances and offering your "token payments".

Other things include going to the website I mentioned, and look at ways to save money to release more towards your debts.

Ultimately, the courts won't make you pay what you can't afford, and often order payments lower than you originally offered (I knew someone who offered £5 per week to credit card, they rejected, court ordered £1 per week!).

If all else fails, bankruptcy is an option, and CCCS will tell you if it is the best option. IMO & IME it only is viable as a way out if you would be able to live debt free without credit on your income, if it were not for the debts you currently have.

Also, big implications with some career options & future credit.

For what it's worth, my husband and I have come through the other side - Bankrupt in January '07, Discharged Sept '07 & Oct '07, so less than a year. Now live on a budget that is tight but doable, and out of debt.

A close family member was Bankrupt in April '07, Discharged in Oct '07, but still in a financial mess because she just doesn't have the income to meet her circumstances as a single parent.

So definitely think carefully about your circumstances.

Heyhey - as long as you are doing something, anything, even if it's just communicating with your creditors, it's better than doing nothing. Otherwise, your creditors will have no idea that your circumastances have changed and got worse, they'll just think you're running away from your debt -no doubt, this is what some people do, however, it sounds like you want a way out from it all.

I haven't read all the answers here as I'm short of time, and I'm sure people have recommended CAb - CAB is def the way to go. Get an appointment and take all your paperwork and be brutally honest with them about how much you owe and to whom. Get a list of all your incomings and outgoings and CAB will write to your cridit ors on your behalf, stating what you are doing to reduce your debt. Make a token payment, even if it's just £5 or £1 or whatever you can afford.

It's a key thing to prioritise your debts as eg council tax have different powers with bailiffs than other debts like a credit card or overdraft debt, so you need to get advice on which debts you must make a payment towards first.

Is your debt in the hands of a collections agency or is it with solicitors?

Take it one step at a time and please don't be afraid, you're not alone and imagine how relieved you'll be when you're on the road to getting it sorted, even if youre just paying £1 a time until you're back on your financial feet. Good luck, you can get it under control x

I would recommend you call payplan today. They are free and very helpful. Don't ignore your creditors. Send them each £10 with a letter than explains you have contacted payplan and wish to everything you can to meet your obligations. More often then not they will back off and give you a bit of space if you mention payplan.

Payplan will not leave you with a big surplus of money, but they will leave you with enough to live on. And they will negotiate something affordable with your creditors.

Make sure you don't offer to pay more than you can really afford to pay.

I have mad the mistake in the past of offering too much, in the hope that they'd accept it and leave me alone but then i'd fall behind with payments.

Thankfully I am no longer in the position where I need to be negotiating payments, but if I were, I'd always offer a very minimal amount to start with and then increase it either when I could afford to, or if the offer was refused.

Good luck