Sunday, June 8, 2014

Selling Your Personal Debts? Is It Possible?

My jaw literally fell on the kitchen table the other day when I read an advert from an organization saying that if, I, the family was having problems re paying personal loans, credit cards, overdrafts or overdrafts with personal guarantees then I could legally sell them. Astounding, as an ex and I mean ex financial advisor I had never heard of this type of vehicle before. I have seen, so has every one else in the UK adverts for consolidate this, we will agree the debt for you with your creditors, but never this, for personal debt at any rate.

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In the course of my career I had witnessed companies buy debt ridden companies or firms for the purpose of tax relief or because it had certain assets but never this. We all hear about wall street or the city of London doing billion dollar debt trades, but not on a personal level.

In continuing my breakfast advert reading I was looking for the painful small print. Massive fees or commissions or long winded legal claims taking years to go through the courts with the hitherto attached massive legal bill. No, it would seem that there are companies out there who will look at your case and if they cannot pursue it, effectively, buy it then your fees are returned in full. There is a cut off date which was loans taken out before the May 2010, which seemed to be the only stumbling block. That and the fact you must pay an admin fee plus a 10% levy on the balance of the loan amount.

Re -discovering my brain cells, I do have a few, I begun to think about families in situations where they can manage the mortgage payment but for one credit card they could live well, without the threat of debt recovery firms, entering into a court supervised agreement, where they are paying fees any way and not necessarily being able to clear their credit file afterward. Meaning that in the future that if they wanted anything on credit or account it could count against them, because of the mark on the credit file. Selling the debt having read further into the brochure clears not only the debt but should according to them not appear on your credit history, as effectively your debt has ceased to exist because the debt has been sold. The difference to a family budget could be huge not only that the countless thousands paid in interest over the years. During these uncertain economic times, nobody actually asks to lose their job and it could the loss of maybe one of the household's income that could be the tipping point.

I am encouraged that the case is looked over by lawyers first, there are no false promises involved. There are a number of debt management companies that have started up offering to negotiate on your behalf and equally press reports that the majority to great work, but others are slipping beneath the radar and not fulfilling their part of the bargain. So it is always worth checking a company who offers any type of, we will get you out of this by 'x' means my own thoughts would be that if you are in any doubt ask a lawyer of if you can an appointment with the citizen's advice bureau ask their advice too. From experience the worst thing to do is to do nothing. Sitting and waiting for the phone calls or reading threatening letters can cause untold stress, I always found that when clients confronted the situation there was a plan that could alleviate what could be a time bomb.

As I said to my clients it is not necessarily your financial ignorance that is the problem, it is the access to financial information that can be the stumbling block.

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