Mike Thomas
Debt Expert

Mike Thomas, as head and founder of www.debtwizard.com, has become well known as ‘The DebtWizard’ and has been helping people with their debt issues since 1994. Recently he was a finalist in Credit Today’s UK Debt Counsellor of the Year 2011.

Mike's career began in the Metropolitan Police, but after 17 years of exemplary conduct he was forced to leave through injury. It was then he became a debt counsellor, developing his expertise in this difficult and often emotive field, interviewing people, assessing their debt problems and helping to resolve them.

He is now regarded by many as an expert in the debt management industry, specialising in unsecured personal debt covering credit cards, loans, overdrafts, store cards as well as mortgage shortfall debt following house repossession.

Mike has extensive press and media experience, featuring on television and in radio shows talking about consumer debt issues.

Mike’s catchphrase is: “The last debtor’s prison shut in 1869, society needs to move on and support those in financial difficulty - it’s not a crime to be in debt!”

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Q.

Hi Mike, my son currently lives with my ex. I moved into my mums recently to help me clear some debts I had. I owe 40,000 vat from a pub I used to own, which I sold for 20.000. Most of the money was owed out but I used the remainder to take the ex and the kids on.holiday in a bid for reconcilliation. It didn't work and I went into.a drunken chapter for a while . I have got myself back together now and my son (who is 12) wants to come and,live with me. My problem is I owe another couple of thousand from when.I had the pub and if I rent somewhere I will pop up straight away and bailliffs could come round. A guy came from the VAT and he said by the sound of things they.might as well make me bankrupt, however they.dud this once before for the paltry sum of 1500 quid in year 2000 so they're unlikely to do it again. What's my punishment likely to be if I make myself bankrupt, if I can ? I have saved 750 to pay for bankruptcy which I believe costs 650. I am working at the moment earning 20,000 pa. My mum lives in council property. Thanks Gary

A.

Bankruptcy may be the way forward and the cost is £525 Official Receivers (ORs) and £175 court fee, making this a total of £700. However there are other options, you may wish to look at an Individual Voluntary Arrangement, commonly known as an IVA. To see if suitable and to help you work out what you can comfortably afford you will need to talk to a specialist who will help you work out your best monthly payment, usually for five years. Once you have completed the IVA, this means made all your agreed payments then the IVA will conclude and any outstanding debt will be written off. Interest and creditor charges are frozen at the date of the agreed IVA.

If this is an option for you then don't pay 'up front fees', find a firm that will help you and take the fees from your monthly payments.  I have some more information for you about how IVAs work -What is an IVA?, IVA pros and cons, IVA infomation & Advice,  this covers procedure and IVA fees as well.

That said it would be a good idea just to talk over matters with a debt professional, to help you further and save fees I have a list of all the agencies that will do this 'free of charge' the list also includes the debt charities.  Any debt option you eventually take up should not affect your mother's address, it will impede on your credit rating though, bankruptcy or the IVA will stop any bailiffs or debt collectors, if you do nothing then yes, expect them to come calling.

Best wishes,

Mike Thomas

Debt Wizard

Q.

Hi, I have 2 credit cards totalling to 3800 and a personal loan of 6000 and a an overdraft of 1600. I have just fallen pregnant and I worry I will not be able too keep up payments once I have baby. Stressing me soo much I don't know if I should not have it all together. What is the best way for me to go about sorting this out?

A.

Hello 

It is most unlikely that you will be able to take out a new loan to cover all your debts, you would need at least £11,400. The concern then would be how you would repay this when you are soon to reduce your income and gain more expenditure when the baby arrives.

If you know you are not going to meet your debt repayments then it is important you get sound, no nonsense and free debt advice as to what ALL your options are.

I have a list of agencies that are totally free to use for debt advice and they won't charge you fees! They will help you go through your income and expenditure to establish what money you do have available to pay your debts, this is known as 'Disposable Income' in our industry.

All the contact details are on this link  Free Debt Advice Agencies.

Any more questions then please pop back.

Regards

Mike

Q.

Been with partner for 18 years and have now split, we have 20k of debts on credit cards and loans, am I only liable for those in my name and him in his (we aren't married? Also if any vehicles are in his name do I own any right or equity to them? Thanks

A.

Credit cards debts are in one name only and are never joint, you can have additional card holders who will not responsible for the debt, just the person who took out the credit card.

Re personal loans or any other joint liabilities these are never divided 50/50. If one named person on the agreement cannot pay then the other named person is responsible for the full amount outstanding.

Regarding the cars, the only time you may have a claim is if you can prove you borrowed money and purchased the car, such as through bank loan. If there is a dispute about this then it may well lead to the civil court which will naturally incur additional costs.

Q. I have been on a DEbt Management Plan since Nov 2007. My husband and I are now separating and I need to either buy or rent another house for me and my two children. I will have equity from my current home, will I be able to get another mortgage or rent a property as I need to understand my options before I start looking?
A. Would like to know who your debt management plan (DMP) providers is as I suspect you may be paying management fee, usually around 18% of your monthly payment. If this is the case then please pop back and I will help you go to a debt management plan provider that will not charge you any fees. On a debt of £15,000 I can save you approx £3,500 in fees if you were paying £200 pcm.

As you are already on a DMP then your credit rating will have been downgraded and I fear that in the current economic climate you will have great difficulty getting a mortgage, this may change according to how much deposit you can put down. You will need to speak to a mortgage adviser or search around on the internet.

You say you that following the sale of your home you will have some reasonable amount of cash, you have not said the amount this would be or how much you owe. There is the possibility that you could use some of the cash from the sale to broker a deal with your creditors, either by negotiating a deal with each creditor paying back a fraction of the debt in full and final settlement or through what we call a ‘lump sum Individual Voluntary Arrangement IVA’.

With a lump sum IVA there will be no need to make monthly payments as well and once approved it will legally bind all your creditors into the arrangement. It is not uncommon, obviously subject to one’s circumstances, for creditors to accept an offer of 25p in the pound, or less without the need to make monthly payments.

So my advice would be to take professional debt advice from a firm that you can trust and that is passionate, determined and hands on to see what options you have on clearing your debt.

I have a list on my website of all the organisations that can assist you free of charge and with no management fees - www.debtwizard.com.
Q. Hi Mike, I have an outstanding debt of £3500, and the debt company want to put a 'charge' on my property. I am going to remortgage my house in the autumn. Its the first Ive heard about a charge on a property, can you advise if I should agree to this and if so, what are the implications? Thankyou Chris
A. Hi Chris

There is no such thing as an unsecured debt such as a credit or store card or personal loan if you are a house owner, simply because in the event of non payment the creditor/lender can apply to the court for a county court judgement, often referred to as a CCJ. Once this has been granted then the creditor/lender can enforce the debt though the CCKJ by attachment or earnings, this means they take an amount set by the court from your salary before you get paid, or they can send in the bailiffs, or as in your case, they can ask the court to put the debt on your home. This then becomes a secured loan, like a second mortgage.

So it seems to me that your credit rating has already been marked down which will have an adverse affect on apply for a re mortgage.

You should have received notification of the pending CCJ, if you did not then you can apply to the court using form N245 to have it set aside so that you can have the opportunity to address this issue.

If you cannot do this then you can consider asking the court not to grant the charging order, the best resource for this that will help you would be on this link http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=15_charging_orders_in_the_county_court National Debt Line - Charging Orders in the County Court.

Your plan of action may be to get the CCJ set aside, then off your credit file, apply for the remortgage and pay the creditor.

If you have other debts, then you may wish to think about getting good solid no nonsense fee-free debt advice. I have a list of all the agencies that can assist you for free on this link http://www.debtwizard.com/debt-help/credit-advice/134-helpful-organisations, they include the debt charities full contact details.

Trust this helps.
Mike

Q. Hi Mike, my name is David Lewis. I have a residency order & my two boys aged 7 & 10 have lived with me for nearly three years. The court costs alone have left me £20k in debt. I had to resign from work. My
ex-wife suffers from a mental health condition, yet diagnosed, "outside the parameters of a clinical assessment",(I think it means cant be bothered to do our jobs properly). My eldest son has Asperger's Syndrome, which can be challenging. I do need help of not just financial, but since this is your area, I would like to hear from you.
A. One question comes to mind you say you have £20,000 court costs, is this £20,000 on loans and credit cards or ‘actual’ court costs, if the former then you will be able to include them in any IVA, DRO, debt management plan or bankruptcy, if the latter then you will have to pay them. Can you give me some more information, are you a house owner or in rented accommodation?

Many thanks

Mike






Q. Mike, can you recommend a debt expert in the US? I'm currently overwhelmed with IRS (tax) debt, credit card debt, and am going through a separation. I have no budget, no plan, and I'm stuck. Thanks in advance
for your recommendation.
A. I would have a look at Consumer Credit Counselling Services CCCS in the USA, website http://cccsusa.org/ they are a non profit making company and their services should be free to the US consumer.






Q. I am on a debt management plan and am looking to rent a new property will this be a problem if the letting agency do a credit reference check my last four years renting have been good with no payments missed.
A. Unfortunately your credit rating will be marked down by the creditors/lenders that feature in your debt management plan because you are no longer keeping the previously agreed payments when you first took out the credit.

The letting agency will undertake a credit search on you which may then lead to them asking you to put a bond down, usually three months of rent payments in advance, if unable to do this then they may ask for a guarantor, this is someone that will guarantee the payments if you fail. The guarantor will also have to undergo a credit search.

I know you do not intend to fail, but landlords will request a credit search on every new tenant. This also applies to people that go bankrupt, in extreme cases like this the letting agency may then ask for a six month bond.

It may be prudent to ask the debt management plan provider for a conduct letter, this is a note that confirms that you have made payments on time and actively cooperating with them and your lenders. This is not essential but may help.

I do not envisage you not being able to move, just be aware that you may need to find the bond or the guarantor.

I know it is a pain, I have been guarantor for two of my children and their credit rating was v good!

Good luck, Mike






















Q. About five years ago I split up with my boyfriend, we had a house and as we could not pay the mortgage it got repossessed soon after. I been too frightened to look into it as apart from being a bad chapter of my life I am just hoping the debt will go away. I am now with someone that I adore, he doesn’t know about the previous house. Will this debt ever come back to get me, can I say it has really gone as I have not heard anything for over 5 years now?
A. Are you sitting down? I have some bad news for you. In the UK a mortgage lender has six years to recover the interest element of the debt and 12 years for the capital (the amount you borrowed).

The lender will use the sale proceeds of the home to clear the interest and that leaves then 12 years to pursue any named persons on the mortgage agreement. Importantly the time clock runs from the date of the last payment on the account or acknowledgement of the debt, this is usually done in writing whereby you admit the debt.

If contact is made you do have options, you have a choice between either refusing to pay anything and rely on the outcome of any legal proceedings that may well begin, or negotiate a settlement.

With skilful negotiation often a full and final settlement can be reached by paying a fraction of the initial claim. However, every case is determined on its merits, including the amount of assets, if any, that you may have and your monthly disposable income as this may well reflect upon the amount required to settle. Points to bear in mind when deciding what option to go for:
• Was your house sold below the market value?
• Was the sale through reputable estate agents or auctioneers?
• Was your property repossessed more than 6 years ago?

The Council of Mortgage Lenders (CML) announced a directive which came in to force on the 11 Feb 2000. Under this directive those that have not been contacted by the lender for more than 6 years from the date of the sale of the property will now not have to repay their mortgage shortfall debt.

Unfortunately this is a voluntary code and applies only to new cases and not those with existing shortfall debt repayments or where the lender has already started recovery procedures. This may be your lucky card!

It is a difficult call as to whether you should tell your new partner, only you know how strong the relationship is, it must be a stressful time with this always in the background and not knowing when it will rear up.

If the mortgage lender does make contact then I would urge you to get immediate professional advice as to all your options BEFORE you make contact with the lender, their agents or a debt collector.

The reason is simple, debt collectors and solicitors are good at getting money out of people that often cannot really afford to pay, by getting the correct advice you may be able to propose alternative methods of repayment and which could be over a vastly reduced period.

Good luck and fingers crossed!
Q. My wife and I are separating and she wants me to carry on paying our joint debts, I know i can’t do this as well as pay for rent and maintenance. Is my wife liable, if so is it half each, I pay half the debt and she has to pay the other?
A. Unfortunately lenders do not see it like that, if you have any joint debts then this means that the named persons on the agreement are responsible for the full amount outstanding, lenders do not just halve it and allow you to pay 50% each.
So if you are unable to make the monthly payments and say go bankrupt then your wife will be responsible for the full amount outstanding.
The way to look at it is like this, any debt that is in the name of more than one person, this is typically a mortgage held in a husband and wife’s name, then each named person is liable for the whole debt, however you never pay more than what is owed.