Dad cleared £32,000 debts in one year by haggling with debt collectors
A YEAR ago dad-of-one Darren Kelsall was crippled by anxiety and stress over £32,000 he owed on credit cards and loans – but now he’s almost debt free after haggling with creditors.
The Royal Mail worker, 44, spent almost 20 years dodging debt collectors demanding repayments for the thousands of pounds he’d recklessly spent and borrowed in his twenties.
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“Debt is like a prison sentence that totally takes over your life,” Darren who lives in Stoke-on-Trent told The Sun.
“It’s crippling. It makes you constantly anxious, stressed and overwhelmed and you can’t enjoy anything. »
“I was offered my first loan by my bank at 17 and stupidly I took it, even though I didn’t need it.
“I was from a poor family in quite a deprived area and I just felt like I deserved to have things that others had, without realising the consequences of taking out a loan.
How many debts did Darren have?
DARREN Kelsall quit his debt management plan and haggled directly with debtors themselves.
Many firms agreed to write off the debt if Darren was able to pay off a chunk upfront.
Here’s what he owed and how much he repayed:
- EOS Solutions – Owed: £1,018.16, Repayed: £509.08
- Link Official – Owed: £2,345.67, Repayed: £1,172.90
- Lowell Financial – Owed: £7,656.48, Repayed: £1,505.41
- Moorcroft Debt Recover Ltd – Owed: £2,587.92, Repayed: £1,290
- NCO Europe – Owed: £2,490.22, Repayed: £1,191.11
- PRA Group – Owed: £7,964.71, Repayed: £3,179.40
- PRA Group – Owed: £59.92, Repayed: £59.92
- The Money Shop – Owed: £82, Repayed: £60
- Virgin Media – Owed: £151.45 Repayed: £151.45
- Vodafone – Owed: £188.35, Repayed: £188.35
- Wescot – Owed: £319.47, Repayed: £159.74
- Halifax – Owed: £2,500, Repayed: £1,500
- Lloyds – Owed: (Approx) £3,400, Repayed: £0. Debt written off because it had been more than six years since the firm contacted him about it.
- T-Mobile – Owed: £164.42, Repayed: £164.42
- Moorcroft Debt Recover Ltd – Owed: £714.59, Repayed: £357.30
Total debt: £31,643.36
Total repayments: £11,489.08
“From then on, I was offered more and more credit which I accepted even though I couldn’t afford it.”
But in January last year Darren turned a corner. He was sick of the stress, anxiety and shame the repayments caused him.
He realised that if he continued to pay back the £31,600 that he owed via a bad debt management plan that he’d taken out at 27 then it would take him more than 100 years before he’d paid it off.
So he took matters into his own hands, faced his fears head-on and spoke to debtors directly.
A year later, Darren’s managed to write off 15 of the debts with £11,500 – saving him thousands of now. He now reckons he’ll be debt free by July.
He wants to help others struggling with spiralling debts to face their finances to pay off what they owe sooner.
Over a decade, Darren has maxed out around eight credit cards with limits of up to £3,000 and at its worst, Darren earned £1,500 a month from his customer service job but owed debtors £5,000.
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Eventually, the habit cost him his relationship with his son’s mum and even made him homeless.
In May last year, debt collectors called him to tell him that if he could pay a portion of what he owed upfront, they would write off the remaining debt.
« I can’t describe the feeling I had when the debt was gone »
“For the first time in my life, I decided not to run away,” Darren said. “I was so fearful but I picked up the phone and heard what they had to say.
“It was store card debt worth £2,300 that I’d taken out years ago and they said that if I could pay off half now they’d write the whole lot off.
“It sounded like the opportunity was too good to be missed and decided to cash in some shares that I had working for Royal Mail and pay them the £1,172
“I can’t even describe the feeling I had when they said the debt was gone.
« For the first time in my adult life it felt it was possible to be debt free.”
What help is there if you’re in debt
IF you’re struggling with debt then you can get help.
Debt Management Plan (DMP)
A DMP is an informal agreement so you can stop it at any time and resume the normal debt repayments, or adjust your payments if your circumstances change, like you lose your job.
It ends when you’ve paid off the debt so it could last for decades.
The plan is proposed to creditors individually so there’s not guarantee that the interest will be frozen.
Many firms charge a fee for the service, either upfront or one that’s incorporated into your monthly payments.
You can get a free DMP from the National Debtline, StepChange and PayPlan.
Individual Voluntary Agreement (IVA)
It’s a lesser form of bankruptcy, which is a legally binding agreement with your creditors to pay off your debts over a set period of time that has been approved by the courts.
It must be set up by a professional called an insolvency practicioner who will charge a fee of around £5,000.
Your repayments are made to the insolvency practioner who distributes your cash.
If you come into some money during your IVA then your creditors may have the right to claim it.
If you have any savings or pension payments then these will go to your creditor. If you own a home you may have to remortgage it. You may also struggle to get credit while repaying an IVA and details of the agreement will remain on your credit file for six years.
If you fail to make repayments then you could be made bankrupt.
The debts are written off after five years, regardless of whether you’ve paid them off in full.
Debt Relief Order (DRO)
A DRO is way to have your debts written off if you have under £20,000 of debt and no assests. You have to pay a £90 fee, make repayments and after 12 months your debts are written.
You can’t apply for a DRO if you’re a homeowner. It will negatively affect your credit score for six years and it maybe difficult to get credit during this time and details will be pubished publically.
Bankruptcy
Bankruptcy is a last resort if there is no other way to repay your debts. It lasts from one year to up to three and you’ll be asked to make repayments during this time.
It is much more difficult to get credit after bankruptcy and your credit rating will be affected by up to 6 years.
You could lose your house, possessions and some proffesions won’t let you work if you’ve been made bankrupt.
If you own a business it could be sold and the details of your bankruptcy will be published publically.
You have to pay a £680 fee to go bankrupt.
It inspired Darren, so he requested a breakdown of what he owed to each company.
He realised that through his debt management plan he was only paying back each company £1 or £2, while the rest went straight to the debt firm on fees.
Darren contacted each them company directly with an offer of upping the repayments to £10 a month and told the debt management firm he no longer needed them.
“They all accepted my offer,” said Darren, “which I knew I could afford to pay because I was earning more than I had been when I first took out the DMP.
“I then set about cutting back on all of my spending so that I could save as much money as possible and make each company a lump sum offer.
“I took up any extra overtime that I could, sometimes working six or seven days a week, quit the gym, started running or cycling to work and cut down on my gas and electricity bill.
« That way I could put anything between £500 and £1,500 into my savings account.
“When I thought I had enough to make an offer, I’d call up one of the firms and see if they would accept it.
« The worst response I had was when sometimes the caller had to put me on hold to talk to their manager but every single one of the companies I owed the most to accepted.”
« I’ll run through the streets naked when I’ve paid off the last debt »
One debt worth £7,656 was written off after he agreed to pay £1,505 upfront, and another worth £7,964 was scrapped after he paid the firm a £3,179 lump sum.
Darren has just two debts left – one worth £2,300 which he’s haggled down to £1,900, and another for £300 – and is aiming to have paid them off by next month.
“When I’ve paid off that last debt, I will be running through the streets naked I’ll be that happy,” said Darren. “It’ll be embarrassing for everyone but it will be the biggest relief.
How to cut the cost of your debt
Being in a large amount of debt can be really worrying. Here are some tips from Citizens Advice on how you can take action.
Check your bank balance on a regular basis – knowing your spending patterns is the first step to managing your money
Work out your budget – by writing down your income and taking away your essential bills such as food and transport.
If you have money left over, plan in advance what else you’ll spend or save. If you don’t, look at ways to cut your costs
Pay off more than the minimum – If you’ve got credit card debts aim to pay off more than the minimum amount on your credit card each month to bring down your bill quicker
Pay your most expensive credit card sooner – If you have more than one credit card and can’t pay them off in full each month, prioritise the most expensive card (the one with the highest interest rate)
Prioritise your debts – If you’ve got several debts and you can’t afford to pay them all it’s important to prioritise them.
Your rent, mortgage, council tax and energy bills should be paid first because the consequences can be more serious if you don’t pay.
Get advice – If you’re struggling to pay your debts month after month it’s important you get advice as soon as possible, before they build up even further.
Groups like Citizens Advice and National Debtline can help you prioritise and negotiate with your creditors to offer you more affordable repayment plans
“All of my adult life I’ve been in a spiral of debt which has made me scared to answer the phone or door in case it was someone who was going to take my house away.
“Even having a DMP hanging over my head was horrendous because it totally took away any control of my finances from me. I couldn’t bear the thought that this is how it was going to be for the rest of my life.
“The thought of calling the debt collectors up was really frightening and I was scared they’d want more money than I could give – after all, I’d spent all my life running away from them and now I was contacting them.
“But I’ve managed to pay off £33,000 of it with just £10,000 – and anyone can do it too. My advice is to make sure that you can afford it and not to be scared.
“I wish I’d faced up to my fears and done this years ago because debt really hangs over your head.
« My credit score is totally shot and I’ll never own a house but I will also never touch a credit card or loan ever again. »
How to get debt help for free
There are lots of groups who can help you with your problem debts.
- Citizens Advice – 0808 800 9060
- StepChange – 0800 138 1111
- National Debtline – 0808 808 4000
You can also find information about Debt Management Plans (DMP) and Individual Voluntary Arrangements (IVA) on the Money Advice Service website and on the Government’s .Gov.uk site.
Speak to one of these organisations – don’t be tempted to use a claims managment firm that will claim it can write-off lots of your debts in return for a large up-front fee.
Debt advice manager, Daniel Kelly, from the Money and Pensions Service said: « While Darren successfully managed to write off a large amount of debt by offering a one-off lump sum, this is not always an option for people – in this case, Darren was able to use his savings and shares.
« It is important to know that it is up to creditors as to whether they accept these settlements. They may judge that it is not in their commercial interest to write off debt in this way.
« Although Darren didn’t find an individual voluntary arrangement (IVA) or debt management plan to be the solution to his debt problem, it may well be an appropriate solution for other people struggling with problem debt.
« The main thing to remember is that there are a number of ways of dealing with debt and a regulated debt adviser will be able to help you identify the right solution for you. »
If you’re worried about your debt, the Money Advice Service website has a free debt advice locator tool which will help you find your nearest free debt adviser.
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He’s not the only one to have his debts written off – dad-of-two John Talbot from Peckham in London, managed to get a £3,750 refund for a £600 payday loan that he couldn’t afford.
But not everyone is so lucky. Dan Taylor, 34, from Tamworth, says his £4,600 doortstep loan debt is now stopping him from buying a house, even though he’s paid it off.
Last year it was revealed that workers are turning to payday loans to make ends meet and pay off unexpected bills.
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