Credit Card Debts

[Myriad2112]

How long is it before a credit card debt stops getting chased or passed around to the collection agencies? I heard it was 4 years but someone else told me it was 7. My friend had a debt of £4000 which has now risen to £12000 because it's been ignored. Are they allowed to load that much interest onto an unsecured loan? It sounds like extortion to me.

[Buenchico]

A debt remains a debt forever. If there's no attempt whatsoever to pursue the debt for a period of 6 years, and the debtor does nothing to acknowledge the debt during that period, the creditor can longer take court action to enforce payment. (Even then, the debt still remains. It can still be pursued and, for example, the debtor's credit rating can continue to be adversely affected).

Since your friend's debt is still being actively pursued it remains 'live' and it will continue to do so. You friend needs to do what he/she should have done ages ago:
1) Cut up the card and return it to the credit company ;
2) Send an accompanying letter, explaining his/her inability to pay (e.g.through separation or redundancy) ;
3) Make an offer of monthly payments at a rate which he/she can afford (as a 'sign of good faith').

Most credit card companies will then:
a) Cancel the card ;
b) Stop adding interest ;
c) Require the debtor to complete a form detailing their income and expenditure and (again) make an offer of monthly payments.

If those payments are met the lender won't take legal action. (However they'll almost certainly make contact, from time to time, to try to get the payments increased. Your friend needs to be strong-willed and not offer to repay more than he/she can afford).

If your friend continues to ignore demands for payment, the creditor will eventually take court action. The County Court will issue a Judgement, requiring your friend to repay the money at a realistic rate. (That assumes that your friend submits details of his/her income and expenditure to the Court. If not, the Court might make a Judgement that the money should be repaid in full immediately).

Then, as long as your friend kept up with the repayments ordered by the Court, the creditor could take no further action. However if he/she did not keep up with the payments, the creditor could seek enforcement through a Court order allowing bailiffs to seize his/her property (or, for example, by getting the money paid directly from his/her employer).

StepChange is a registered charity which was set up specifically to help people with debt problems. (It used to be known as the Consumer Credit Counselling Service). Your friend should get in touch with them:
http://www.stepchange.org/

[Myriad2112]

Thank you very much Buenchico I appreciate all the time that very detailed answer must have taken you to write and will pass it on. The reason I asked was because I had a similar debt myself although it was for a much smaller amount. After 4 years of paying £10 a month they wrote offering me a full and final payment of less than half the balance. I thought that it was because it was so old that it would no longer be worth them taking me to court. I don't know enough about it though which is why I thought I would post it on here before offering said friend any advice. Understandably she is very worried about it all. thanks again. M.