Offer creditors 1 pound per month?

starks

Hi,

I have been professionally advised to construct letters that 'Offer creditors 1 pound per month' which is now clearly understood by me.

What the advisors didn't explain is the sort of responses I can expect from these creditors in terms of bully tactics, their failure to respond, sending the heavies around etc.

Similarly I would be interested to understand the possible future arrangements these creditors normally go for if anyone has experience/advise please.

Do they seek a settlement figure at a reduced amount?. I heard they dont normally trigger CCJ proceedings as the courts would consider the 1 pound payment a reasonable amount due to current circumstances.

How does this 1 pound to creditors affect future credit ratings etc.

If there are any web pages that show similar experiences and the ultimate case outcomes (2-3 years down the line etc) I would really like to read up on this info as I prepare for this rocky ride. My situation is only a result of losing job some months ago which ties in with the economic downturn. I dont even have a parking fine to my name right now!.

I would love to hear from those who have gone down this route and understand the expected responses from creditors plus how things ultimately got concluded etc.

Your advice in anticipation.

Thanks
S

poorandindenial

Hi Starks

Can I ask who advised you to do this?? Usually you do it with a plan to do something else, normally because youa re setting up a payment plan or because you have had a change in circumstances and have nothing to pay with, but it isn't usually a long term plan. The purpose of the £1 payment is essentially demonstrating that although you can pay nothing you are willing to pay. If you are able to pay more than £1 and have no other plan to follow it up with then I would doubt that this is the best plan for you.

In short - your credit rating won't look great (and after a while it will look sh1te)

Could you post a bit more about your situation, maybe do a statement of affairs for us (there is a calculator at www.makesenseofcards.com)

starks

Hi,
A legal friend is sorting out the approach for me and would rather not go in to detail who etc; which i hope you can similarly respect. The friend doesnt have personal experience on follow on tactics creditors use but does know the legal system very well. I was more so seeking experiences from people in terms of what to expect from creditors and case studies where people have concluded some payment agreements such as a 25% lump sum arrangement and so on. Also can we expect bully tactics from the creditors and what to expect so that we can be prepared how best to respond.
Thanks

poorandindenial

Sorry I didn't mean who as in which individual, I just needed to know what sort of person.

It could take many, many months before you can get them to accept a full and final partial settlement, they make take you through to a ccj if any one debt is large. They will ask you to give them statements of affairs or income and expenditure so that they can see that you aren't being unreasonable to them. n nThey will also probably hound you with letters, phone calls and possibly doorstep visitors (who have no rights)

To be honest, I wouldn't trust a lawyer (are they a lawyer??) with no experience of sorting debt out to be able to do the best job for you - I am not questioning their abilities as a lawyer, I am sure they are very good, but if they haven't done this before with anyone then they will have to put in a hell of a lot of time getting up to speed with the pitfalls and practices of creditors and debt collection agencies.

Also you will get charges added (some of which you will be able to claim back) so some of your debts may just get bigger and bigger (they have no duty to freeze interest)

The initial late payments on your credit file will turn into defaults which will ake 6 years to fall off of your credit file and won't do you any favours.

If you have problems with debt then there are people out there who have reams of experience and can help you for free. http://www.moneysavingexpert.com/loans/debt-help-plan#help

Messing around with your creditors unless you are sure what you are then going to do with them is kihda risky.

If you are struggling you can send these min payments and then offer lower monthly payments to each creditor on a pro-rata basis (this is called a debt management plan) and then after a while you may be able to get them to accept a full and final settlement for less than the capital value of the debt.

poorandindenial

Oh and in terms of how to respond - there are a whole host of letters on the national debtline website (ones to request that you are only contacted in writing, etc etc)

starks

hi
read through the web links in last post... thanks..

from experience does anyone know the sort of responses creditors will likely make?

10past6

starks wrote: »

from experience does anyone know the sort of responses creditors will likely make?

None, creditors don't like accepting reduced payments, however, you pay what you can afford, not what they want.