How to start paying back debts.

Amnesia180

Hi all,

I'm coming here for a bit of advice on behalf of my partner.

She has got herself into a bit of debt over the past year or so and has been trying to make payments with little or no success. Recently, she has been in contact with her two mobile phone suppliers and other account that she owes money on and has received letters (between July and September '09) stating how much she owes. I have recently found out about these debts and have said I will help her in finding out the best way to start making payments again.

The problem we have is, she can’t afford any “early termination fees” which are around £700 each, and the arrears for both contracts are around £350 each, plus the £40 per month she will have to add on top to continue paying the contracts.

I honestly don’t know where to start, apart from calling all three companies and explaining the situation to see what payments they would start to accept (one of which has now been passed on to a debt collection agency, and I fear this could soon lead to more serious consequences).

I’ve never had to do anything like this before, and am unsure on what is frowned upon and what is accepted. (such as, asking for monthly payments or reduction in rates)

Whilst I understand she shouldn’t have got herself into this situation in the first place, I am trying to help her get back on track – she is starting to pull her hair out over this. So any advice you could provide would be most grateful. (Likewise, if you need further information from me, please do not hesitate to ask).

Thank you in advance and I look forward to hearing from you soon.
Amnesia

Amnesia180

Hi all,

A bit of an update. We've been told that Orange have passed the debt to Buchanan and Wells who then forwarded it to Scotcall. We know how much we have to pay, and are discussing payment options. We're requesting the amount to be confirmed in writing before making any payments.

Any advice, please?

Thank you

Tixy

Hi Amnesia

Make sure you get the amount due in writing from Scotcall before you make a payment to them. They may be prepared to accept a lower payment to settle the account if you can pay in one go. This is a reduced full & final settlement and here is all the info regarding this - http://www.nationaldebtline.co.uk/england_wales/factsheet.php?page=24_full_and_final_settlement_offers If you do this do follow the guidance on this and make sure you get written confirmation in writing. If they have put on charges to the original amount this may give you some scope for negotiating.

Particularly important when dealing with DCAs to make sure you keep copies of all letters to and from them. Its usually advised not to speak to them by phone as you don't have a record of the conversation plus they are more likely to bully you.

If she is agreeing monthly payments for any of these debts, make sure she doesn't offer to pay more than she can afford. No point paying these debts and then not being able to afford prioirty bills like council tax, utitlities etc. To work out what she can afford advise her to complete an income & expenditure statement to see how much money she has left over after prioirty expenditure.
Also for any repayment plan best to set up a standing order so she can be in control rather than a DD or giving them debit card details (as they sometimes deduct more than you agreed).

She should also look carefully at the luxuries/entertainment money she is spending and cut back whereever possible (such as why does she have 2mobile contracts in the first place, that can never be necessary).

Good Luck. If she wants more general advice on other debts and money management get her to join here and we should be able to give her loads of tips and advice.

Amnesia180

Hi Tixy,

Thank you for your reply. Fortunately, she doesn't need to worry about council tax, utility bills etc. That is all sorted.

All she has to worry about is her rent and bills (which include these debts). We've worked out roughly how much she can afford to pay. Another fortunate situation is that she is still young and doesn't have much other responsibility right now.

Scotcall have told her what she has to pay, which is a monthly amount and that it will be for 8 months. They have not put this in writing and told her they need to take first payment over the phone. Would you suggest no more telephone calls to them and from now on ONLY write to them? I will use the sample letter to make a settlement offer to each of the collectors.

Thanks again!

Amnesia180

How about a letter to this effect... ?

I write with reference to the money which you are claiming on the above account.

Further to my recent telephone conversation with one of your representatives, I would like to receive confirmation that any interest and line-rental payments have been frozen until the arrears have been paid in full at a rate we agreed (see below).

I can confirm that I am unable to offer to pay the money which I owe in full. This is due to the current economic climate which has resulted in a reduction of my working hours, directly affecting my monthly income.

However, I can raise £40.84 per month (as agreed on the telephone) and I want to offer this as an ex-gratia payment. This offer is made on the clear understanding that, if accepted, neither you or any associate company will take any other action to enforce or pursue this debt in any way whatsoever and that I will be released from any liability.

I also request that, if accepted, you will mark any entry on a credit reference agency file relating to the above account as “satisfied” in full.

Payment can be made each month, beginning from 10 days of receiving your written agreement of this offer and method of payment.

The offers I have made to my creditors have been worked out on a pro-rata basis, and I have written to all of my creditors asking them to accept reduced payments.

Should my circumstances improve, I will contact you again.

I look forward to receiving your reply.

Deep_In_Debt

Keep everything in writing and do not give card details over the phone as DCA's have been known to help themselves.

National Debtline website has a good template letter you could use asking to freeze interest etc.