On DMP - creditor applying interest again - please advise

Gaia2014

Hi everyone,

I've started a self-administered DMP - one month in :j

I've just received a letter from one of my creditors (not a DCA) basically stating that because my monthly payments on my DMP are similar to the contractual payments (i.e. I'm paying the expected amount for the money owed) interest will start to be applied again (as per original agreement).

I've set my heart on being debt free by next Summer. My fear is that it will take longer now and other creditors may follow suit in regard to adding interest again... Anybody else have any experience of this? It feels like two steps forward one back sometimes. I'm trying my best to get rid of £7,000 of debt and all I wish for, is that the next 17 months go smoothly, with all of my creditors playing ball

National_Debtline

Hi

Are you offering this creditor their pro-rata share? It does sometimes work out that their pro-rata share is similar to the contractual payment.

Unfortunately the creditor doesn’t have to freeze interest in an informal negotiation. Generally interest seems to be frozen in cases where the debtor is demonstrating financial difficulties, but if your offer is similar to the contractual payment the creditor may feel you haven’t show financial difficulties.

You could try asking them to reconsider your offer and point out that your other creditors have accepted. Your whole situation and payments to other creditors demonstrate financial difficulties if you can't afford all of the minimum contractual payments.

We have a sample letter for asking a creditor to reconsider a pro-rata offer here:

www.nationaldebtline.org/EW/sampleletters/sole-letters/Pages/Reconsider%20my%20pro-rata%20offer%20(sole%20name).aspx


James
@natdebtline

sourcrates

Gaia2014 wrote: »

I've just received a letter from one of my creditors (not a DCA) basically stating that because my monthly payments on my DMP are similar to the contractual payments (i.e. I'm paying the expected amount for the money owed) interest will start to be applied again (as per original agreement).
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Hi,

How have you worked out your payments to your creditors ?

I assume you have done it on a "pro rata" basis ?

you may want to re-think what you are paying them, possibly reduce this one payment, so that they do stop interest, otherwise, as you say, you will be no better off.

Jiggle the payment a bit.

Gaia2014

Thank you for your reply. Yes, I'm giving the creditor their pro rata share based on a Citizens Advise Bureau DMP calculation... But, it is a similar amount to the original contractual payment unfortunately. I understand that the creditor can choose whether or not to freeze interest. But, I feel like I can't win either way in terms of trying to be debt free as quickly as possible... I guess I can contact them and appeal to their good will :rotfl:

Sourcrates, I could juggle the payments and will definitely consider this if the other creditors follow suit. I will seriously feel like giving up with my DMP if they do that. The whole point of self administration is to be debt free as quickly as possible and on my terms. But, having said that I want to run the DMP properly to avoid the to and fro of correspondence that might ensue otherwise... the painful price of being irresponsible with money in my twenties

Gaia2014

I've just received my statement. The creditor in question (a catalogue company) have charged me £57 interest this month against a monthly repayment of £100 and an outstanding balance of £1,700. This is one of my biggest debts and so far the only company that has unfrozen interest. This means that my debt free date will now be further away (for this creditor anyway).
I feel really angry about this because I had my heart set on completely debt free next year. I don't think I have a leg to stand on by writing to them because I can obviously afford the contractual payment now! Rant over... Thanks for reading

I assume the monthly interest will go down with the debt??

glentoran99

Stop paying them until they sell it on ( i assume its already defaulted)

Gaia2014

It did default but it's back on track now... would prefer to pay it with that in mind...

Don't need the stress to be honest... interest frozen on everything else which was sold on. Hope it stays that way otherwise I will have to reconsider my plan.