Negotiating with my Creditors

MarkNottage

Hi all! I have been slowly repaying a considerable sum of debt since 2018 via Stepchange debt charity but still have some way to go before its cleared. I am on  Debt management plan, not an IVA. Debt was @£60k when I started and is now down to @£40k.

The thing is, I may be due to inherit some money very shortly but not quite enough to pay the whole £40k - so I was thinking about contacting my creditors to see if they would settle at a reduced amount.

Does anyone have any advice as to how they think I should attack this issue please?

Many thanks in advance.

sourcrates

First of all, decide one way or another if this is the way you want to go, then if it is, you will have to ditch stepchange.

The reason for this is that stepchange will want you to pay the inheritance to them, and they will sub divide it between your creditors, keeping in mind that they are creditor funded, there ethos is to treat all the creditors fairly, so there won`t be much in the way of negotiation, and you could still end up owing money.

The correct way to do it is to negotiate with them yourself, start low so you can always increase your offer, it`s fine to do this over the phone, as long as any deals are agreed in writing, before any money changes hands.

Be aware this is not a quick process, it can take many months of toing and froing to get a good deal.

Look on the National Debtline website for a full and final settlement offer template letter.

Brie

I would be doing something like the SOA that is normally done on the debt free forum but have at the end a list of creditors with the amount available to pay them off.  (this may not be the whole inheritance - that's your choice).  Then list the amounts due to all the creditors and give them pro rata amounts so they are all getting the same percentage....say 60% of what is due to everyone or something.  This way they can see that they are all be treated equally well and might more readily agree.  There's nothing saying that any of them need to agree to anything so some might and some might not.  But worth a try.

RAS

Mark, a debt charity will try and negotiate pro rata payments to the debt charity.

The experience here is that some debt collector, debt buyers will accept offers as low as 15-20% whilst others might refuse to budge below 85%.

Detach from Stepchange, keep paying your standard payments, say nothing immediately about the inheritance and in a few months approach anyone who hasn't offered a full and final settlement, with your own offer.

Remember it is a negotiation, you start low, they will ask for more and you might meet in the middle. 

It might help if when the time comes, you list the current creditors as there is some knowledge here as to who is easier and who is really difficult to negotiate with.

fatbelly

Make the initial offer (low) in writing and see what comes back. If they initially move a bit, then it's worth talking to them by phone to get them to move a bit more.

There's a National Debtline standard letter which you can adapt

If they won't move, leave them six months and try again.

Always get the final deal confirmed in writing before paying.

gwynlas

I am surprised that  you have not already received some offers of reduced pay offs from some creditors,. Stepchange do not like you engaging with these as it goes against their ethos of being equitabkle to all. You can move to self management at any time by informing Stepchange and cancelling direct debit. However before going down this rourte you could still ask for settlement figures and see if it is worth it to you.

Rob5342

Don't rush into clearing them, try and keep as much of that money as you can. Remember that they buy the debts at a huge discount, perhaps only 20% of their value. If they agree to settle a £10,000 debt for £6,000 it might seem like very good deal, but if they only paid £2000 for it then they have made £4000 for nothing.

Start with low offers, take it slowly, and if they say no leave it for a while and try again later. I would make CCA requests and wait for responses before making offers to anyone.

fatbelly

We think debts change hands at between 6 and16% of face value, so 10% would be typical.

MarkNottage

Thank you so much to all of you who have left your comments/advice - all of them are extremely helpful and I will take them all on board. So glad I put his out there before commencing negotiations!

Once again - THANK YOU!

runforlife

In addition I’d say also ask for proof of the debt. Have the current creditors got all of the required paperwork from the original creditors. You’d be surprised as to how many don’t. I’ve written off over £10000 of NatWest debt because the debt collection agency couldn’t find the original agreement. Takes a bit of doing and endless letters back and forth but worth it. Go to the “prove it” forum to see how to do it. 

DjangoUnchained

runforlife said:

In addition I’d say also ask for proof of the debt. Have the current creditors got all of the required paperwork from the original creditors. You’d be surprised as to how many don’t. I’ve written off over £10000 of NatWest debt because the debt collection agency couldn’t find the original agreement. Takes a bit of doing and endless letters back and forth but worth it. Go to the “prove it” forum to see how to do it. 

not sure why you have had endless letters back and forth. I simply wrote once for my CCA, they wrote back saying they were waiting for it. Job done. Until they can come up with it (over 5 years now) i just ignore any other correspondence, phone calls and texts, simples.