Is this a good plan of attack?

Would it be worthwhile me sending a Statement of Affairs to all my creditors showing how much I can pay them on a monthly basis and asking if in theory they would agree to it and if they would also agree to freeze interest and charges on the account. I would probably also say something along the lines of that if all my creditors agree to this it is an option I am prepared to take otherwise it looks like my only option is an IVA or bankruptcy. I am trying to avoid bankruptcy or an IVA to be honest as a) I don't want to lose my house and b) I don't want to have to give any future equity in the house to my creditors either. Is that likely to get them to agree to the pro-rata figure proposed? Could they in future change their mind and start applying interest etc again?
If you need any background see my thread explaining my situation..
Any thoughts?

Comments

  • boogiemaster
    boogiemaster Posts: 912 Forumite
    If you’re struggling to pay bills debts whatever, Get in touch and speak to them! Its no good later when court orders come through the door or bailiffs?.
    Phone them up and say I’m struggling to pay you? Can we come to some sort of agreement please!
    They won’t bite your head off? And will want to get the money back even if it takes slightly longer than planned.
    If they do get a little funny? Tell them that the court would pay you less and I’m willing to pay a lot more? And the other option I don’t want to take in bankruptcy? The bankrupt threat is a swear word to creditors, and will make them scream in terror.
    But they will come to an agreement I promise you, its worked for me in the past and I owed £20.000 because of my x girlfriend.
    I'm not poor i'm just skint
  • zAndy1
    zAndy1 Posts: 244 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    I'm tempted to call them and see what they say but on the Kronos' Korner site it says 'Do not be tempted to telephone your creditors, you may be coerced into promising payments that you cannot afford or given advice that is not entirely in your interests.'. I have several credit card bills due next week (Monday actually) so I need to inform them before then really and if I write it's just going to delay things. My options would seem to be:-

    a) As I've explained above, contact all creditors, explain the situation and propose a monthly payment we can afford and also ask that they freeze interest and charges (if they don't freeze interest then it's a non starter as it would never get paid off basically).

    b) Go for an IVA with debt free direct as they have recommended

    c) Wait and see what payplan say but I had my appointment with them last monday (6th) and they promised to reply with an assessment/recommendation in 7 days and I still haven't heard from them. Maybe they think I'm a lost cause lol. At the end of the day though payplan will only arrange what I could arrange myself i.e. reduced monthly payments. Just depends whether they would have more success in getting interest/charges frozen and whether the creditors are more obliged to stick to the agreement if it's been arranged by them than by myself.
  • zAndy1
    zAndy1 Posts: 244 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    One of my creditors rang me at work today asking what was happening as I am in arrears. I have informed them before that I was speaking to a debt management company, think they were just after an update. They agreed the first time I called them to take a reduced payment but I'm not sure if they're willing to freeze interest etc. I don't see how it's worth entering into an agreement to make reduced payments unless interest is frozen anyway. I would be offering £200 less than the minimum payment of £250, if interest was still being applied the debt would just increase exponentially!
  • Malestrom
    Malestrom Posts: 983 Forumite
    You can contact your creditors yourself and as long as you stand firm and dont let them coerce you against your will then you'll be fine. With regard to having the interest frozen, if you use a company like CCCS or PayPlan to deal with the creditors then there is a higher probability of the interest being stopped. If PayPlan haven't contacted you yet, then contact them! You need to be pro-active, find out whats going on.

    In the meantime, write to all your creditors, outline your difficulties, say that you're talking to PayPlan/CCCS with regard to those difficulties and that they have advised you to make token payments at this time. Enclose a cheque for the payment. Send it recorded delivery. Alternatively, browse the sample letters here and see if they fit your situation.

    When you write to them, ask them not to contact you by phone but only via letter. This makes it much easier to deal with and also gives you a trail of proof that cannot later be denied.
    He huihuinga taangata he pukenga whakaaro – A meeting of people; a wellspring of ideas (Maori proverb)
  • zAndy1
    zAndy1 Posts: 244 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    I rang payplan last night and was told the person dealing with my case had left for the day. I asked if she could call me and I've heard nothing all day. I called when I got in from work and the lady I spoke to said she was going to ring the person dealing with my case and get her to call me... still haven't heard anything. To be honest I'm not impressed with this as they know the situation I'm in and that time is of the essence, I've only delayed sending the IVA stuff back to DFD as I wanted a second opinion from payplan, beginning to think I should have just sent the forms in to DFD anyway now as at least the wheels would have been put in motion..
    I can't view those letters on national debt helpline site, I don't know why but when I click to view one I get a new window that pops up and promptly disappears. And I have disabled my pop up blocker and also tried adding that site to allowed sites for popups and it still doesn't work, really annoying!

    Thanks for the advice by the way
  • zAndy1
    zAndy1 Posts: 244 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    Ok, I've spoken to payplan tonight. Quite a different story to what debt free direct have told me in the following respects:-

    a) Debt free direct were proposing to lump both mine and my wifes debts together under the IVA, Payplan have said that my wife can't do an IVA as her debts don't exceed £15000 (she is a second name on the Tesco loan with a balance of approx £19000 which I assume will be split 50/50 between us?) and has credit card debts and current account o/d totalling approx £6000 (I'm not sure payplan realised the tesco loan is in joint names as by my calculations my wife's debts are very close to the IVA minimum limit!).

    b) Payplan explained that the CURRENT equity in our property will be split 50/50 as one half is mine and the other half my wifes. 75% of that value will be calculated and that's the figure that will be expected to be paid to the creditors at the end of the IVA by means of remortgage. Assuming the current equity is approx £20k that would mean a figure of £7500 at the end of the IVA. Debt free direct were talking as if the equity will be calculated at the end of the IVA (well after 4 years of the IVA) and any shortfall made up by releasing as much equity as possible.

    c) Payplan reduced the surplus income available by putting food/household up to £400pm from £280pm and clothing up to £80 from £30pm. They said they're going on average figures and it's best not to underestimate. Fair enough but that leaves us with a lot less each month to pay off the debts, if the creditors accept this then all well and good.

    Payplan are pretty much saying an IVA (for myself) is the only option, a payment plan would take 17 years to pay off the debts, not really realistic! They would do an IVA for me and a payment plan for my wife, not sure how that would work in reality as the sum going towards my wifes debts would only be approx £70pm I would guess, that's a long time to make a dent in almost £15000 of debt!
    I'm trying to work out if we're better off with my wife having at least £15000 of debts and therefore going into the IVA with myself , I guess that would mean we'd have to pay 75% of the full amount of equity so £15000 instead of £7500 at the end of the IVA but at least my wifes debts would be cleared as well then. I suspect payplan aren't aware that the tesco loan debt is a joint one, need to speak to them again to clarify that.

    Anyway, they seemed to really know what they were talking about and I had a better feeling about them than DFD to be honest who I just felt had already decided an IVA was the best option before I even spoke to them!
  • If you take ALL your paperwork to your local CAB they can help you work out an income/expenditure sheet and can also deal with your creditors on your behalf.

    The creditors are likely to agree to anything sensible proposed to them as it is not in their interests for you to go bankrupt.

    Don't forget your wife's debts are HER debts - she should have her debts assessed seperately. However, if you both go in together it can all be dealt with at the same appointment. When it is estalished who owes what to whom then a plan can be drawn up for your household income/expenditure and presented to creditors.

    Debt needs to be prioritised. You cannot go to jail for not paying your credit card or loan. You CAN if you don't pay your council tax. Hence - ALL your expenditure needs to be assessed not just the loans.
  • zAndy1
    zAndy1 Posts: 244 Forumite
    Name Dropper First Post First Anniversary Combo Breaker
    If one of the loans (the biggest one in actual fact) is a joint loan does that mean if I go into an IVA that my wife has to as well? I'm wondering if it's possible to keep my wifes debts seperate (credit cards and DFS loan) and try and pay them and I just do the IVA. I really don't want to ruin my wifes credit rating as well as this is a problem mainly of my making and it's not fair on her. Would creditors seriously consider reducing the level of debt to say 60 or 70% of it's current level and arranging a payment plan to pay off the balance (oh and freeze interest etc as well!). Asking a lot you might say but the alternative means they'd get a lot less money at the end of the day (IVA or bankruptcy). That would only work if they all agreed to do it though and I guess the chances of that are fairly slim!
  • Joint loans mean exactly that. You are BOTH jointly and severally liable - providing BOTH parties signed the agreement of course.

    The lender can pursue either or both of you for ALL of the unpaid amount - not just your half.

    If one of you goes into an IVA the lender can still pursue the other party to the loan.

    If you are thinking of going it alone then you need to contact the creditors at the earliest opportunity asking them to suspend interest and reduce the monthly payments. You will need to supply them with a list of all your expenditure and income and show that you cannot afford the current payments.

    You may find it easier to go to a debt counselling service (I always suggest CAB as that's where I used to work) - it's free and confidential - they can write the letters for you.

    If the joint loan is falling behind then your wife's credit rating is already affected so it's in both your interests to sort things ASAP.
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