Received my first letter from Debt Recovery

jones98746

So this morning I received my first letter from a Debt Recovery for a Marks and Spencer debt - a little bit scared. There is now a default showing for this debt only on my credit file. Waiting for info on the other 4 debts.

Here is my thought process. 

• Make an updated list (nothing has changed since I stopped paying in December) of what I owe to who - I am assuming they have kept adding interest/fees.

• Update my budget to make sure it's accurate and to see what I can afford to pay towards the debt payment - do I have to put the entire amount left over from my monthly budgeting towards the debt? Will the debt company check what I am paying in my budget from bank statements etc -  just worried in case an emergency comes up, although do have some put away.

• Work out and Pro-rata the amount I owe by percentage. For example: M & S is 20% of the total debt so I would pay 20% of what I can afford from my debt payment.

• Contact the debt recovery and pay them the pro-rata amount - do I send them my budget sheet and amounts I owe to other debts? 

• Can I ask them to stop the interest/fees?

• Please can someone point me in the direction of a template letter I can forward to the debt recovery with all the info I need to include? 

• Do I send bank statements, what do they need to know? Can I do this all through the debt recovery website/ email or should I post snail mail?

Then repeat for all other debts once I receive defaults etc


I am worried and nervous again, but please let me know if I've forgotten anything. 

Thanks in advance for all your help, I wouldn't know where to turn without all your advice. 

sourcrates

First off, calm down, take a deep breath, r e l a x.....

Expect to get a lot of this kind of letter, best not to go off the deep end every time one drops on your doormat, it really is nothing, just a computer generated letter.

Whoever this company is, they have zero rights to see anything, and you remain in control of matters, make sure you understand that.

The only info they need to know is how much they are getting and when, all interest stops when an account defaults, that`s what default means, the end of the agreement, the debt is frozen at that point if its a creditcard/catalogue debt, or for a loan the whole outstanding balance becomes payable.

Now, who are "debt recovery"?

Is this M&S`s own internal recovery department writing to you, or a 3rd party debt collection agency?

You don`t have to share any details or tell them anything about yourself, payments can be made on all DCA websites, or you can obtain their bank details and pay via online banking or standing order, its up to you.

Brie

If you go to one of the top stickies here you'll find the statement of account (SOA) template.  Fill that out if you haven't already.  You could post it back for suggestions on how to budget but it will help you know how much you can afford to pay to your creditors.  

It is quite a standard thing to set aside a certain amount each month for an emergency fund.  Even the debt collection agencies accept this so NO you don't need to give them everything.  You don't need to send them your budget but might consider doing so if asked later.  At no point do they have the right to ask to see your bank statements.  The reason they might want to see your budget (or SOA) is to see what other creditors there might be and to ensure they are all being treated equally.  So your knowledge of pro rata payments is spot on.

And personally I would do everything, and I mean everything, by snail mail.  Yes it costs you printing, envelopes, stamps but it means the creditors potentially have less access to you.  So don't email them, don't do things online, don't ring them, don't text them.  Don't give them any more ways to contact you than they have already.  And you can in fact tell them to delete everything (mobile, landline, email) and only ever contact you by post.

I don't think a template letter is needed really.  Just write a letter stating something like "I'm able to pay you £XX a month.  Please send me your bank details so I can set up a standing order."  Don't ask if it's ok.  Just tell them.  

And well done for getting this far handling the process yourself.  Don't forget to come back for more assistance if you need it.

jones98746

sourcrates said:

First off, calm down, take a deep breath, r e l a x.....

Expect to get a lot of this kind of letter, best not to go off the deep end every time one drops on your doormat, it really is nothing, just a computer generated letter.

Whoever this company is, they have zero rights to see anything, and you remain in control of matters, make sure you understand that.

The only info they need to know is how much they are getting and when, all interest stops when an account defaults, that`s what default means, the end of the agreement, the debt is frozen at that point if its a creditcard/catalogue debt, or for a loan the whole outstanding balance becomes payable.

Now, who are "debt recovery"?

Is this M&S`s own internal recovery department writing to you, or a 3rd party debt collection agency?

You don`t have to share any details or tell them anything about yourself, payments can be made on all DCA websites, or you can obtain their bank details and pay via online banking or standing order, its up to you.

Thank you for the advice. The debt recovery company is Moorcroft Debt Recovery Limited, so I believe the debt has been sold to them. They have also emailed me to make payments, do you believe asking them to remove mobile and email and to use snail mail is the best route as per Bries post or can I email them the amount I can pay and then pay on their website? What would you recommend. 

Rob5342

It's pretty straightforward really, there's no need to give it much thought. Just log on to their website and set up a plan to pay whatever it is you can afford and then their automatic nagging computer will shut up and go and annoy someone else. The one thing I would say is make sure that your payments are made by standing order rather than debit card or direct debit so that you stay in control. That way you can change the payment easily instead of having to contact them.

As far as I know Moorcroft just collect debts rather than buy them. They try and scare people by having a logo that looks like some sort of medieval prison but as they are just collecting debts they don't own they don't have the power to take any sort of legal action. 

fatbelly

Rob is correct. Moorcroft is the traditional debt collector. In this case, employed by a very traditional company.

They just work through their standard letters, then return the debt to the original company

If now is a suitable time to start payments, then do it. They should have made it clear that they have stopped interest and fees. If they haven't, then don't pay them yet

dankemp

Hi there

First of all I would like to assure you that almost everybody in the Debt Free Wannabe thread has been where you are right now at some point.  They have all felt the same anxiety you have felt and you will see that they are getting through it.

I read through your initial post in each of your threads and the one quoted herein and I am concerned that things may not have been fully explained to you.

I also built a small business on half the amount of dole money for six months and it took two years to break even. So I understand your business pain, albeit I think you might need some help understanding some aspects or the core principles of growing a business which you might not be able to afford or it might not even be a business.

The core thing I think you need help with is the personal debt, I could give you hundreds of the debt letters, enough so you would see that they are all a set of template letters for each of the debt chasing companies.  They are meaningless, there is no need for you to feel sick with worry, there is nothing any of them can do to you except whine and they are not even whining about their own money.

As you have been told before, the only debt you need to worry about servicing is the loan secured on the car.  I want you to imagine that all of the rest of your consumer debts are parked away and rotting in the garage, by the time they become relevant you will only owe around 40% of their value and if you want you can make them worth only 10%.  It is entirely up to you, you are in control of this, not the lenders, not the debt consolidators they sell your debt to, not the debt managers who are responsible for appointing debt collectors, all of them are meaningless organisations and people in the scheme of things.  They are doing their job, but that is not your problem, you need only be concerned with planning your future without them, think about your parents and your kids, everything else is irrelevant.

If you take a step back and look at the credit industry, what is there objective?

Why did they give you those 0% cards?

Was it because they are sweet and nice?

No it is because they know it is a trap and we all fall for it.

They are giving us permission to live beyond our needs and beyond our income, but their goal is to put us in a place where we can just about afford to SERVICE the debt but can't afford to pay off the debt.

What is worse is that they do not lend you money they have worked for, nor inherited nor is it profit from their business.  They are actually licenced to create the money on their computers simply by running you past some basic credit checks.

Once they have you where they want you they will bleed you dry, you might come into some money and pay it all off, but they will then rinse and repeat until you are back where you started.  Of course you go bankrupt and again they offer you this free money, none of this is your fault.

Sure it is nice to be able to afford nice things, two or three holidays a year, weekend citibreaks, nice restaurants, maybe a nice car all trappings of success. 

Now the interesting thing is that the lenders know about your situation, they would love to have you bleed to pay them something because even if you pay each one a pound a month you are extending the life of the debt.  However, the money never existed, they created it and they have the right to charge you interest UNTIL they default the debt, terminate the agreement and sell the debt for literal pennies in the pound.

To answer your question, interest is frozen at this point, no more fees or interest, the bath taps have been turned off and now all that needs to be done is to pull out the plug and let the water drain away.

The people they sell to have an opportunity period of six years to chase the debt, it is called enforcement but they are not allowed to use any force nor employ anyone to use force.  Some might try to extend the debt by getting a CCJ but a CCJ is just an extension period, only one of my former creditors went for a CCJ and they did not get a penny, nor did any of my former creditors.  This went against my principles which is why I foolishly services the debt for so long and extended it with micro payments,  don't make my mistake, nobody will thank you for it or think any better of you.

Why do lenders sell your debt, they do it when they believe or you tell them that you will not be paying this debt and you do not feel that it is likely your situation will change at any time in the foreseeable future.  

That is ALL you need to tell them, you don't need to tell them you might inherit one day and they have no dibs on that anyway, their debt is not secured.  They would LOVE nothing more than you refinance with them on a secured debt, but that is the last thing you want or need.

When they sell the debt they get to create more money on their computers to the next person who want to have a go on the ride.  They are only limited by the state of their balance sheet and debt ratios, by selling your debt they have little or no bad debt, they are squeaky clean and a responsible lender as far as the Central Bank and FCA are concerned.

Obviously complete confidence and credibility would be shot if everyone knew you could get rid of debt this easily, so there are deterrents in the system.  Those are that the people they sell to are allowed to chase you for the full value of the debt, at least for a while but that does not mean you have to pay them a penny. 

You referred to not going nuclear but the truth is you already have trashed your credit record and the smart thing to do is not to play this game. 

The way you do that is with a Self Managed DMP but you are in control, do you not answer to the lenders or any of their acolytes. You are living your life.

What is very wrong is you trying to work out amounts based on ratios of what you owe, they have got you still thinking in having another go on the ride, but this is a mistake, all it will do is extend the misery of debt, extend the panic, extend the fear, uncertainty and doubt.

No what you do in a DMP is STOP paying all the unsecured debt, put aside the money you would have paid them into yet another separate account which is referred to on here as your emergency fund.

You have to realise that they see your credit record, so you don't want to give them any signs of living a high life, you are servicing the car but they have no rights to that and they know you are probably getting help from family or partners to fund that. They know it is probably a personal contract hire agreement and it will go in due course or you will buy it from the car finance company.

The stage you are entering now could be called the reality phase, when the lenders face their own reality and sell the debt. They will write to you to tell you the new owner, they will say they have terminated the agreement and no more interest will be added.

Each time you get such a letter FILE IT because you will need it later, also file every stupid demand, laugh at how creative they get, how daft and meaningless their fake threats are, even their door steppers are very rare and those that dare to call can be ignored.  In fact the lesson in this whole process is DO NOT ENGAGE.

Ideally before starting on this journey you would have changed you number and email, updated their system and so any future owners of the debt would only have the number of the pay as you go SIM you got from Tesco and the email for the dedicated debt email account.  It may not be too late to do this, if they have a portal you can update it yourself, alternatively you just drop them an email saying "please note my new email and phone number which have been changed due to huge number of spam and scammers, please do not share these numbers which are confidential".  Later you can remove permission to use these under GDPR but by doing it on new number and email you have the ability to put that old sim in a non smart phone which gives you even more control.

As explained above the players in this final stage of the game are

Debt Consolidators - who buy the bad debt

Debt Managers - who appoint and manage the Debt Collection companies

Debt Collection companies - who write silly letters

The process is simply that a series of Debt Collection companies are given a go at scaring you into believing you need to pay the debts.  Long story short, eventually they will offer you a 60% discount, there will be pretend offers along the way and smaller offers. 

In my opinion, you can either hold out for the 60% or you can just wait them out whether it be for 6 years to Statute Bar on enforcement or for an extension to 12 years with a CCJ.  

This waiting is good for you, it teaches you how to live frugally and to really value life, for me it helped me decide that no matter what I do not want any form of credit. I do have an overdraft for emergencies but I do not use it and I have developed the discipline of a ninja in my determination to never get in debt again.

Every 3 to 6 months the Debt Managers sack the Debt Collection Company who is currently tasked with persuading you to pay some money, but you will not be paying them a penny at this stage  You can't tell them what you are waiting for, you just do not engage and you wait them all out.  

The first few Debt Collector companies do not make offers, they might talk about a possible reduction to try and get you to acknowledge the debt, you do not want to acknowledge the debt because it extends the life of the debt and resets the 6 years.  Some make idle threats about sending people to your home, but only a few actually send them, the people they send are part timers mostly, they have no powers, you do not have to open the door to them and you definitely never let anyone into your home.  It really is a DO NOT ENGAGE situation, your family need to know they are vermin and should not be engaged.  I think I had about 30 threats from Consumer Debts and nobody ever came. 

Ironically I had a new threat this week from a debt that expired many years ago, it was sold again you see from one Debt Consolidator to another. They then played the same game, so far two debt collection companies, the second one even said they have appointed a company to visit me at my home address.  I could get p'ed off at them but I am happy for them to waste money and it is all part of my complaint to the FOS which will see them get their knuckles rapped for breaching FCA CONC rules.

Later different Debt Collector companies will operate differently, they will send the usual 4 to 6 letters but maybe the 3rd will say they are prepared to accept a lower amount, this is a ruse to make you contact them.  Then what follows is a low ball offer at maybe 20% off, you ignore that and do not engage, letter 5 is a repeat of the offer in number 4 and with a false scarcity time limit.  Finally before they are sacked the 60% offer comes and you have a choice to make.

Either you take that offer or you hold out for more or the end of the debt enforcement period, i.e. paying nothing. Even if you decide not to pay you will get another series of 4 to 6 letters from a different company.

The risk for the Debt Consolidator is that if they leave it too long you think you might as well hold out, their decision making is also governed by what credit activity they see on your credit file, so show nothing new. No new borrowing, not pay day loans, you must live within your means and we can work on increasing your income later.

So PLEASE 

Forget budgeting for these debts they are in limbo

Forget Pro rata payments, the only payments will be to your emergency fund

Forget talking to them, they are finished, the relationship is over, you are not friends or loan buddies,

Forget Business Debtline, the business has no debts or assets. forget everything they said.

Do not budget

Do not send them any information

Try not to worry you are on your way to be debt free

The only template or communication you need to send is

I am writing to inform you that due to a change in my family and financial circumstances I will not be paying this debt and I do not feel that it is likely that my situation will change at any time in the foreseeable future. 

The only thing you need to think about is whether you want to head for the 60% or wait out the whole debt and start living a stress free life.

I mean it, whatever these debt vermin call themselves they have no power, your only job is to file the letters by debt with dividers and by date.  

You need this because each debt could be sold to a different debt consolidator, each potentially with a different debt manager for 3 to 6 months at a time. File them with the most recent on top within each section, you will then have the complete history of the debt and if there is anything that needs to be proved down the road you will have it. So the default letter goes at the back of each section.

Actually you have another job, to save save save, save whatever excess in in your account when you get the next income. This is the money that will be used to pay the 40% if you decide to take that offer, but if it is say 40 months down the road then what the eel, might as well go for the 72 months.

This might sound like a long time but it is the typical time for a consolidation loan which is yet another trap, why pay a long loan loaded with interest when you can pay nothing or 60% off?

Keep an eye out for a real Letter before Action or Claim Letter, most of these are faked, so come back here and show a redacted version.  Some of them copy legal Court forms but they are not Court forms.  These threats are just another process, a CCJ before 65 months actually gives them less potential collection period.  They only go for such things if they believe you have income they can get a deductions from earnings from, but one goes to Court, shows no money and £1 a month awarded.  So £72 for the debt.

Meanwhile just consider it a game, you will have removed their ability to call you, to SMS you and to Email you, so you can focus on your business, your parents and your kids.

No need to feel sick, any debt letter is just more progress to the end of the debt or the 60% off offer.

The Default letter will usually say 

Account number

Recovery Account number

The agreement is terminated

The debt is sold to a company
Interest will no longer be charged

The amount outstanding

With my M&S Bank loan they appointed Moorcroft first and a couple of other companies, but they gave up completely within 11 months.  Never heard from them again and it became statute barred.

I hope this helps reduce your anxiety, just remember you are in control, they have no power, you are on your way to being debt free

dankemp

Below is a review of why you do not need to worry about your debts:

 

Current Debt – no current defaults

Student finance – £5770.54 not earning enough yet to pay back

Stellantis HP car – £7141.00 outstanding £166.07 per month ends May 2028

Total Debt £7141.00 ( the student debt is not relevant)

 

Currently paying per month £673.97 this will be reducing because the second half of DMP and what this site is really good at is cutting costs.

 

MONTHLY SPEND

MOBILE PHONE SIM ONLY          £6.00  replace with lebara £3 sim and flip offers every 5 months

MOBILE PHONE SON                  £18.34 Explain to son he needs to find a cheap plan and can choose using the MSE tool for finding cheap deals, he may need to use

MOBILE PHONE PAYMENT         £35.96  I assume you are still in contract, otherwise this needs to be traded down for a another lebara SIM .

PET INSURANCE                         £22.93

CAR TAX                                       £16.62

PETROL                                           £45.00

CAR INSURANCE                         £40.00

LIFE INSURANCE                        £25.81

FOOD                                           £400 Review what you are spending and where, is ALDI cheaper could you spend less by making stews and freezing them.

CLOTHES                                    £0.00  Good keep it this way.

SUBSCRIPTIONS NETFLIX       £10.99

CCTV SUBSCRIPTION              £10.00

I assume the CCTV is for ring doorbell or similar, if you live at your parents house this would be their cost.  There are Doorbells and CCTV with their own storage, they do not need a monthly sub, review on YouTube.  Maybe you can leave this for a while.

What M&S have sent you does NOT sound like a default notice, they are saying you are in default of keeping up payments, not the same thing at all, this is just their internal collections department.

 

 

 

 

----------------------

I assume the following are business expenses which should be in a limited company which you can probably get free if you open a business bank account.

GOOGLE SUBSCRIPTION        £19.99 - For what exactly - look to cancel this if not absolutely necessary

MICROSFT OFFICE SUBSCRIPTION £7.99 Replace with open office which is open source and free.

BUSINESS COST                         £90.98 

(MEMBERSHIPS - for what? I would hazard some sort of business that is not a business because you are not earning enough money.  I can tell you where to get such things for free, but the compelling factor will be a review of what skills you have, whether you are better off as a freelance contractor or a business brand you own.  Not saying abandon it, I had six jobs at one point in my life.

PHONE - not sure whether this is another mobile but you can get VoIP numbers from 99p a month.

ADVERTISING - currently as a percentage of £90.98 it isn't working, this needs to be reviewed.

NECESSARY COSTS) - I would advise you account for these, necessary is a subjective term, by accounting for it you accept accountability which is really good for you.

TOTAL £ less than you think.

 

 

 

sourcrates

jones98746 said:

Thank you for the advice. The debt recovery company is Moorcroft Debt Recovery Limited, so I believe the debt has been sold to them. They have also emailed me to make payments, do you believe asking them to remove mobile and email and to use snail mail is the best route as per Bries post or can I email them the amount I can pay and then pay on their website? What would you recommend. 

Moorcroft don`t buy debts, they are a simple straightforward collection agency, engaged by the client company to collect the debt on their behalf.

Honestly, they have no interest in being a part of your DMP, if you start paying them, chances are in a few months they will get tired of processing your trickle payments, and just return the debt to the client.

They want fast results, they are not in it for the long haul, you would be much better served ignoring Moorcroft, and waiting until the client sells it to the likes of Lowell or Cabot, with whom you can set up easy affordable regular payments, on a longer term basis.

jones98746

Thank you for all the advice, it's a lot to take in. 

I'm torn between following the advice of paying a small amount pro-rata with my other debts or holding on and not paying anything or communicating with anyone unless I receive a 'letter before action' or a claim letter. What's best to do?

Another question: If I were to pay pro-rata what I have budgeted for debt -  once the six years roll around, do I stop paying 100% as it is statute-barred?


Thank you

sourcrates

You are getting very confused here with different process and procedures, its understandable, there is a lot of information to take in, and a plethora of different ways situations can go.

However, any debt will only become statute barred if you do not pay it, or acknowledge it in writing, for any period of 6 years since it first defaulted.

If you are paying the debt, it will never become statute barred, and after 6 years, even through the entry may drop off your credit file, the debt is still valid and collectable.

As to what course of action you take, well, that`s up to you, if you want to try and get everything to the 6 year mark unopposed, then go with option 2.

If you want to repay monthly, go with option 1.