Scared to take the next steps!

Kittymumof4

Hi, We have significant debts and stopped paying credit cards in June last year.

Most have defaulted now, we're waiting for one still.

Some have been sold to PRA and Lowell. Others are being handled by Moorcroft and AIC.

We have worked out that we can pay £200 p/m across all debts, which isn't a lot given the amount of debt, but the advice I've been given here is that we can't pay what we don't have.

I have drafted a letter to make payment offers based on splitting the monthly payment between creditors as a percentage of what we owe so that its fair to all of them. Do I need to send details of income and outgoings? I've read online that they can refuse our offer, so what happens if they do this?

I tried to do a live chat with Lowell and they started asking for financial details so I just said I'd communicate via post instead, but now I'm scared they will refuse the offer as it will take so long to pay off. I'm hoping to work again in the future so the amount we can pay will increase, but for now this is our situation.

We haven't been able to build as much emergency fund as we planned as we had some expensive essential house and car repairs to make, so we're holding back £100 p/m to continue to build this up, which I'm guessing we'll have to justify to them?

So my main questions are

Do I send our SOA to them?

Is it likely they will refuse such low monthly payment offers?

What happens if they do refuse?

I am prioritising contacting the agencies who have brought the debts because I've been told here that these can take legal action, but should I also be contacting Moorcroft and AIC to set up payment plans as they are acting on behalf of the original creditors?

Can I still make unaffordable lending claims, even for the debts that have now been sold?

RhiBi

I’m in the early stages of a DMP, but hope I can answer some of your questions.

You don’t need to write to them, just set up a standing order paying what you can afford.

If you do send a SOA, make it very basic:

Income £xxx

Expenses £xxx

Debts £xxx = no need to itemise each debt

Money available £xxx

My understanding is that it can be as basic as that. Make sure you have an element of ‘life’ built into your SOA too. You shouldn’t be expected to work just to cover essential living expenses and debts.

Like I said, there will be more knowledgeable people along who can give more advice, but I hope that helps a bit. If you want to post an SOA on here there’ll be people who can give advice on that too.

Rob5342

It's best to contact them so they know what you will be paying and will stop nagging you. You can just email them or use the form on their website. You don't have to send an SOS but if they make too much fuss it can sometimes be easier to send one to get them off your back. It doesn't have to be real figures, just make something up that sounds plausible and arrives at the figures you want to pay.

They should accept what you say you are paying but if they don't just pay it anyway. It's possible they could go for a CCJ, but if that happens the court would just set payments at the level you can afford. That would be a waste of time for them and you would just end up paying the same amount anyway so you shouldn't worry about it.

Debts get sold for about 12% of their value so even quite a small repayment would give the purchaser a nice little profit relatively quickly. Of course they don't want you to know that and try and make out they are doing you a favour by accepting less than your previous payments.

ManyWays

I'm hoping to work again in the future so the amount we can pay will increase, but for now this is our situation.

If that is a realistic hope, it gives a good way forward for you. Set up low payment arrangements now and be open about why you can not afford more. Then when your income goes up, start shovelling the extra into a pot to make settlement offers, do not increase the monthly payments

Can I still make unaffordable lending claims, even for the debts that have now been sold?

Yes you can and it is best not to delay. the claim goes to the original lender, not the current debt collector

Kittymumof4

Thank you all so much. I am always so grateful of everyone here who takes time to support others.

So the reality is that we will be making payments of £200 spread across 75k of debt. So for example, one debt is just over 10k and we would be offering £30 p/m .

Is it likely they will accept this?

I really hope to start work in the next year or so, that makes sense @ManyWays to build a pot of money for settlement offers rather than increasing payments. I think I've been thinking of it as every extra penny needs to be focused on increasing payments, but maybe I need to think of it as extra pennies are to be saved so we can eventually clear the debts in lump sums.

ArtyJ931

What I have gathered (at the very beginning of a DMP myself) is that you don't ask you tell them what you can afford and just start paying it.

HTH

Grumpelstiltskin

No creditor will turn down anything you pay them, of course they might ask for more but if they have a choice of £30 or nothing what do you think they will do?

You must remember you are in control not them, just set up a standing order for what you can pay and tell them as little as possible.

Kittymumof4

Okay thank you. So do I literally send an email explaining how much we can afford to pay each month, then set up a standing order? Not giving any further information unless they ask for it?

The letters only give instructions for how to set up a direct debit, so do I set up the standing order using the reference number as reference on the payment?

Grumpelstiltskin

No need to tell them how much you can afford just set up a standing order, they want you to set up a direct debit so that they can be in control so avoid that just use the refence number.

fatbelly

You have had good advice. I just wanted to add that paying £100 into a car/emergency/fighting fund is sensible. Particularly when dealing with cars it can be cheaper to say 'that's an issue, I'll deal with it now' rather than 'that's an issue, I'll deal with it later'

If you start to accumulate a fund, it could also be useful for settlement deals somewhere down the line

Rob5342

https://forums.moneysavingexpert.com/discussion/comment/81945483#Comment_81945483

That's all I did, I set up a standing order for the amount I'd decided on and sent them an email saying what I'd be paying. They asked for income and expenditure details but I said I wasn't going to provide, they grumbled a bit saying they'd accept it on a concessionary basis but then that was it.

Always pay by standing order as it keeps you in full control, they prefer direct debt or debit card as it makes it more difficult for you to adjust they payments.

It can feel a bit overwhelming at first but once you start you soon start to feel on top of things, and then as time goes on you can start building up savings to make settlement offers.