Thread: first direct new loan agreement

Hi all,
I could do with some advice on a letter received from first direct today.
The background is my wife and I have accumulated a large sum of debt with them comprising 2 credit cards and 2 loans.It was the usual getting loans to pay off the cards then cards building up again.
Around 2 years ago everything came on top and we agreed a reduced payment of £350 a month which we have been paying since with no payments missed.
Everything was done over the phone with me giving them my financial statement which was reviewed after 12 months and resulted in the same payments continuing.
This morning I received a letter from them with an enclosed fixed sum loan agreement for the outstanding balance.It details the amount outstanding,the period of 12 months payments of £350 and also states that the balance will be due in january 2011.The balance will still be £20,000+.
On a seperate piece of paper it says that if we are unable to repay the remaining balance I will need to supply a new repayment proposal at that time.
The final paragraph on the accompaning letter states that if i fail to return the loan agreement in 7 days it will become invalid and they will issue a final demand and upon expiry of the demand the accounts may be passed to a debt collection agency even if regular payments are being made.
Any thoughts on why they are going this direction with a new loan agreement and whether i should sign or not.

Thanks for your reply.I was thinking it was best not to sign anything.I guess i'll just carry on with the payments for now and see where they take this.