An Alternative Strategy

Are you “at the end of your tether” “constantly stressed and harassed about your debts”, “don’t know where to turn”- would just like to put an end to the worry ?

Basically what it involves is doing a self debt management plan whilst still being able to contest individual debts.

When a OC or DCA first seeks to obtain payment from you- they are usually totally in the dark as to your financial circumstances.

The debts handled by DCA’s are very rarely “bought” for pence in the pound as some people think- rather they offer a “sale or return” service to the OC whereby they agree to pursue a certain number of debts and agree a “split” from those that pay and return those that they get no joy from ( and which the OC will then offer to yet another DCA to have another go)

Debt Collection is a “Numbers Game” and nothing else

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For example (hypothetical figures)

Send out various letters to say 1000 bad debtors threatening letters 500 dont respond 100 contest the debt 400 are frightened into paying up or coming to an arrangement

Provided that the DCA earns sufficient income from the 400 payers to cover the costs of chasing all 1000 and make a profit- that is a business model- therefore they will naturally put their efforts into the ones that will produce a result and not “waste resources” on those that wont- or who are likely to offer nominal payments

However as i said- unless you pre warn them- they have no way of knowing which of the 1000 are good for payment- and which are not!

Knowing that you are a “man of straw” or of “little means” at the outset is very likely to affect their strategy or keenness to continue throwing good money after bad.

What they will see is that even if they win......they lose!

By which i mean that if you owe them say £5000 but are only going to be offering £25 per month- it is not going to be a very appealing prospect for them to waste too many resources, the more so if they have no documents to prove their claim

Therefore where you are in that position where you just want to get your life back and are at your wits end with all the debt collectors and afraid to open the mail this strategy can be a way to a new start for you

If you are not a homeowner or are in negative equity the strategy will be most effective

Even if you are a homeowner the strategy is still useful

SELF MANAGEMENT

Wha t you are going to do is to self manage your debts-(take control) and where others will pay hundreds or thousands to a debt management company- you can “do it yourself” for free

(if a creditor tells you they will only accept your offer if made through a recognised debt management practitioner or under a debt management plan/IVA etc - simply point out that you are badly enough in debt already and intend 100% of your payments to go towards reducing your debt- not line the pockets of a debt management company)

So the first step is ACCEPTANCE or “coming out” (if you have had your head in the sand)

Get out ALL your paperwork ( get a load of document folders to place each debt ) for all your outstanding debts- do not leave any out- even include any that are statute barred since technically you still owe these so you can “use them” in your calculations to water down the payments to live creditors) There is no need to disclose that the debt is SB

If you have had your head in the sand/hiding the truth from others in your family - this is a good time to fess up and get things off your chest- trust me- you will never regret the feeling of relief if this is you)

The income/Expenditure List

MAKE sure you include EVERYTHING incoming (don’t include overtime pay if it is not regular) and outgoings ( the creditor may at some point wish you to provide proof)

The purpose of this exercise is to work out the “disposable income” that you have left - after all your other essential outgoings which you can then split between your unsecured creditors

Note that you do not have to APPEASE your creditors by making offers that you cant really afford –in the hope that they will be impressed and more likely to accept

The above illustration shows £200 available income- but it could be £100 or even £50- it matters not- the whole point is to stop the debt cycle once and for all and not make promises you cannot keep and which will get you back into debt- you are seeking a figure that you CAN COMFORTABLY afford each month to put toward these debts and still leave you a life.

Your list of debtors (which at this time you are not going to disclose to anyone) should include ALL: debts including those that have not chased/been quiet and statute barred .

So for instance if you have 5 debts

1000

5000

500

2500 (old statute barred debt)

8000

The total debt is £17,000

Lets say your disposable income is £200 per month (it matters not how low it is- what you have to offer is what you have to offer)

Your offer per every £1000 of debt would be:-

£200 divided by £17000 = £12 for every £1000 owed. (rounded up)

So

Debt 1 (£1000) = £11 per month

Debt 2 (£5000) = £55 per month

Debt 3 (£500) = £5.50 per month

Debt 4 (£2500) = £44 per month

Debt 5 (£8000) = £88 per month

Note that the “statute barred debt is not actually going to be paid-but because technically it is still a debt as far as any other creditor is concerned- it can be included...( so that’s an extra £44 per month for you)

When defending/disputing the debt you can therefore write in terms that you have come to the point where you are finding it difficult to manage your debts and explain the reasons why you arrived at this position

this may be job loss, illness, whatever the reason- do not be afraid to admit (if it is the truth) that you simply over extended yourself with credit during the boom and got caught out in the recession- if major banking institutions can get caught out- there is no shame in the fact that you did too!

Flower the letter up to show that you have reached the point where you now intend to remove all the stress you /your family have been under and that you have carried out an initial income /expenses evaluation in accordance with the CCCS/Court format and from the resulting disposable income to service unsecured debts and that you have pro rata’d your disposable income amongst those creditors who can prove a legally enforceable debt or who are able to satisfy any outstanding dispute on a debt, by value

Point out that the offer made would also be conditional upon the creditor cancelling interest and further charges on the debt and that the offer will be withdrawn if the end result of making the payments is that the debt rises or remains static

Point out that this is a final attempt to get your life back on track and that you are not prepared to put yourself/family under any more stress therefore any creditor who has a legally enforceable debt or has resolved any outstanding dispute but is not prepared to accept the payment offered will have to obtain a ccj at which time the same payment offer will be made via the court.

Point out that you understand that this might increase your indebtedness- but that as you are “between a rock and a hard place” any such costs will merely add to an already unmanageable situation . You are also aware that your credit rating is already trashed and that you would not be in a position to want to borrow money for the forseable future anyway-

Now go on to dispute the debt in whatever is the case and then point out that in the event that this dispute is resolved or shown to be legally enforceable- the payment that would be offered subject to the foregoing- would be £xx per month. Tell them that the sooner your dispute is resolved the sooner you can commence payments

the current thinking in Govt is that the banking industry has to curb its propensity to keep on adding charges onto people already in financial difficulty and to which end the oft is still preparing new guidance. so the "establishment" is on your side-

From your own point of view- its a bit like confronting a bully.......once you say "enough is enough" instead of appeasing them and say "if you hit me i will hit you back- even if i come of worse" you will find that the bullying will quickly stop and you have just taken control of your life

The bankers have thrown their last punch- have nothing more to threaten you with - there is now nothing they can do to hurt you anymore.

If you are a homeowner do not worry unduly about charging orders- the courts will allow you time to pay and the creditor cannot get one if you keep to the agreed payments

even if a charging order was ever obtained it is VERY rare for one to be enforced- and in fact sometimes can be a positive thing (more about that another time)

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I am not saying that this will work in all cases- but i very much doubt that a lender/dca faced- after all the aggravation of debt collection/court action only to be offered a nominal amount or a pittance will have the stomach to continue a protracted dispute- and if they do- so what- you have already set out the ground rules and it is YOU who are in control not them

If paying direct from a bank- always pay by standing order NOT direct debit- set them up at least a week after your pay comes into the bank to allow for delays

Always make the payments to the creditor from a standing order a week before the agreed date to allow for any delays in the banking system (you don’t want to give your creditors an excuse for claiming you are not sticking to the agreed payments

Ideally, open a second bank account into which you will transfer £200 (or whatever the amount is ) per month and use this solely for making these debt payments.

If they won’t accept a standing order – pay by cheque

If at some point in the future your financial circumstances change- - for the worse- perhaps you lose a job or some form of regular income- then simply do a new income/expenditure calculation and write to all your creditors that you are paying – telling them of the changed circumstances and the new payments that will be made

If the change in income is for the better........well you can carry on paying what you are – or if you want to increase them thats up to you. Some creditors may insist on an annual review

Personally i would save any extra and at a future date you will find that you may well be able to offer full and final payments in respect of outstanding balances- the longer the repayment period- the more likely they will accept a cash f offer (usually after a couple of years of payments)

This is an alternative strategy (not a cure all) which i have used successfully in the past when i held a debt counsellors licence

I hope it helps someone

Hey matey, it's not an 'alternative' strategy you're suggesting, it's the RIGHT strategy!

A brilliant summary and should be the standard for those going forward in tackling their debts. Bravo.

Very good but a debtor is under no obligation to advise any creditor of I & E although it is good to know for your own records.

Very good but a debtor is under no obligation to advise any creditor of I & E although it is good to know for your own records.

I really, really do not understand why people keep banging on about this, what gives?

How else is a creditor going to allow an individual pay a lesser amount if they cannot see that circumstances have changed?

It's all very well saying that only a court can order an income and expenditure form but how many people actually want their situation to go as far as court - especially if they are in mortgaged accomodation?

A creditor is only likely to allow reduced payments to be made if they can see that the offers of payment are fair and reasonable.

Refusing to send an I&E form when trying to negotiate lesser payments isn't going to do the debtor any favours at all.

Another fantastic post

My only issue is getting creditors to listen to you. All the time you are trying to get their attention they keep adding interest and charges (and as we all know, that can be many hundreds a month). Scallywags that they are ;-)

Another fantastic post

My only issue is getting creditors to listen to you. All the time you are trying to get their attention they keep adding interest and charges (and as we all know, that can be many hundreds a month). Scallywags that they are ;-)

Rule 1: Stick to your guns

Rule 2: Communicate in writing only, never via the 'phone

Rule 3: Persist with it!

Please note that I said as debtor is under "no obligation" and not "should not"! If you cannot afford it, even a court cannot make you pay more than you can. Why should you give details of your I & E to some moronic baboon known more commonly as a DCA. If you are going to supply an I & E supply it to the original creditor and not a DCA. It does not concern a DCA and anyway they probably will not take any notice of it. Obviously the best way is to use a DMP like Payplan or CCCs as that gets creditors off your back.

even a court cannot make you pay more than you can.

If a court sees that an income and expenditure form demonstrates an inibility to pay a reasonable instalment they are likely to grant a forthwith judgment, for a homeowner that would then allow the creditor to then proceed with a charging order application. This is happening more and more often.

Letting a debt get to court isn't usually a wise idea and people can save an awful lot of time, stress and money by being proactive with their creditors.

Why should you give details of your I & E to some moronic baboon known more commonly as a DCA. If you are going to supply an I & E supply it to the original creditor and not a DCA. It does not concern a DCA and anyway they probably will not take any notice of it. Obviously the best way is to use a DMP like Payplan or CCCs as that gets creditors off your back.

DCA's have an obligation to consider reasonable instalments presented via a realistic budget which conforms to 'common financial statement' figures. The majority are actually quite good at doing this.

I agree that a DMP is a very effective way and get debts sorted but there is absolutely no reason why an individual cannot do it themselves by following the same processes (e.g. pro-rata offers). Also the likes of CCCS/Payplan will only take people on with a surplus of more than £100 per month, those with a lower surplus are forced to consider an alternative option.

Very good but a debtor is under no obligation to advise any creditor of I & E although it is good to know for your own records.

i understand your comments but......

negotiation is a two way street...... although at the outset you need not reveal all these details- at some point in the future- if you want the creditor to believe that what you told them is your income and expendiute- it would not be unreasonable of them to ask for some proof of what you are saying...,they are not simply going to take your word for it (which is why many insist that it is done through one of the debt counselling services or management companies)

indeed, if you offer payments through a ccj- the creditor has a right to demand an oral examination in which you have to bring all your bank statements and financial details so that he can satisfy himself that your figures are genuine- if this happens the creditor rarely appears and it is left to the court clerk to carry out the exaimnantion

at the stage where most people who use this strategy- most people just want to draw a line in the sand and reclaim their lives

Please note that I said as debtor is under "no obligation" and not "should not"! If you cannot afford it, even a court cannot make you pay more than you can. Why should you give details of your I & E to some moronic baboon known more commonly as a DCA. If you are going to supply an I & E supply it to the original creditor and not a DCA. It does not concern a DCA and anyway they probably will not take any notice of it. Obviously the best way is to use a DMP like Payplan or CCCs as that gets creditors off your back.

with respect surfer- as far as a court is concerned- nothing could be further from the truth- if you have assets ( a home for instance with lots of equity) and large debts and you are not prepared to make an offer- then the courts will indeed "make you pay more than you can afford"

The court will take the view that the creditor- having won his case- is entitled to his money back and that no offer- or an offer of a£10 per month on a £10,000 debt with no willingness on the part of the debtor to substantiate his offer (and even worse the debtor shows an attitude of beligerance towards the court or the creditor)- will make a forthwith order quicker than you can say "foul"

As far as DCA's are concerned- if they are acting for the creditor- you can indeed refuse to deal with them- but the OC can just as easily say- sorry pal- they are authorised to act on our behalf- deal with them or not at all.............. debtors are the first ones to moan when OC's and DCA's try to by pass THEIR nominated agents.

what's good for the goose etc.

there are, IMO two types of debtor and cagger,

those who believe that it is everyone else's fault they got into debt, that it is the credit card companies fault for "throwing money" at them , that debt collection is not a legitimate business, that they have a "right" if they get into difficulties to simply "walk away" from the debts and do not understand that it is not the creditor who loses the money (it is every other borrower and card holder in the country that pays their debt- because the bad debt is "factored" into their interest rates they pay)

Then there are those who - whilst it is true that credit was made too easy- and thought the bubble would never burst - knew full well they were spending more than they could afford- but hey- it was easy .. who wanted things now- not later- or maybe were unfortunate in their personal circumstances and lost their job/health/partner etc BUT WHO nevertheless still realise and accept that at the end of the day it it THEIR personal responsibility .

It is the latter group that my strategy was aimed at- and a pre requisite of a successful negotiation (and also challenges to agreements etc) is to leave out all the vitriol, personal insults and attitude , and remember that when they deal with creditors solicitors and DCA's (ok Bryan Carter excepted)- they are dealing with normal fellow human beings who are doing a job and who, as a general rule- would not feel particularly inclined to be helpful or sympathetic towards those who are abusive towards them .

I am happy to assist further with points raised from the initial post to help people understand what to do- but with respect

I do not really want to get into an argument as to whether people should or should not co operate with their opponents- the thread is for the benefit of the latter named group and i don't realistically expect to win over the former group who i find are usually so entrenched in their views that no amount of debate will sway them- and from past experience know that such arguments often end up in personal insults being traded and intervention by moderators

good look to all

quote:- Obviously the best way is to use a dmp like Payplan or CCCs as that gets creditors off your back. unquote

yes, if all your debts are not disputed - they can be quite useful- however there are exceptions - many will not help you if your disposable income is less than £100 or £150 per month

debt management companies charge heavy fees- the presumpiton is that you want 100% of what you are paying to reduce your debt- this means doing the donkey work and not paying someone else to do it for you

my post was aimed at those who have disputes with their debts and their ability to pre warn their creditors that they are fighting a battle which may ultimately lead only to a hollow victory for the creditors- and so affect their handing of the dispute from the outset

with respect i think you need to read the original post again-

payplan CCCS etc will NOT advise or get involved in any disputed debts

Another fantastic post

My only issue is getting creditors to listen to you. All the time you are trying to get their attention they keep adding interest and charges (and as we all know, that can be many hundreds a month). Scallywags that they are ;-)

hi minmoo,

As far as creditors "not accepting" offers - or refusing to cease interest and charges-- the fact is that PROVIDED your I & E calculations are HONEST and not fabricated- you are in control

you simply keep a record of all interest and charges that are imposed AFTER your offers of payment have been made so that you will know not to includ them in the amount to be repaid to the creditor.

you should in fact respond(in writing of course) to such a refusal by the creditor and advise them that you do not believe any court would think it fair and reasonable for the debt to keep on rising when you have made it clear that you are in financial difficulty and your offers are a genuine attempt at a resolution, and advise them that your offer is are still valid - but will not include charges and interest added to the debt after this date.

you have already told them that if the payments do nothing to decrease the debt then then they should take you to court

in the present climate (and new OFT guidlelines soon to be published) the emphasis will be very much on the creditors being prevented from such actions

they would also get a "spanking" in court from the judge - if you have previously been totally up front and honest with your creditors and have attempted to resolve the matter out of court

no court is going to be impressed with a creditor- faced with a debtor in financial straits- insisting that the debt continues to rise

despite the debtors best efforts to resolve matters.

payplan CCCS etc will NOT advise or get involved in any disputed debts

They should advise on potential disputes if the issue is raised by the caller, I don't think they are able to help individuals with said disputes, however.

yes, thats what i meant

I have found in the past (long past so maybe things have changed) that they will not make the arrangements if you are refusing to pay anything to the debts that you are disputing

their attitude is that the work would all have to be re done if such disputes were lost and that you should maintain payments on disputed agreements until such time as you win the day

if this is now different i apologise in advance- as i say it is a long time since i dealt with cccs

You make some excellent points diddydicky, but here is my question that i can never seem to find a definitive answer to.

Should you be making token payments even when you are in dispute (for eg, a cc company admit to not being able to produce cca). I have had to do this and stop payment in the hope that they will talk to me!

Sorry, i do have a thread regarding this but being as you have started a thread about the correct way to go about things then i hope you wont mind me asking (not trying to hijack)

Should you be making token payments even when you are in dispute (for eg, a cc company admit to not being able to produce cca). I have had to do this and stop payment in the hope that they will talk to me!

That is an excellent question and in my view there is no right or wrong answer. Some people halt all payments until they can obtain proof that the debt can be enforced. Some will make a token payment as a gesture of goodwill. Often it takes the stopping of payments to get a creditor to engage.

Good thread, this.

Sadly the goodwill is rarely reciprocated

It seems to be more about getting any sort of payment to meet targets than about successfully negotiating a solution that will be beneficial to both debtor and creditor. Why are banking bodies so reluctant to talk and so quick to threaten i just dont know. Most people would happily pay off every penny they owe if treated with a little respect and honesty (i know i would). Instead we are reduced to playing silly bu88ers just to get them to listen.

The call centre folk are incentivised to try and pull in as much money that they can, and often by using pretty questionable tactics. This is why the mantra has, and always will be, communicate in writing - it's much more reasonable to do it that way!

Hi guys

Three brief points based on current experiences:

1. Dicky's post is spot on; this is what I learnt on joining CAG and the tactics are working for me.

2. There are dangers with DMPs with CCCS and PayPlan; rogue OCs may continue to charge interest and charges without you knowing, even worse an account can be sold on and then interest and ridiculous charges applied without you knowing, e.g. to Link. So you may pay a heavy price for the lack of hassle.

3. I do supply a basic I&E and list of other creditors to OCs who are co-operating but no further supporting documentation; the only exception to this is one with whom I also have my mortgage. I don't make even token payments to those who are aggressive and uncooperative.

x

vic

You make some excellent points diddydicky, but here is my question that i can never seem to find a definitive answer to.

 

Should you be making token payments even when you are in dispute (for eg, a cc company admit to not being able to produce cca). I have had to do this and stop payment in the hope that they will talk to me!

 

Sorry, i do have a thread regarding this but being as you have started a thread about the correct way to go about things then i hope you wont mind me asking (not trying to hijack)

you are not hijacking- the thread is open for discussion

its a difficult one

IMO you should continue to make payments- however- if the creditor is refusing after some months to deal with your complaint o or says that there is no dispute you should write to them telling them that if they fail to respond/do not deal with the matter within 28 days you will stop payments and make those payments into a holding account until such time as the matter is dealt with

in that way you can demonstrate that withholding payments was the only way that they would take notice

Sadly the goodwill is rarely reciprocated

It seems to be more about getting any sort of payment to meet targets than about successfully negotiating a solution that will be beneficial to both debtor and creditor. Why are banking bodies so reluctant to talk and so quick to threaten i just dont know. Most people would happily pay off every penny they owe if treated with a little respect and honesty (i know i would). Instead we are reduced to playing silly bu88ers just to get them to listen.

This is very true which is why I ended up in a DMP with CCCs which is free like Paypal. Despite numerous letters explaining my situation they were not prepared to negotiate and in most cases did not even bother to answer letters I wrote to my debtors. Luckily I had copies of letters written to one creditor plus a SAR so when they went for ourt proceedings I told the solicitors that I would produce evidence of paying regularly at least 60% of the monthly payment and that the creditor refuse to negotiate and had not even acknowledged my letetrs or the I & E sent.

The solicitors backed off and actually reduced the monthy payment to a more acceptable level. Three weeks later I was in a position to pay them in full the £6800 I owed and after negotiation they settled on a full and final payment of £6000. We are no longer on a DMP as we have managed to clear our other debts by downgrading cars, living standards etc.

The call centre folk are incentivised to try and pull in as much money that they can, and often by using pretty questionable tactics. This is why the mantra has, and always will be, communicate in writing - it's much more reasonable to do it that way!

i agree 101% never never never discuss on phone EVERYTHING in writing- the proof is in the pudding as described in the preceeding post

written communications are a lot harder to deny than telephone conversations

Good post #1

What a way to to spend the wee early hours of the morning!!

ive had this fricking chest infection for over 6 weeks and taking antibiotics every 6 hours which kinda leaves me up to the small hours (as i dont want to get up at 6am to take them)!