First of the Debt collection letters - Need advice :(

[shimmertrap]

I have just joined this forum after browsing the threads here in the past and finding that there are some very knowledgeable people here, so I pray one of you can help me!

 

I have had my head in the sand for long enough. I have a total debt of nearly £13000 split between three different catalogues from Shop Direct. My financial situation went belly up last Oct and i haven't paid a penny since. I did write to each catalogue in around December (using a template letter) offering £25.00 a month each, but they turned me down, so I just buried my head in the sand after that.

 

I recieved a few letters from NDR which I worked out was part of Shop Direct, so I ignored them. Now, I have received letters this week - two from Lowell and one from Global something or other, each chasing a single catalogue debt.

 

I decided now was the time to do something about it and have just completed a Money Steps thing which says I have £65 left a month to pay my creditors with. Now I really don't know what to do. Do I write to the debt collectors, hope they accept the payment of around £22 a month each and be paying that for the next 15 years........ or, in typical burying my head style, do I just ignore them and hope they go away?

 

If I ignore them, will they take me to court? Will it look really bad that I didn't make them an offer at all? I've read that the judge will frown on them if they didn't accept any reasonable offer. I just want to run away and hope they don't catch up with me for another 5 and half years....I know it will be statute barred then, but to do that, I can't make an offer or I will be acknowledging the debt?

 

The thought of paying £65 as month for the next 15 years makes me want to cry as I can't see my financial situation improving very much at all in that time. But at the same time, I don't want to have bailiffs round taking my things. I don't want debt collectors turning up at the door. I can ignore the phone calls and have been for months now (caller display). I dont want to be taken to court and the judge do something awful to me because I never made an offer.

 

Help? Please!

[gordies]

First of all - calm down.

 

Can you let us know how the debts are split?

 

Has there been any penalty charges added to the account?

 

Are you working or on benefits?

 

All these things are helpful to help you in the right direction.

 

Gordie

[ims21]

Catalogue debts are the lowest priority.

 

You don't offer them money, you tell them what they are going to get, even if that's only £1 per month.

 

If they do take you to curt then no judge is going to have you pay more than you can afford.

 

They cannot send Bailiffs round...they would need to go to court, get a judgement and for you not to pay it before that happens. Anyone else pitches up and you tell them to get lost.

 

Have you got any late payment or other penalty charges on these accounts?

 

ims

[dpick]

Hi as above catalogue debts are not priority debts. We need more info as to when the accounts were opened and are there added charges etc. In my case they had no signed agreement at all and refunded all charges and interest applied to the account.

 

dpick

[shimmertrap]

Thank you so much for your quick replies, makes me feel less alone already

 

First of all, the debts are £4626, £3548 and the other one is around £4500, but threw that letter away I also have an £800 overdraft which I'm always right on, which I decided to include in my Money Steps plan as the option to include it was there.

 

I am self employed as a childminder and my one big earner left last October through no fault of her own, but left me £500 a month down. No chance of replacing her with same for same as the bulk of the earnings came from overnight childminding which is like gold dust. So my income is unlikely to ever reach that level again. Also, I'm a single parent with a nine year old son and do receive housing benefit to help with the majority of my rent.

 

I opened the catalogue accounts around three or four years ago. I did it all online, but I'm sure there is such a thing as an online signature or something isn't there when you open these accounts?

 

and lastly, yes, the interest was ridiculous, almost half of my monthly payments were interest and that was being added month after month since last October including default charges of £12 every month.

 

I think I've answered the question you've asked, but if you need to know anything else, just say the word! It's such a relief to be able to finally admit to my debt.

[shimmertrap]

Hi, I'm still here

 

All I want to know at the moment is what to do next? I feel slightly better now knowing that catalogue debts are a low priority. Should I reply to these debt collection letters offering £1 a week each then? That way I know I can go higher if I need to. My concern is though, they are highly unlikely to accept it are they? I mean it would take me 13,000 weeks to clear the debt! Is this just a way of stalling them?

[dpick]

Hi first the bad news as these debts started after the CCA 2006 amendments came into force all that the creditor has to prove to a court is that you had the goods. Now the good news any charges they have made to the accounts are unfair and can be reclaimed along with any interest applied to the charges. So first off if they did take you to court then all a judge would make you pay would be an amount in line with your income and expenditure not some pie in the sky figure spouted by a creditor/DCA's phone monkey.

 

First off calculate what disposable income you have after paying you priority debts (mortgage etc.) then calculate from your disposable income what you can afford to pay pro-rata to each creditor.

 

The creditors can then make all the usual demands/threats to take your kids etc but can do nothing to you, you will probably find your CRA files are already ruined by them so all they could do is take you to court and a judge would not be happy with them if you are making sensible payments to them even if the creditors do not agree with the amounts they get.

 

Please remember that a creditor/DCA will always want more then you pay even if you paid them £1000 a week.

 

dpick

[Fred Bassett]

Also, you must not skint yourself when working out what you can afford. You have to live, so once you have worked out the priority debts you have to look at all areas of expenditure and consider what is reasonable. You have to eat, you have to clothe yourself and your son, so think about everything you spend in the course of a month, then think about those items of expenditure which crop up annually and can't be avoided, like school uniform, school trips for your lad etc. and make a monthly allowance for them. I'm not suggesting that you gild the lily, but if you don't do this you might find yourself in a difficult position later on. There is absolutely nothing wrong with this and nobody will criticise you for it. There are budget sheets and spreadsheets on the forum that will help you with all of this. Shout if you need any help.

 

Regards.

 

Fred

[shimmertrap]

Thanks again

 

I've already done the budget thing on Money Steps, but hadnt thought of all those annual expenses that come along, so will tweak it slightly. Will probably leave me with around £40 a month to pay the creditors. So, I will get those letters off to the DCAs this week then. I know where to find the templates. So, WHEN they decline my offer, do I still pay them it anyway?

 

Thank you so much, your advice is greatly appreciated!

[dpick]

Yes you must pay them then if they do take you to court you can show that you are paying a reasonable payment, and keep a paper trail of everything no phone calls unless you can record them.

 

They will make all sorts of offers/threats by phone but are a lot more careful in writing.

 

dpick

[rdm2006]

You will probably find that the majority of the money owed is charges of some sort or other so claim them back before you do anything else.

 

Another option (rather than paying them £1 for the rest of eternity) is a Debt Relief Order if your credit is already shot.

 

By stating the above I neither condemn nor condone debt avoidance, that is for you to make a personal choice (nor do I suggest that this is what is happening here, I am just giving you another option to consider)

[Fred Bassett]

One other important thing is to insist that you pay by any means other than direct debit. Standing order is the best method because you have control of that and they can't vary it.