How Much to Offer Initially for Reduced Payments?

[Duffers Mum]

Hi all again - well I've filled out my budget planner and have decided I don't want to go with a DMP, I would rather contact the companies myself. I have cancelled our holiday in December because we feel the money will be better spent paying off 2 of the credit cards, which will then only leave 4 with outstanding balances. Firstly when I write advising them that I am experiencing financial problems, how much should I offer these 4 companies each, what I can realistically afford to pay or just a token sum (say £5 each)? I presume I should also ask that they refrain from adding interest and charges. Should I then automatically send off CCA requests or not? If I send them and they can't produce the CCA (at least 2 of the cards I've held for years) what do I do then? Have not included our loan in this as we can just about afford the repayments on this at the present time and we might need to call on them to reduce payments if OH doesn't manage to find suitable employment when his job finishes. Any help you can give, will be appreciated as usual - thanks

[RussH]

You need to take the money you have left for your creditors and divide it between them on a pro-rata basis. Add up the total amount you owe all your creditors.. Here's what you need to do next. Take the amount you owe each creditor and work it out as follows: (Creditor Debt/Total Debt)*Available payment.

Here's an example:

Creditor A's debt = £3000

Creditor B's Debt = £1500

Creditor C's Debt = £1000

Therefore total debt = £3000 + £1500 + £1000 = £5500.

Next, Lets say you have £250 left over each month to pay your creditors.

Pro-Rata payment to Creditor A = (3000/5500)*250 = £136.36 per month

Pro-Rata payment to Creditor B = (1500/5500)*250 = £68.18 per month

Pro-Rata payment to Creditor C = (1000/5500)*250 = £45.45 per month

Remember you have to offer to pay them on a pro-rata basis, as you have to be seen to be treating your creditors fairly.

 

Hope that helps

[Duffers Mum]

Russ - thanks for your advice.

 

Anybody else? Especially on the CCA bits?

 

Thanks

[Tristesse]

Good advice from RussH offered and you must remember when calculating that it has to be absolutely realistic and don't underestimate your costs as if you need to lower payments later on it will be alot harder.

You will need to CCA them before you send your offer, if they don't reply (don't have the CCA) then you are in a very strong position indeed as the debt will be uneforcable and more people will offer advice when this occurs.

I'm sure someone will come along shortly who will point you in the right direction for a CCA request.

All the best

[Duffers Mum]

I'm more than prepared to pay all my debts and don't see this as a way out of paying them. Just need some breathing space, hopefully by next year I'll be able to try and negotiate full and final payments with them and be shot of them once and for all. However if they don't play ball with me after i've been a good customer for many years and refuse to stop interest/start passing the debts to DCA's, then I will probably CCA them and I'm pretty sure at least 2 or 3 won't have the necessary paperwork as I've held the cards for many years. I'm just a little worried that they might think £20 per month for a £10K debt is not enough, but thats really the maximum I could afford (that is the biggest debt by far) and its all they'll get! The others will probably get between £5 and £10 each - its a sorry state of affairs to be in and I'm deeply ashamed that I let it get this bad. However when they keep putting your limit up its so easy to just go and spend, in fact one of them has recently upped my limit again, despite the fact I cut the card up last year and nothing has gone onto the account (apart from interest and payments) in over a year!

[Tristesse]

I'm not suggesting that CCAing them is a way of not paying debts (thats a personnel matter for each person) it does however give you the breathing space you need and could make them more open to suggestions. Alot of them will be very difficult and you need to have some ammunition to go back at them with, a lack of CCA is the perfect weapon in my mind.

[tomterm8]

I would also suggest contacting nationaldebtline.com and asking them for advice (or one of the other debt charities).

[dx100uk]

pay them what you can realistically afford, as advised.

write to each one.

tell them what you are doing & how much you are going to pay and over how long the problem might exist [i'e 12mts].

even if it is only £5, keep doing it regardless of what they say.

this will go very well for you if it ever gets into a court

the judge will laugh them out the door.

 

good luck and i had mixed results with asking for interest/charges to be stopped.

check you have not got any PPI running on any cards.

if so try and invoke it [i bet they will not!!]

if they dont play ball cancel it and claim everything + the Int back

could it also have been mis-sold to you?

 

good luck

 

we are all here to help

 

dx100uk

[tomterm8]

ech... and don't forget penalty charges.

[Duffers Mum]

I never take out PPI as I think its a rip off! I haven't had any penalty charges as I've always ran the accounts within their limits, however I fear they will start adding them on once only token payments are being made. I've asked for reduced payments for 12 months, but DH will be getting a lump sum payment next year so I hope to be able to negotiate with them a repayment figure. I have today cancelled the direct debits, and cut up the cards (boy did that hurt!), we've cancelled a holiday to pay off one of the debtors off (the one with the highest rate of interest). What would be the normal procedure for these companies, if they accept my reduced payments would they pass to a DCA as a matter of course, or keep it "in house" for the 12 month period? Also when do they start to think about taking you to court? None of my creditors have my phone number so I will only deal with them in writing, which I think will take some of the stress away. I'm still a bit confused re CCA'ing them, should I only do this if they refuse my reduced payments or only if they pass the debt to a DCA? Surely if I go to them now with my reduced monthly offer and then CCA this will just annoy them even more and make them unlikely to give me the time I need to try and sort this mess out?

 

All advise gratefully received as always

[miss muppet]

Personally we have found they take more notice if you are on a dmp, we went with CCS, they emailed us their self-help info however and this is only personal experience, Banks do not play fair, I had been paying Sainsburys £100 pcm for about 18 months no interest, then they advised me agreement had ended and they would be charging interest of £48 pcm out of my £100, so then I cca'd them and guess what, only an application form, so sorry if this depresses you but while you are upfront and honest, they certainly well allegedly are not!

[Duffers Mum]

Miss Muppet - thanks for that, one of my creditors are Sainsbury. However if they hold interest for 12 months that should hopefully be enough for me, I don't really want to go down the DMP route if I can help it, because this is a short term problem, I have however been onto the CCCS web site and filled out the budget planner which I will send with my letters.

 

Have you now stopped paying Sainsbury's as they only sent you an application form? Out of interest, when did you open your account with them?

[miss muppet]

Sorry about delay, around about '98, only got behind due to their damn penalties and I had cancer, had calculated that at the rate of £100 a month interest free would have cleared it in 2 years but as I said previously they don't play fair, have a look at Cornucopia's thread if you want to see how they really behave.Yes I have stopped paying Sainsburys as they are in default and I'm doing the countdown to 30 days, I was just like you when I started but now I've become all bitter and twisted!