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Arranging payment with creditors is an informal repayment agreement made between you and your lenders

In a nutshell If you’ve fallen behind with your repayments, you may be able to come to a debt settlement repayment agreement with your creditors. You can make a debt settlement proposal by phone, email or letter, but however you contact them, you’ll need to put forward an offer as to how much you can repay. Your debt settlement proposal will be either accepted, or your creditors may reply with a counter offer.

What debt problems is arranging payment with creditors suitable for?

This may be the best debt help for those who feel confident in communicating with their debtors without official debt assistance.

Our debt expert’s opinion on the pros and cons…

Advantages of arranging payment with creditors

  • Communicating with your creditors can feel like a huge weight has been lifted from your shoulders, and will also stop your creditors from chasing you.
  • Your creditors may also freeze all additional interest and charges.

Disadvantages of arranging payment with creditors

  • Arranging payments with creditors can be challenging. While creditors are legally obliged to consider all reasonable offers of repayments, they still have vested interests in your repayments being as large as possible.
  • Like other debt solutions, this form of debt assistance also requires that you stringently control your finances, as missing payments on any debt settlement repayment agreement – informal or otherwise – could leave you in the same position as before, or worse (e.g. your creditors may make a full and final demand).

Worried about debts that won't go away?

FAQs – Arranging Payment with Creditors

  • Can a debt collection agency (DCA) force their way into my home?

Debt collectors are not bailiffs, and as such as they are not allowed to force entry. They will usually attempt to resolve the situation prior to progressing to court. Bailiffs are typically involved after court action has taken place.

  • A debt collection agency (DCA) are threatening to take me to court. What should I do next?

While your debt collection agency may have mentioned the possibility of court, there’s no guarantee that they will progress it to that stage. The best course of action is to keep communication open and to negotiate a repayment schedule.

  • I have repaid the original amount that I borrowed, but there’s still money outstanding. Why is this?

You may still owe money due to additional fees, charges and interest that have been added to the original amount. For clarification, ask your creditor for a statement with a complete breakdown.

  • I didn’t sign a credit agreement – do I still need to pay the debt?

There are different rules, regulations and laws that surround different products. For example, for loans, credit cards and store cards, there must be a written agreement, however there are exceptions for agreements that are completed online. If you’re uncertain as to whether your creditors have met their legal obligations seek debt advice from a trusted debt agency.

  • What should I do if a creditor rejects my offer of payment?

If your creditor rejects your offer of payment, ask for clarification as to why. Then look at what you’ve presented. Have you shown them your income and expenditure? Have you demonstrated that this is a reasonable offer given your circumstances? If you believe you have, seek advice from a third-party debt agency.

  • Asides from bailiffs, are there any other forms of action that my local council can take against me?

Local authorities have considerable powers for ensuring their residents pay their council tax (so much so that it is considered a priority debt). Methods at their disposal include removing money directly from your wages or benefits; forcing bankruptcy; placing a debt against your home and even asking a court to sentence you to prison. If you’re struggling with this form of debt, it’s imperative that you seek debt advice as soon as possible.

  • Can my energy suppliers disconnect my home?

Energy companies do have the power to disconnect those that owe them money, however this is considered as a very last resort.

  • Will I be sent to prison for a County Court Judgement (CCJ)?

No – it is not a crime to have a CCJ, nor is it a crime to not pay the CCJ as the court has ordered you to. However if one of your creditors applies for an order for your court attendance to provide details as to your situation, or applies for a regular deduction from your wages and you don’t respond, you may risk imprisonment due to contempt of court.

  • What’s the best way to contact my creditors?

You should communicate with your creditors by either letter or email, and you should always keep copies of all correspondence.

  • If I make an arrangement with my lender, can they still send me a default notice?

Once you’ve made an arrangement you should receive clear terms and conditions that set out your rights and duties. Within these there may be a condition that, should you not meet your rights and duties (e.g. you miss some repayments) that your creditor is entitled to send you a default notice.

  • How do I make a full and final settlement offer?

Write a letter that asks your creditor to accept a set amount as a full and final settlement of the debt. Include all necessary details (such as the account number, debt total and any other information that may help your case – such as an income and expenditure sheet).

*An Individual Voluntary Arrangement (‘IVA’) is subject to the customer meeting qualifying criteria and gaining creditor acceptance. Monthly IVA payments include fees and may differ to the example provided, based on the assessment made of your own personal circumstances – these fees will be clearly explained to you in writing by your IVA company. Debt write off amounts are subject to creditor acceptance and vary by individual customer based on their own financial circumstances, and are applied upon successful IVA completion.

Substantiation example, Someone owes £60,000, they pay £100 over 60 months which equals £6000, write off amount would be £54,000 which is 90% of total debt level. Upon submitting your details on this website we will pass your details to one of our approved partners as this website does not give any advice.

Free debt counseling, debt adjusting and credit information services are available from the Money Advice Service.

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