Talking to Creditors
When talking to your creditors, there are several things to do, and also some not to do that
will greatly help your case.
Always be polite
It never pays to get angry, even when you feel justified in doing so. Always be polite and
courteous even in the face of being treated unfairly or rudely. Always speak to the person
how you would like to be spoken to. If they are rude report them to their manager or even
ask to speak to a manager/es at the start if you have had problems in the past when you
have called them. If someone is acting negatively with you and you react negatively, it
always makes the situation worse. As a debtor your objective is to persuade someone to be
sympathetic to your circumstances.
Communication
Communication is the key to successful negotiations with your creditors. Do not ignore
letters, and bury your head in the sand as the problem will not go away and will only get
worse the longer you leave it. Answer them promptly by letter or by telephone. If you
promise to contact creditor by a certain date, make sure you keep to your word and contact
him or her, even if only to tell them when you are going to make a payment. As long as you
remain in contact they are normally very helpful.
Don't Take Any Nonsense
There are a number of ‘debt recovery’ companies now out there and a lot of them use
very aggressive tactics. If a creditor is harassing you or the debt has been passed on
to a debt recovery company and they harass you take the name of the individual and the
name of the company that has called you if it is someone other than who your debt is with.
Report them to their manager and then to their head office. While you may have an
outstanding debt there is no need for companies to be aggressive as this will only
make the problem worse for you.
Get written proof
If you are having financial difficulties and you have to contact your creditors there
are a few things we would recommend you do first see the list below:
- Always keep a log of all paper work and letters written.
- Log every telephone call and make a note of the date and time of your call along with the name of who you spoke to.
- Send letters by recorded delivery in you can afford to.
- Keep all information including letters and statements for the same creditor paper clipped together.
- Always confirm all conversations and offers in writing.
Explain the reasons for your current financial difficulties and then come to the point
and make the offer. Make the terms of the offer precise and do not leave things open.
For example, do not say you think you may be able to pay more in a couple of months. Set a
figure and stick to it until you are sure you can pay more. If you make an offer of payment
to a creditor make sure it is realistic. Only offer what you can actually afford even
if it’s a £1.00. Don't tell creditors what you think they want to hear, if you can only
afford to pay a £1.00 say so. Ensure you complete your statement of means as accurately
as possible, not forgetting items such as school expenses, child minding, TV licence
and must pay household bills etc. Do not however insult your creditor by over estimating
your expenses, the majority of creditors are fair, will accept realistic payments and
most will try to help.
If you get into trouble
If you get into trouble paying the negotiated amount and you can't adhere to the
arrangement, contact the creditor immediately. Try to send a portion of the funds you
promised with a proposal to make up the balance, or renegotiate the entire proposal.
Do not wait for the creditor to contact you after you have missed a deadline for payment,
it will make things worse.
Threatening bankruptcy
Every creditor and their agents hear these types of threat regularly and it will not
help at all. You will just be putting up a brick wall that hinders and may possibly
even stop negotiations. Creditors are far more likely to become more aggravated and
their standard reply is ‘go ahead’. It is possible to make the threat of bankruptcy
indirectly in the context of explaining your adverse financial circumstances, with
an inference that it is a possible alternative in the event that the creditor does
not accept your offer.
Cover Yourself
If you receive Court or official papers, cover yourself. Make sure you know how much
time you have. This is usually set out on the Court or official papers. Consult with
either a Citizens Advice Bureau, insolvency practitioner or a solicitor regarding your
rights or the means to resolve the claim without going to court. If you contact your
creditors or their agents and start negotiating the claim, make sure the response to
deadlines is postponed to a date that you can keep to. This postponement must then be
confirmed in writing.
- Citizens Advice Bureau - Look in your local phone book under Citizens Advice Bureau or
on the Internet at: www.nacab.org.uk
- Consumer Credit Counselling Service - Telephone 0800 138 1111 - www.cccs.co.uk
The Consumer Credit Act 1974 regulates consumer credit and consumer hire agreements
for amounts up to £25,000. Its protections apply to agreements between traders and
individuals, sole traders, partnerships and unincorporated associations, but not
agreements made between traders and corporate bodies such as limited companies.
The Act lays down rules covering:
- the form and content of agreements;
- credit advertising;
- the method of calculating the Annual Percentage Rate (APR) of the Total Charge for Credit;
- the procedures to be adopted in the event of default, termination, or early settlement;
- extortionate credit bargains.
For more information and a full breakdown please go to the DTI website.
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