Advice: Dealing with Creditors

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Dealing with Creditors

Communication

Communication is the key to successful negotiations with creditors. Do not ignore their letters, and bury your head in the sand the problem will not go away. Answer them promptly by letter or by telephone. If you promise to contact someone by a certain date, make sure you keep your promise and contact him or her even if only to tell him or her 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

If a creditor is harassing you or a company employed by a creditor take the name of the individual and report them to their manager then to the head office.

Mind your manners

It never pays to get angry with anyone, even when you feel justified in doing so. Always be polite and courteous even in the face of being treated rudely. It takes the wind out of their sails and always speaks to the person how you would like to be spoken to. If they are rude report them to their manager. 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.

Have it in writing

Have it in writing it is proof or it’s just your word against theirs. Always keep a log of all paper work. This starts with your records such as invoices, credit card statements etc. Every telephone call, letter written or received and offers made. Always make a note of the date and time and to whom you have spoken to and always confirm all conversations and offers in writing.

Don't bluff

If you make an offer, always make sure that you can do what you have promised. Don't tell creditors what you think they want to hear, if you can only afford to pay a £1.00 say so, they would prefer to have a £1.00 rather than nothing at all.

Don't threaten creditors with bankruptcy

Most creditors and their agents hear these types of threats every day and it will not help at all. You will just be putting up a brick wall that hinders negotiations. Creditors are likely to become more aggravated and their standard reply is go ahead and file. There is a way to do this indirectly in the context of explaining your adverse financial circumstances, with an inference that bankruptcy is a possible alternative in the event that the creditor does not accept your offer.

Make your offer as brief and precise as possible

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. Do not leave things open 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 shore you can pay more.

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.

Cover yourself

If you receive Court or official papers, cover yourself. Make sure you know how much time you. This is usually set out on the Court or official papers. Consult with either a Citizens Advice Bureau or insolvency practitioner or a solicitor regarding your rights or the means to resolve the claim without going to Court it will be fare better if you can. If you contact the creditors or their agent 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.

Be realistic

Be realistic with your offers. Only offer what you can actually afford even if it’s a £1.00. Ensure you complete your statement of means as accurately as possible, not forgetting expenses such as school expenses, child minding, TV licence and must pay house hold bills etc. Do not however insult your creditor by over estimating your expenses, the majority of creditors are fair and they will expect realistic payments and most will try to help.

Consumer credit act

If you are looking for a credit card or an unsecured personal loan a number of things are changing that will affect the way products are displayed and advertised and also the way applications are assessed.

The Consumer Credit Directive takes effect on 1 February 2011. The aim is to improve transparency so that it is easier for individuals to compare credit products and make a well-informed decision about whether or not the credit on offer suits their needs and financial circumstances.

The CCD was adopted by the European Council in May 2008 with the aim of establishing a harmonised set of rules within core areas of the credit market among EU member states.

Its implementation is designed to ensure that a high level of consumer protection applies across Europe and to help improve consumer confidence and understanding of credit products and assist individuals in making the right decision when it comes to taking out unsecured credit.

Unsecured credit refers to any lending product, such as a personal loan or credit card, where the lender does not have a charge on an asset belonging to the borrower in case he or she defaults on repayments. The most common asset used for security in this way is a borrower's house - the lender could potentially repossess the property if the borrower falls behind in their repayments. Secured lending products aren't covered by the CCD.

From 1 February 2011, providers offering any form of unsecured credit will have to adhere to the new rules, although some started implementing the changes earlier.

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