Negotiating arrangements with DCA’s or Original Creditors

[tomterm8]

There is a widespread belief that sending credit agreement requests via s77-79 of the consumer credit act 1974 is the only route to go down when attempting to deal with debt problems. While it is true to an extent that this can be helpful, it has several limitations:


1. Many credit agreements are actually enforceable

2. Some credit agreements are exempt and,

3. It causes some significant drawbacks and stress.

[tomterm8]

Re: Negotiating arrangements with DCA’s or Original Creditors

Stress related to credit Agreement Requests

It is fair to say that when DCA’s receive a credit agreement request there is a common theme of them engaging in tactics that, on the face of matters, appear to be initimidatory or harassing. In many cases phone calls are stepped up, neighbours or close family contacted and threatening letters are written.

In other cases the creditor decides to go to court, and while this shouldn’t be as frightening as DCA’s suggest, it is stressful and there is no absolute guarantee that you will win. Sometimes “enforceable” credit agreements magically appear, and although I would not condone the view some share that some creditors manufacture such agreements, I am sure everyone realises that there are some bad apples in an otherwise honourable industry.

What I am saying is that relying on s127 is in itself a choice which may be necessary, but which is only one option when facing debt problems.

[tomterm8]

Re: Negotiating arrangements with DCA’s or Original Creditors

Meaningless threats by DCA’s

I will note that some people have mentioned DCA’s threats of “going to prison” etc, or that being unable to repay your debts is a crime. It is not. Debts are a civil matter, and the worst that a court can do is take some of your assets away, secure the debt on your home, or place an attachment of earnings.

Courts can not, and do not, require you to pay more money than you can afford.

[tomterm8]

Re: Negotiating arrangements with DCA’s or Original Creditors

Negotiating repayment strategies


I would suggest where possible initially going to a debt advice charity such as the national debt line, or CCCS. Your initial steps, regardless of whether you intend to do a CCA request are:


1. Establish a statement of affairs, and a budget.
2. Investigate ways to increase your income
3. Investigate options to decrease your costs.


While a CCA request CAN result in a reduction of indebtedness in the short term, if you do not take control of your finances you WILL be in the same situation sooner or latter. Control means knowing how much you owe, how much you get in income, and learning strategies of making the outgoings less than the income.

Repaying priority debts.


Council Tax, rent, Mortgage payments, magistrate fines, utilities and any other debts that provide essential services or which carry significant penalties if you do not pay them should be repaid first. Never pay other debts before priority debts.

Do you have a surplus?

After repaying priority debts, do you have a surplus? If so, the rest of this thread is helpful. If not, you MUST contact national debt line immediately for advice, since you are in a very serious position and you should NOT make any further payments to DCA’s except with regard to the priority debts until this is solved.

[tomterm8]

Re: Negotiating arrangements with DCA’s or Original Creditors

Making offers to DCA’s

Before you make an offer to a DCA, run your statement of affairs past a debt charity, and ensure your figures stack up. My approach to making an offer to a DCA involves the following step (this letter is reproduced via the National Debt Line) Make sure you keep proof of postage:

First letter

Your address
DCA address
Date

To whom it may concern

Re Account No/Reference No:- XXXXX

We cannot now afford to agreed monthly payments because ... [your paragraph added here]

We enclose a Personal Budget sheet which shows our total income from all sources, and our outgoings. As you can see we have only £123 per month left for our creditors.

The offers we have made to our creditors have worked out on a pro-rata basis, and we have written to all our creditors asking them to accept reduced payments. In view of our circumstances, please would you agree to accept a reduced offer of £27 per month.

If interest or other charges are being added to the account we would be grateful if you would freeze these so that all payments made will reduce what I owe you.

Should our circumstances improve we will contact you again.

We would be grateful if you would send a paying-in book to make it easier to pay you.

Thank you for your assistance. We look forward to hearing from you as soon as possible.

Yours faithfully

[tomterm8]

Re: Negotiating arrangements with DCA’s or Original Creditors

Likely response


They will call you “to discuss the matter”.


The standard advice is to refuse to deal with them on the telephone. Personally, I do not entirely agree with this advice. I would always talk to them on the telephone, but I would do two things first:


1. Arrange facilities to record the conversation and
2. Have a script.


Why recording conversations is a powerful tool


As long as you are polite in the conversation, a recording is an incredibly powerful tool. There is no legal obligation to inform the person at the other end that you are recording the conversation as long as it is only for personal reasons. The strength is that you can record them harassing you, intimidating you or lying to you. You can also engage in “Fillet the DCA” at a future date, whereby you send them a Data Protection SAR, they redact (i.e. remove) the harmful conversations out of there record, and you can then prove they did so.

Have a Script.


Write down before the call what you want to say. Don’t give them any information… don’t tell them about any property you own, cars, and other assets. If they ask you to sell something, say you have nothing to sell. If they tell you to borrow, reply it would be fraudulent as you could not repay the borrowings. Record the 20 most likely questions they might ask.

There is power in short answers, and questions.


If they say you need to pay XXX ask how you are supposed to manage on less than the UK governments’ poverty line.


If they say can you borrow from relatives, say that you have no relatives with money.


If they continue pressuring you, don’t get rude or defensive, merely keep repeating the script. “I am sorry, I can only pay £XXX, which is based upon my income and complies with the national debt lines advice “

If you have kept my advice (recording your calls), exercise the next step… fishing for complaints

Fishing for complaints


If they refuse a reasonable offer, your next step is to start building a case. Normally, DCA’s are not smart. Encourage the DCA to put their foot in their mouth by naturally asking certain question:


1. What are the consequences if I don’t pay?
2. Will you take me to court
3. What can the court do to me?
4. Will I go to jail?


And any other similar questions. Work out a list before the first phone call.

[tomterm8]

Re: Negotiating arrangements with DCA’s or Original Creditors

Don’t tell them information

Remember, don’t give them any new information… refer every question back to the statement of affairs and the fact that you can only afford to pay £XX.

The Second Letter

If they still refuse, the next stage is the second letter (again reproduced from the national debt line)

Thank you for your letter of 01-01-2002 concerning the above account.

We are sorry that you feel unable to accept the offer which we have made. The majority of our other creditors have accepted the offers made to them and we have commenced payments. We cannot offer you more because we can only afford £775 per month between all our other creditors, and it would be wrong to cease or reduce payments to our other creditors in favour of your company. The offer made to you is on a pro rata basis, as used by the county court.

In the light of the other creditors agreeing to our repayment plan, please would you reconsider our offer? We will be making the payments in line with the offer to your company, on a weekly basis, as a gesture of goodwill.

I would remind you of your obligation under the banking code that you will "develop a plan with you for dealing with your financial difficulties and we will tell you in writing what we have agreed.”

We look forward to hearing from you as soon as possible.




If they call again, use the same script as before. Log every call. Record every call. Then, one day, after you have recorded enough calls to have substantial weaponry against them, inform the drone that you are recording the calls, and intend to lodge a formal complaint under the banking code and to the financial ombudsman service.

OFT Debt Collection Guidelines

Please read http://www.oft.gov.uk/shared_oft/business_leaflets/consumer_credit/oft664.pdf .

This is the guidelines written by the OFT in regard to debt collections. Use the information in this, and note any occasion they breach the guidelines.

[tomterm8]

Re: Negotiating arrangements with DCA’s or Original Creditors

Formal complaint Letter


Your address
DCA address
Date

To whom it may concern

Re FORMAL COMPLAINT Account No/Reference No:- XXXXX


With regard to my letters of DATE and DATE, and phone calls on (list them) I would like to remind you of your obligations under the Banking Code and the OFT debt collection guidelines. I have sent you a copy of my statement of affairs, and a proposal for repayment based upon my ability to pay.


Despite this, you have repeatedly asked me to pay more money than I can afford while sustaining my basic living expenses.


Further, over the course of the conversation on XXX, you were aggressive and said XXX which is against the OFT debt collection guidelines (LIST THEM)


I especially note that your refusal of my offer to pay a pro-rata settlement is in direct conflict with the OFT debt collection guidelines which prohibit:

b. pressurising debtors to sell property, to raise funds by further
borrowing or to extend their borrowing and
f. pressurising debtors to pay in full, in unreasonably large instalments, or to increase payments when they are unable to do so


Please reconsider your refusal to accept these repayments, which I believe to be unfair behaviour within the remit of the financial ombudsman service.

Further, please consider the above a formal complaint, and respond with a copy of your complaints procedure, and a timescale for dealing with my complaint.


Please note, I have recorded all phone calls discussed above and intend to release them to the FOS if I need to escalate this complaint further.






What they can do


At this stage they can either accept your repayment offer, OR, they will find the financial ombudsman service less than enthusiastic about their behaviour.


if they DON'T respond, pay them the money anyway, BUT feel free to forward the complaint to FOS if they try to continue to harass you.


Further, if they actually take you to court you have huge leverage considering their behaviour, and you can seek a time order which is almost certain to be granted. Generally, at any satge in this keep on paying them the money, and if they suddenly "go quiet" consider this in effect agreement. Pay them anyway, and if they take you to court or start harassing you, use the fact you did everything properly to fillet their donkey.

[Amethyst]

Re: Negotiating arrangements with DCA’s or Original Creditors

Please also read Consumer Credit Agreements - A Guide - Legal Beagles regarding the Consumer Credit Act.