~~~~~Guide to Debt and sample letters for writing off and reducing payments~~~~~

[Amethyst]

DEBT TEMPLATE LETTERS


~Ask Your Creditors to Hold Action on Your Account

~Ask Your Creditors to Accept Pro Rata Offers of Payment on Your Debts

~Full and Final Settlement for Any Debt

~Ask Creditors to Write Off the Debt Due to Your Circumstances



When any correspondence is received regarding the repayment of a debt, the first problem that needs to be addressed is:-

Has the letter been received from your original creditor?

This means exactly that, is the letter from the original company that any loan, credit card, account was taken out with.

If the answer is “yes” you should make an arrangement to repay what you owe, there are letters to help you reach an agreement. ( see below )

If you have had a change in circumstances that has led to a build up of arrears, you can ask that they stop any forthcoming action on your account and give you a little time to organise your situation ( Letter 1).

You can ask that they accept pro-rata payments (installments) (Letter 2).

If you have access to the funds, you could ask them to accept a full and final settlement of the debt ( Letter 3 ) or if you believe your circumstances will allow it, you could ask that they write the debt off entirely (Letter 4).

Please also read Tomterm8's guide to Negotiating arrangements with DCA’s or Original Creditors


Has the letter been sent by a Debt Collection Agency?

A Debt Collection Agency is different from an original creditor. First you need to work out if the Debt Collection Agency is acting as an agent for the original creditor or if they have purchased the debt.

Often DCAs will call themselves solicitors. If you receive a letter and are unsure of the sender's identity usually a quick Google of their trading name will bring up some information.


SOLD DEBTS

While it is perfectly feasible that the original creditor has sold your debt on to a DCA for collection the DCA must be in possession of the correct paperwork ie. a true copy of the agreement with all the prescribed terms.

It is your right to request these documents when contacted by a DCA and you should do so using the CCA 1974 letter (here). For much more information on CCAs see Curlyben’s sticky ''Consumer Credit agreements - A Guide''


A DCA may be hoping to collect on a debt that they have either not purchased at all or not purchased correctly and therefore will not hold the necessary paperwork. This does not, however, automatically render your debt unrecoverable.

If you have not been contacted about this debt within 6 years of any previous acknowledgment of it, the debt becomes statute barred and cannot be collected on. See Curlybens sticky ( HERE) for more information on statute barred debt.

The DCA will doubtless try all sorts of ruses and tactics to try and scare you into paying them. If you receive any letters which do concern you please post them on the forum.


COLLECTION on behalf of ORIGINAL CREDITOR

Your aim should be to have the debt returned to the original creditor. Curlyben’s sticky ~~~ Consumer Credit Agreements - A Guide ~~~~ inc. Letters - Legal Beagles has a lot more information on CCAs.

How to deal with DCA's

First Rule: NEVER talk to them on the phone as they will say anything to secure payment. Keep EVERYTHING in writing as this will supply an excellent paper trail should the need arise.

Second Rule: Admit NOTHING. Now bear in mind that DCA's are simply commission based "agents" and are looking for any admissions that they can use as leverage. It is the DCA's job to prove the debt is owed and valid, not yours to do their job for them.

Third Rule: Always deal with DCA's in a professional manner. Let them rant and rave and make all the threats. They will come unstuck before you do.

Fourth Rule: Stay cool and calm. Yes there is a debt to pay, but on your terms.

Thanks to Amy and Sapphire for rewriting the debt letters and guide, and Tomterm8 and CurlyBen for their comprehensive guides.

[Amethyst]

Re: Debt Template Letters

LETTER # 1

Ask Your Creditors to Hold Action on Your Account


Re:- Account Number: xxxxxxxxxxxx

We wish to inform you of a recent change to our circumstances. We are seeking urgent advice and assistance regarding our current financial difficulties.

To this end, we would very much appreciate that any planned action on the above account be postponed for a period of at least 28 days.

We will, of course, keep you fully appraised of any developments in the meantime.

We look forward to hearing from you and thank you for your consideration.

Yours faithfully/sincerely

[Amethyst]

Re: Debt Template Letters

LETTER # 2

Ask Your Creditors to Accept Pro Rata Offers of Payment on Your Debts


Dear Sir/Mr

Re: Your Account Number: xxxxxxxxxxxx

We wish to inform you of a recent change to our circumstances and as such we are unable to maintain the present level of repayments. [Add an explanation here, keep it brief and in one paragraph if possible].

Please find enclosed an Income and Expenditure sheet (here) which details our current position. As is clearly shown, the total amount available for us to repay our creditors has now become significantly reduced.

In view of our circumstances, we have written to all our creditors to ask that they agree to accept reduced monthly payments and that any interest and charges currently being applied to the account be frozen to enable the debt to be repaid as quickly as possible.

To this end, we request that you agree to installments of of £............ per month.

We would like to assure you that it was never our intention to renege on our financial responsibilities and as such, should our circumstances improve, we will contact you immediately with a revised installment offer.

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

Yours faithfully/sincerely

[Amethyst]

Re: Debt Template Letters

LETTER # 3

Full and Final Settlement for Any Debt



Dear Sir/Mr

Re: Your Account Number: xxxxxxxxxxxxxxxxxxxxxxxx

We write with reference to the above mentioned account number.

We confirm that we are unable to offer the full amount repayable, we are, however, able to raise a total of £................. and wish to offer this as an ex-gratia payment in full and final settlement of the above account.

This offer is made on the clear understanding that, if accepted, neither you nor any associated company will take any other action to enforce or pursue this debt in any way whatsoever and that we will be released from any liability.

We also request that, if accepted, you inform the relevant credit reference agency and mark our file relating to the above account as "satisfied”.

Payment can be made within 2 weeks of receiving your written acceptance of these proposals.

We look forward to receiving your reply.

Yours faithfully/sincerely

[Amethyst]

Re: Debt Template Letters


LETTER # 4

Ask Creditors to Write Off the Debt Due to Your Circumstances



Dear Sir/Mr

Ref: Your Account Number: xxxxxxxxxxxxxxxxxxxxxxxxxx

We wish to inform you of a recent change to our circumstances and as such we are unable to maintain the present level of repayments. [Add your explanation here, keep it brief and in one paragraph if possible].

Please find enclosed an updated Income and Expenditure sheet which details our present financial circumstances. As is apparent, our outgoings far outweigh our income and as such we are experiencing extreme financial hardship.

[Detail how much you have paid in total and how much is left] In light of the amount that has been repaid, we would be grateful if you would consider writing the remaining amount off.

We would like to assure you that it was never our intention to renege on our financial responsibilities, but unfortunately our current circumstances are such that we realistically cannot maintain payments of any kind.

We would greatly appreciate any help you can give us and look forward to your comments on this matter.

Yours faithfully/sincerely