Debt- contact the creditors!

[Louisaaa91]

I wanted to create this post as I have spent a lot of time looking for debt advice online the past few weeks, I’m in a significant amount of debt and saw no way out and all the threads I’ve seen have been saying contact step change, cab etc or get an IVA, bankruptcy etc none of the things I actually wanted to do so I took a step today and started contacting my creditors one by one and telling them my situation and honestly they could not have been more helpful! I have been offered payment plans that freeze interest, allow very low monthly payments, won’t accrue arrears and won’t affect my credit score. I still have a few to contact on monday when they open but I’m feeling positive! They will ask for all your income/outgoings so have it all ready to tell them. I haven’t found anything online really that advises you to just contact the creditors directly and thought maybe it’s just not an option and is too good to be true but it is an option and although it won’t work for everyone I really do think this could be a changing point for a lot of people in debt like myself. I was scared they would just say No but they haven’t! I started the conversation by saying ‘my next step will be an IVA but I wanted to contact you first to see if we can arrange a plan before I do that’ these companies would much rather get a small payment monthly off you than to get practically nothing which they would get if you went through an IVA/bankruptcy etc. Sit down, right all your creditors down, the amounts you owe and all your bills, clothing, food everything you pay out a month and all your income including wages and benefits, it makes it so much easier. I was so down about my debts, I didn’t want the hassle and fees and annual reviews that come with an IVA. I really see a light at the end of the tunnel now and feel like I can finally enjoy life again. I really hope this post helps someone else In my situation.

It sounds as if you have had a huge weight lifted off your shoulders, I hope the ones you contact on Monday are helpful too.
A brighter looking future for you, all the best

I’ve just helped dd to cope with debts from when she was suffering from depression
She started to make payments on one debt and they wrote saying they would take 20% as a settlement figure
I’ve given her the money and she paid it off this morning, the relief for her was immense
She still has a massive overdraft but the bank seem quite happy charging her interest now she’s no longer a student
Op, glad you see light at the end of the tunnel

The hardest part can be facing the reality of the situation you're in.

Well done for facing the issue head on, as you say, it feels like a weight has been lifted. I would advise you to keep an eye on your credit report to see if the companies do report it differently. It is rare for creditors to agree to not report the reduced payments to the credit reference agencies, so just keep an eye on it over the next few months. Don't pay attention to the score, the information being reported is the important detail.

If you're jn an overdraft/ high balance credit card it's also worth contacting your bank. They can also freeze interest etc and have specialist teams to help and in some cases can wipe it altogether

@Louisaaa91 well done. One of the hardest steps is picking up the one.

One piece of advice.... ABSOLUTE must to get the agreements in writing from the companies. Check it's an accurate reflection on what has been agreed.

I know if a few cases where agreements have been reached on the phone to only be denied/rejected later on down the track resulting in debt collectors and ruined credit scores.

Chase the companies if you need to but make sure you keep the correspondence.

Up the phone of course!!

I worked for an Insolvency Practitioner and you are right in what you are doing, it is always best to be honest and upfront with creditors. Unfortunately a lot of people leave it too late and end up with an IVA or bankruptcy as the debts become very large and unmanageable and need someone to sort this out.

That’s so useful! I’m just about to enter into a trust deed (Scotland) but nothing is signed yet. I might just take your advice and contact my creditors directly instead. Can they continue to send you threatening letters once you’ve came to an agreement?

It's also worth pointing out that new rules about 'breathing space' have just come in that free people who are struggling with unmanageable debt 60 days without charges or hassle, to try and sort themselves out.

www.moneysavingexpert.com/news/2021/05/debt-crisis-breathing-space-mental-health/

Definitely talk to your lenders if you have a problem keeping up repayments (and that's after normal basic living expenses, you're not expected to skimp on food etc to keep up with unsecured debts).

You can also get help from moneysaving expert which can be good to get your list of incomings and outgoings sorted while you wait for an appointment.

But on the matter of credit ratings, it's very likely that any arrangement to pay less than the agreed minimum on your debts will affect your credit history sooner or later, so worth bearing in mind as the consequences can be long lasting and expensive, such as people being unable to get a better mortgage rate several years after missing or reducing payments on credit agreements.