Archive for January, 2013
Ask Payplan…How do I write a letter to a credit card company to freeze interest?
Having interest and charges frozen on your credit cards can make a huge difference to the length of your repayment period. For many people a solution like an Individual Voluntary Arrangement or a Debt Management Plan will provide a solution to their financial problems. However for an increasing number of people, who have very little disposable income, such plans are unsustainable.
If you find yourself in a situation where your income no longer covers all of your usual outgoings and creditor repayments, you can negotiate with your credit card company and ask them to freeze interest charges. In order to do this you will need to write a letter to each of your credit card providers. The letter should contain the following:
- Your full name, address and account numbers so they can correctly identify you.
- A brief outline of your current situation – for example, if you have been made redundant, say so!
- A repayment offer backed up with a copy of your financial statement to illustrate the amount you can reasonably afford.
If you contact Payplan and your assessment shows that you cannot do either a DMP or an IVA we will send you a Self Help Pack. This contains all you need to set up your own arrangement with creditors until your circumstances improve. A Self Help Pack provides a template letter that you can reproduce and send to your credit cards providers requesting they freeze interest, a budget planner, ways to increase your income, ways to cut down your expenditure and a guide to preparing your own financial statement.
Call us FREE on
0800 254 5205
Please note – while we do try to negotiate with your creditors for them to freeze all interest and charges, we cannot guarantee that we will be successful. Nor can we guarantee that your creditors will freeze interest and charges should you attempt this on your own.
There is a big difference between being threatened with a County Court Judgment and actually receiving one.
A lot of creditors use the threat of legal proceedings to get you to pay more towards your debt, especially if you are not paying anything at all. Creditors/solicitors may use words like Bailiffs, Attachment of Earnings and Enforcement.
If creditors/solicitors threaten legal action is aware it may be a warning of their intentions. If this is the case firstly they have to issue you with a default notice. This is a formal notice that states you are in breach of your credit agreement, as such the creditor/lender will be able to take legal action if they feel it is appropriate. It does not automatically mean they will pursue the debt in this way. The default notice will stay on your credit file for six years and it may have an impact on you getting further credit. If you are in a position to pay the amount outstanding it would be in your best interest to do so. If however you cannot afford to pay the debt it would be advisable to speak to the creditor and come to an arrangement to clear the debt at a monthly payment you can afford. The creditor/lender would prefer that you contacted them to say you are struggling rather than just ignoring the problem. If you have not had any contact with a creditor for over 6 years, the debt may be Statue Barred please see below for more information.
The Limitation Act 1980 – This act only applies to residents in England and Wales, under the act, creditors have a six year period to chase you for payment, if you have not had any contact from them in any form in the last six years it means they may not be unable to pursue the debt or enforce the debt through the Court system. It does not mean the debt will be automatically written off. You will still owe the money and they are still able to chase you for payment, they are just unable to issue you with legal proceedings.
The Claim Form
Claim forms have a time limit set on how long you have to respond, it is usually only 14 days from the issue date on the Claim Form for it to be valid. It must have an issue date, a claim number and be officially stamped by the court. Check the post mark on the envelope the claim form was received in as the date may be taken from the postmark date. Of course this is a shock to have received a claim but there are steps you can take. For more information please click here to Payplan’s website. If you do not respond to the claim form the court will enter a Judgment without your response anyway. The Judgment made may not be in your favour, so it is best to reply at this early stage to stop further enforcement methods.
A Debt Management Plan, or a DMP, is an informal agreement between you and your creditors. When looking for a suitable solution for your debts it can be a daunting experience and many people contacting us have lots of questions. Below we have put together five common questions that we get asked.
How long will my Debt Management Plan (DMP) last?
The length of your Debt Management Plan depends on your individual situation. It also depends on your level of debt and monthly surplus. If creditors freeze interest and charges, the length of the Debt Management Plan can be dramatically reduced.
For example: If you owe £25,000 and you can afford to pay £250 per calendar month the DMP will last for just over 8 years (100 months). This applies only if the payments are maintained each month and the creditors freeze interest for the duration of the plan. Your DMP can be completed sooner if your circumstances improve and your payments can be increased.
How much does it cost to set up a Debt Management Plan (DMP)?
Nothing if you choose Payplan, it’s completely free. As you may know there are many debt management companies that charge by either requiring a start-up fee or a monthly management fee, which can be anything from 15% – 17% of the monthly payment.
Payplan are funded by the credit industry, which allows us to offer completely free Debt Management Plans. This means whatever you can afford each month goes directly to your creditors to reduce your level of debt even quicker.
For example if you can afford to repay £250p/m all of that money will be distributed to your creditors pro rata, Payplan takes nothing out; the full £250 per month will go towards paying your creditors off.
Can I stop my Debt Management Plan (DMP) when I like?
A Debt Management Plan is an informal arrangement between you and your creditors, so you are free to stop the DMP at any time, but we ask that you provide as much notice as possible so we can inform all of your creditors.
If you are experiencing further financial problems and cannot afford the current DMP payments to Payplan, please let us know because we may be able to restructure the Debt Management Plan for you.
Please note: Bear in mind that once the DMP is cancelled, creditors may well resume interest and charges that had previously been frozen or reduced.
Is my credit rating affected if I enter into a Debt Management Plan (DMP)?
A DMP in itself will not show on your credit file, however, if you have recently been experiencing financial difficulty (missed repayments) then your credit rating is likely to have been affected already by this.
To explain this further; whenever the full contractual payment isn’t made, whether this is through a DMP or not and even if the payment is just a few pounds short, it will still affect your credit rating because, if your Debt Management Plan repayment is less than the required repayment as originally agreed, then you are not complying with the original credit agreement you made.
What support do I get during my Debt Management plan (DMP)?
Payplan prides itself on giving excellent support to all our clients. Throughout your Payplan Debt Management Plan arrangement you will have a DMP case officer who will give you a direct number and an email address so you can keep in contact.
If your financial situation changes, you can talk to your DMP case officer who will assess your circumstances and, where appropriate, try and rearrange your Debt Management Plan around your circumstances.
Our members of staff are always there to give support and answer any questions you may have about Debt Management Plans or any other more appropriate debt solutions.
Call us FREE on
0800 254 5205
This week Citizens Advice Bureau’s across the country have been using Twitter to highlight the work that they do. Here are some examples of how they help people who are in debt.