If the creditor refuses to freeze interest
If your creditor refuses to freeze the interest on their debt you may wish to ask them to reconsider this because if your payments are less than the interest that is being applied the debt will continue to grow. You may wish to send them a letter which asks them to reconsider (pdf 12 kB).
If the creditor refuses the offer
If a creditors does not accept your offer it might be because they feel you have been unrealistic in the amount you are spending on specific items. If this is the case then you may need to take another look at your spending and see if you can reduce it.
Sometimes the creditor might refuse your offer because they just want a higher payment. If this happens you must be resolute and say that it would be unfair to give them more than other creditors and that your offers have been worked out fairly. Start to make the payments straight away. You can use this example reconsideration letter (pdf 12 kB) to send to them to ask if they will reconsider the offer.
What if your creditor still won’t accept your offer?
If you have written to your creditors twice and they have still refused your offer you now need to decide how you wish to deal with this situation.
If interest has been frozen you may wish to just make the payments already offered and see what the creditor does next:
– they may just allow the situation to continue
– they may wish to pass the debt on to a collection company who will write to you
– they may threaten to issue legal proceedings
– they may issue legal proceedings
If you decide not to make any payments the creditor is more likely to take you to court.
If the creditor has refused to freeze interest and will not accept your offer the debt will continue to get bigger. In this situation you may feel that it would be better not to make payments and allow the creditor to take you to court. In most cases interest will stop once they have a County Court Judgement against you. If the debt is a large one and is growing with high interest you may wish to encourage the creditor to take legal action against you.
An example letter (pdf 11 kB) can be found here which should only be used when creditors have:
– turned down an offer of payment
– interest is still being added and
– you want the creditor to take you to court
You must be sure before sending this letter.
If the creditor threatens to take you to court
Sometimes a creditor may threaten to take you to court even if you feel that you have made a reasonable offer of payment and have started to make the payments. Creditors have to follow a process before they issue legal proceedings against you and they must abide by the court rules. The court rules say that you and the creditor must ‘act reasonably’ and try to avoid going to court.
If you do not want the creditor to take you to court you can try to persuade them with this example letter (pdf 13 kB).
What will happen if I give in and pay the creditor what they want?
If you give in to the creditors demands and pay what they want it may mean that you have insufficient money to pay your priority debts such as rent and council tax. The consequences of not paying these debts are more serious than not paying a non-priority creditor. You may also find that you struggle more to make your payments and may find that you have insufficient money left to live on.
Making preferential payments may also affect your ability to use other debt remedies such as a Debt Relief Order.
