Before you offer to pay your non-priority creditors you should have followed steps 1 to 6. Now you must write to non-priority creditors to offer to pay them the amount you can afford each week or month (this is the amount you worked out in step 6). When it comes to writing to non-priority creditors, explain your circumstances.
Below are some examples of circumstances you should tell your non-priority creditors about if they apply to you.
- I am single with three children to support.
- I am married with two children to support.
- I am unemployed and am receiving benefits. These are Income Support, Universal Credit, Jobseeker’s Allowance, Incapacity Benefit, Employment and Support Allowance.
- I am off work because I am ill. I receive Statutory Sick Pay, Incapacity Benefit or Income Support.
- I am employed but on a low wage.
- I am employed but have lost overtime and bonus payments.
- I have more outgoings than I can afford.
- I have lost benefits and tax credits.
- You will find an example of a letter to write to your creditors them here
Choose a cheap, convenient way to pay
Convenient and free ways to pay include:
- setting up direct debits or standing orders from your bank account; and
- paying at post offices or shops and stores that show the Payzone, PayPoint or Allpay sign.
Check with the creditor which methods they accept.
Avoid methods of payment that will cost you money, such as postal orders. Always check if there will be a charge for the payment method you choose.
The Creditor won’t accept my offer
If the creditor won’t accept your offer you should be persistent and make the offer again explaining that it would be unfair to treat them differently from your other creditors. Explain that the only fair offer is the one that has already been made.
Don’t give in to their pressure for higher payments because if you do they will continue to pressure you for higher payments and eventually you may default on payments to other creditors.
Creditors are not allowed to harass you
It is sometimes difficult to know what harassment is.
Section 40 of the Administration of Justice Act
S40 Punishment for unlawful harassment of debtors.
1. A person commits an offence if, with the object of coercing another person to pay money claimed from the other as a debt due under a contract he –
- harasses the other with demands for payment which, in respect of their frequency, or the manner or occasion of making any such demand, or of any threat or publicity by which any demand is accompanied, are calculated to subject him or members of his family or household to alarm, distress or humiliation;
- falsely represents, in relation to the money claimed, that criminal proceedings lie for failure to pay it;
- falsely represents himself to be authorised in some official capacity to claim or enforce payment; or
- utters a document falsely represented by him to have some official character, or purporting to have some official character which he know it has not.
2. A person may be guilty of an offence by virtue of sub-section (1) (a) above if he concerts with others in the taking of such actions as is described in that paragraph, notwithstanding that his own course of conduct does not by itself amount to harassment.”
The full section can be found here.
Financial Conduct Authority
Regulation of Consumer Credit has now been taken over by the Financial Conduct Authority.
There are now rules and guidance concerning how creditors must (or must not) behave when pursuing a debt that you owe to them or the company they act for.
Regulations can be found here.
The Consumer Credit Sourcebook can be found here.