Debts and writing to banks to reduce repayments.

Like many people, I have foolishly got myself into some significant debt and cannot afford to make repayments at the current level.

The main debts are two commercial loans with two high-street banks.

If I wrote to them, explained the situation in an apologetic manner, made the point that I intend to pay the debts off in the long term and have no intention of defaulting, but simply cannot do it now, would I receive a receptive response?

Should I suggest a specific amount and would it be reasonable to suggest an amount significantly lower than the current rate. For example: if I pay £240 per month, then suggesting £80?

I took one loan out last year and the other in 2005 - I badly miscalculated my financial situation, hence I need a drop in the monthly repayments in order to start sorting out the mess and paying over £300 per month in loan repayments is not a good situation to start from!

Thanks.

Reply to
Sacrament
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if you have a mortgage maybe a one account and consolidation would help you, other than that offering a bank something and being up front is definately the best way, they will look on you as trying your best.

Reply to
spadger

You should do: remember the Banking Code.

  1. Financial difficulties how we can help

14.2 If you find yourself in financial difficulties, you should let us know as soon as possible. We will do all we can to help you to overcome your difficulties. With your co-operation, we will develop a plan with you for dealing with your financial difficulties and we will tell you in writing what we have agreed.

Subscribers [to the Banking Code] will try to assist customers in financial difficulties. The subscriber will not usually be aware that the customer's circumstances have changed until the customer tells them.

Where a customer requests that the subscriber deals with them in writing or e-mail (providing that facility is available) rather than by telephone, they will do so as long as the customer remains co-operative and in regular dialogue.

There is also an onus on customers to try to help themselves. These requirements do not mean that the commercial judgement of subscribers is compromised.

Where a consolidation loan is being provided and the subscriber considers the customer to be in financial difficulties, the subscriber should take reasonable steps to reduce or pay off the existing in-house borrowing that is being consolidated. This applies only where the existence of such in-house borrowing is apparent to subscribers via their existing in-house systems.

Exceptionally there may be circumstances in which it is appropriate not to reduce or pay off existing borrowing.

If a customer does not respond to direct attempts to re-establish contact, lenders may pursue other alternatives to establish a point of contact. This may include the use of debt collection agencies and tracing agents (see section 14.6).

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If that's all you can realistically afford, then don't ask - tell them that you will be making reduced payments for a while. Specify how much, and then make sure that you keep to your schedule.

Reply to
Robin T Cox

I think it depends how much you are worth in asset terms. For example, if you have no assets, you could ask the banks to write off half the loans (or more!). They may well accept that rather getting nothing if they were to pursue you into bankruptcy. You could also consider a more formal arrangement known as an IVA.

Reply to
GB

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Reply to
spadger

There is an excellent forum for debt issues here - - TMF dealing With Debt board. Start here

Many of the people have been there, done that, & got the T-shirt, so the advice is from people who have a detailed knowledge of the subject.

Beware of debt management companies -

"Debt Management Companies

A lot of people see the adverts on TV promising to reduce your payments to an affordable amount each month by negotiating payment terms with your creditors. The bit they miss is that they charge a fee

- usually around 15%. This is 15% of your money that could be paying off your debts! Instead, try the following companies who offer the same service at no cost to you:

- Free debt management companies: and

- Free debt advice: "

Quote from -

More links on my webpage -

hth

Daytona

Reply to
Daytona

Yes, I did think about this, but I pay by direct debit. And to cancel the one debit and set up another one with a reduced value would presumably require them to accept the second debit.

I also don't think it looks good to unilaterally cancel a direct debit.

Reply to
Sacrament

Per the other reply, the fool.co.uk forums are generally very good - you might find individual lenders will try to force you into an agreement that only works in _their_ favour, such as agreeing to pay them x amount against an unsecured debt, as against paying priority debts which _are_ secured, or council tax etc.

Take good stock of the situation before agreeing to anything with anyone, and (without having experience of the IVA scenarios) bear in mind that if you went to court to agree payment schedules, they would ensure priority debt was covered first, and only if you had enough "spare" cash after sensible amounts were made available for living expenses, would the other lenders get a chance of anything (i.e. £1 a week)

Citizens Advice Bureaus are not perfect, but deal with this scenario regularly - double check any advice though, but you might find lenders will ease off the pressure if the CAB write to them on your behalf - getting a letter from a neutral third party shows the lender you realise you have a problem and are trying to do something about it, not avoid it completely.

Reply to
Colin Wilson

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