Consumer Debt Help 9 - Letters to Creditors Continued
Problems with Debts? One Affordable Monthly Payment More Information
Optional Last Paragraph
Below is an optional paragraph that you could add to any of the above letters. The add-on tells the creditor that you have strength, resolve and intelligence (sorry, but true). The reason you may not want to add it is because of the ‘strength’ bit: you may want to show humbleness – your choice.
The offer of payment I have made to you is the most fair and sustainable payment I can offer. It is my intention to discharge this debt at the earliest possible opportunity, and therefore, I can assure you of my integrity and commitment in dealing with you and the debt.
4. Offer to Settle Full Outstanding Balance
If you have a number of debts and you either apply for a consolidation loan or you have been given some money, but you do not have enough to settle all of your debts, you can try to obtain favourable settlement figures from all of your creditors.
If you have £10,000 of debts and you can get a loan for £5,000 (which will also reduce your monthly payments from, say, £600 to £300 per month) you need to gain your creditors approval (do not get the loan until you have the vast majority of creditors behind you). You should send letter number 1 (above) before sending this letter. The settlement figure that is returned to you is your starting point: negotiate down from that figure, say, 50% if you have genuine debt problems and the settlement is being paid by a consolidation loan.
A creditor, for proof of other creditors settlement figures, may ask you to forward copies of each creditors settlement amount, which would be acceptable.
You need to be strong in dealing with creditors that you are trying to get to reduce settlement figures. Sometimes it’s the smallest creditor that will not shift: remind them that if they did sue you the county court judge might not be best pleased with a creditor that ignored a genuine debtors plea for a fair resolution of a debt issue.
(Your name and address) Mr J Smith, 1 Avenue Road, ANYTOWN AA1 11A,
Your letter of the (22 Feb 2000) stated that the current settlement figure to discharge the account in full is (£2,000.00).
The reason I requested the settlement figure from you, and my other creditors, is to take out a consolidation loan (or accept the help of my family…) to settle all other debts.
The total amount owed to creditors is (£10,000) of which I can pay every creditor (50%) of their settlement figure. You will receive (£1,000.00) approximately four weeks from the date of this letter. The amount needed to settle all debts, (£5,000.00), is the absolute limit of my capability with no other options available other than individual county court action, and possibly some form of bankruptcy.
Please consider my sincere offer and accept my apologies for this involved process. Please send me a letter confirming your acceptance of my offer. If no confirmation has been received within 14 days of the date of this letter I will assume your favourable acceptance of my offer and make payment to you as described above.
Yours….
5. Payment of Reduced Settlement
When you receive the confirmation of acceptance of your reduced offer you need to send a letter with your payment.
Dear Sirs
Ref. Account Number: 12345
(Your name and address) Mr J Smith, 1 Avenue Road, ANYTOWN AA1 11A,
Thank you for your letter of (22 Feb 2000), in which you agreed to the reduced settlement figure of (£1,000.00) in full and final settlement of account number (12345).
My cheque for £1,000.00 is enclosed.
(if you did not receive confirmation of your offer use the following paragraph in place of the one above)
Further to my letter of (22 Feb 2000) that said,"The total amount owed to creditors is (£10,000) of which I can pay every creditor (50%) of their settlement figure. You will receive (£1,000.00) approximately four weeks from the date of this letter. The amount needed to settle all debts, (£5,000.00), is the absolute limit of my capability with no other options available other than individual county court action, and possibly some form of bankruptcy.
Please consider my sincere offer and accept my apologies for this involved process. Please send me a letter confirming your acceptance of my offer. If no confirmation has been received within 14 days of the date of this letter I will assume your favourable acceptance of my offer and make payment to you as described above."As you have not responded to my letter, I assume your acceptance of my offer and I enclose my cheque for £1,000.00 in full and final settlement of account number (12345).
Which description best suits you (if you have debt of course)
"I never asked them to increase the card limit"
"the letter said I was one phone call away from £5,000"
"I was never any good at looking after money"
"I never had money problems before I started using credit"
"I was going to pay it all off when I got…"
"I never had credit before meeting my husband (or wife)"
Any of those sound familiar? Very few people intend to get into debt, but most of us do intend to use credit. Maybe if the lender asked the question "are you any good at paying back credit?" there would be many less debt problems: if there were such a question, would we answer it truthfully? I doubt it.
There are many reasons why credit can turn to debt, and of course not all are preventable. The following three examples will give you an insight into preventable debt.
Lack of Value
Most of us that use credit are susceptible to the ‘why should I payback’ thinking; it goes something like this:
You buy a new computer on 36 months credit
Notable events
Feel good about payback
Purchase Day - 1
You do not have a computer
105%
Purchase Day
Latest specification computer
100%
+ 6 months
Specification still good
75%
+ 12 months
Specification superseded
50%
+ 18 months
Latest software no use on your PC
25%
+ 24 months
Needs repair out of warranty
What figure would you enter?
It is obviously nothing to do with the computer manufacturer that you feel no benefit in continued payment, but the computer’s relevance is a strong focus. With a £100,000 mortgage for your ‘dream house’ you are unlikely to feel that same resentment when meeting those payments. It is quite easy to start missing the odd payment ‘to treat yourself’ or to use the money to pay for something you value more. Using our chart above, what would happen if your new car was stolen, with a lot of damage and the insurers would not write off the car. You then had to put up with a car that had 75% repairs and in a far from new condition?
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