Can a Debt Collector Refuse a Payment Plan? Guide & UK Laws

Are you worried about a letter from a debt collector? You might be asking, “Can a debt collector refuse a payment plan in the UK?”

You’re not alone. Each month, over 170,000 people come to our website for help with debt matters. 

In this article, we’ll help you find answers to questions like:

•  Is the debt really yours?
•  Can you ask the debt collector to stop bothering you?
•  What are your choices for setting up a payment plan?
•  Is it possible to get some of your debt written off?

We understand how you feel – some of us have also had debt collectors chasing us. But don’t worry; we are here to help you learn more about your options and how you can deal with debt collectors in the UK.

My Creditor Has Refused My Offer, What Should I Do? 

Debt repayment negotiations are tricky! From my experience, having your offers rejected can be demoralising and quite stressful.

However, it’s important to know that this is not the end. You can still convince your creditor or creditors to accept your offer by negotiating with them further. 

It might be an idea to do some more research on negotiating or even speak to a debt charity for some free and specific advice.

Explain Your Circumstances 

You most probably have already done this in your original offer but it’s good to reiterate. 

This time, be more detailed about your situation and ensure your creditor that you are doing all you can to repay your debt to them.

It’s a very good idea to enclose your personal budget and expenditure within the letter you send to your creditor. This will assure them that all of the extra money you have with you is going towards paying off your debts. 

Sharing personal information may seem like a bad idea but in this case, it’s important to let your creditors know exactly what your situation is like so that they’re more receptive and understanding. 

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Start Paying Anyway 

This may seem like bad advice, but I’ve learned over the years that building trust and goodwill with your creditors can go a long way. Even if your creditor has refused to accept your debt repayment offer, you should start repaying them anyway.

Let them know that you’re doing your best, being consistent in your payments and doing this as a gesture of goodwill. 

But keep in mind that this does not mean that you have a legally binding agreement with them. This should be kept as a last resort or kept until you have a mutually agreed plan for repayments.

Tell Them About Other Creditors that have Accepted Your Offer

If a creditor refuses to accept your debt repayment offer, you may be able to sway them by informing them about other creditors who have accepted it.

If it’s possible, you should send them photocopies of acceptance letters that you got from other creditors as proof. This can be a very effective technique, and there’s a high chance that creditors may be responsive to it. 

You can also explain to them how increasing your payments to them may impact the arrangements you’ve made with other creditors.

Be completely transparent about your arrangements with other creditors and explain to them how it’s very important to you that you treat all of your creditors equally. 

My Creditor has Refused to Freeze Interest; What Should I Do? 

In short, tell your creditors you might struggle! Sometimes creditors can refuse to freeze interest on your debts or they will only agree to reduce the interest by a little amount. This can be extremely troublesome for you as a debtor in most cases.

If your debt repayment offer is lower than the interest that is being charged on it, your debts will just keep on increasing. In other words, you will never be able to pay off your debts.

Point this out to your creditors and let them know that if it keeps continuing like this, you will have very little incentive to be regular with your payments. 

You can also contact a debt charity for some free debt counselling or financial advice. Their advisers will be able to walk you through all of your options and help you develop a plan of action that is most likely to succeed. This could mean that you negotiate a different type of payment plan, you appoint a third-party mediator, or you opt for a formal debt solution.

I’ve Tried Everything and My Creditors Still Refuse to Accept My Offer, What Should I Do? 

Your creditors are not obligated to accept your offer at any point. They can keep on refusing your payment offers as well as your requests to freeze interest. 

In this case, it’s very important to keep a level head, stick to your instincts and be persistent. It’s important that you stay in touch with your creditors and keep making a payment to them each month regardless of if they’ve accepted your proposal or not. Keep providing them with more information about your situation so they can grow to become more understanding. 

You can also attempt to tweak your payment offer so that it becomes more attractive to your creditors.

You should also keep in mind that if you’re being contacted by debt collectors or a debt collection agency, there’s no need to panic.

A debt collection agency does not have any more power over you than your creditors do. All they can do is ask you for payment. 

Debt collectors cannot enter your home without your permission and they don’t have the right to take any of your belongings either in order to collect debt.

They also need to stick to the rules and guidance from the Financial Conduct Authority (FCA). If you think that your debt collector has broken any of these rules, you should make a complaint.

How Do I Complain About My Debt Collector?

If you think that your debt collector has been unreasonable or behaved inappropriately, you can make a complaint. You can also make a complaint if you feel that they have broken any of the Financial Conduct Authority’s (FCA) guidelines.

Make your first complaint to the debt collection company in question so that they have the chance to sort out the issue themselves. Most debt collection agencies have detailed and straightforward complaint procedures for you to follow on their website.

If you feel that they have not taken your complaint seriously enough or have not addressed your issue properly, you can escalate matters.

You can make any secondary complaint to the Financial Ombudsman Service (FOS). They will investigate and, if your complaint is upheld, your debt collection company may be fined. You could even be owed compensation.

Can I Get A Debt Solution?

If your creditors have refused your negotiations or offers and you are still struggling to pay your debts, you might need a debt solution.

There are several different debt solutions available in the UK. This means that you have options, and you can choose the debt management strategy that will be best for your finances. I recommend speaking to a debt charity before you begin a debt solution, as they can give you free advice and make sure that you are making the right decision!

Debt Management Plan (DMP)

A DMP is an informal debt solution that lets you pay off your debts via a single monthly payment.

Because it is informal, it is not legally binding so you are not tied into a DMP for a minimum number of payments.

Individual Voluntary Arrangement (IVA)

An IVA is a formal agreement between you and your creditors. You agree to pay a monthly sum that is distributed amongst your debts, and your creditors agree not to contact you during your IVA.

IVAs typically last for 5 or 6 years, and any outstanding debt is wiped off when it ends.

Keep in mind that IVAs are not suitable for everyone. You need to owe several thousand pounds to more than one creditor to be eligible. You also need to demonstrate that you have some disposable income every month.

Trust Deed

IVAs are not available in Scotland. Instead, you will need to opt for a Trust Deed.

Trust Deeds work in the same way as an IVA – you pay an agreed sum each month that is shared amongst your creditors, they can’t contact you, and any leftover debt at the end of your Trust Deed term is written off.

Debt Relief Order (DRO)

A DRO is a good option for those facing financial hardship with no assets and little income.

For 12 months, you make no payments, but your creditors freeze your interest and don’t contact you.

If your finances haven’t improved during this year, you may be able to write off your unsecured debts.

Bankruptcy

If you have debts but no realistic possibility of ever paying them off, you may need to declare bankruptcy.

Bankruptcy has an unfair stigma attached to it as it may be your only way of getting a financial fresh start. That said, it is a serious financial situation that should not be taken lightly.

Sequestration

Sequestration is the Scottish version of bankruptcy.If you have little income and no valuable assets, you may be able to apply for a minimal asset process bankruptcy (MAP). A MAP is a quicker, cheaper, and more straightforward version of sequestration, so worth considering.

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My Creditor is Threatening Me with Court Action, What Should I Do? 

If a creditor is dissatisfied with your payment offer, they may write you a letter threatening you with court action. If this happens to you, it’s important that you don’t panic. Remember the following things:

• It is often the last resort for most creditors because court action for debt recovery is expensive.
  
• It’s not a criminal offence to be unable to pay your debts. You will not be facing any prison time just because your creditors are dissatisfied with your offer. 
  
• A court is there to help settle disputes in regard to money owed. Even after a court case, you will only be obligated to pay your creditors an amount that is affordable to you. 

Staying On Top Of Your Debts

One of the hardest parts about being in debt is that the industry isn’t at all transparent.

One common tactic used by Debt Collectors is contacting you under multiple names and addresses.

Sometimes, it’s for practical reasons, but even then it can be confusing and intimidating. So it’s important to try to keep a level head and research what’s going on. 

Some of the biggest debt collectors in the UK operate under multiple names. 

• Robinson Way will sometimes contact you under the name Hoist Finance. 
• Cabot Financial Group recently bought Wescot Credit Services
• Credit Style communicate as both Credit Style and CST Law. 
• Lowell Financial also owns Overdales and collects debts under both names. 

In fact, in the case of PRA Group, they’ve been known to use multiple company names. As you can see in the image below.

If you’ve been contacted by a debt collector recently, it’s worth going through your post and emails to check that you haven’t missed anything, just in case they’ve started writing to you under a different name.

References

CONC 7.3 Treatment of customers in default or arrears (including repossessions): lenders, owners and debt collectors

CONC 7.9 Contact with customers