Can a Debt Collector Refuse a Payment Plan? Your Options

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?”

A collector can reject a particular offer, but regulated consumer credit firms must treat financial difficulty fairly and consider the customer’s circumstances.

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?

This guide explains how to present an affordable offer and what to do if negotiation fails. A payment offer does not replace responding to court papers.

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.

Ask why the offer was refused and whether further budget information would help. Acceptance is not guaranteed.

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.

Provide a realistic income-and-expenditure budget after essential living costs and priority bills. Do not offer money you need for food, housing or other essentials.

Share relevant evidence through a verified, secure channel. You do not need to disclose unrelated private information to demonstrate affordability.

» TAKE ACTION NOW: Fill out the short debt form

Check Before Making a Payment

If the debt is old, disputed or you may need an insolvency solution, get advice before paying or acknowledging it. A payment can affect limitation or the assessment of preferential payments.

For a current, valid debt, a debt adviser may suggest affordable payments while you negotiate. Do not borrow more or miss priority bills to make them.

Payments without an agreed arrangement do not by themselves bind the creditor to your proposal or stop interest or legal action.

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.

You can explain comparable offers to other creditors and provide relevant acceptance evidence if helpful, removing unrelated personal information. This does not oblige a creditor to accept.

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

Comparable non-priority creditors are often offered a proportionate share of available income. Priority debts must be considered separately; equal cash payments to every creditor are not always appropriate.

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

Explain clearly if continuing interest makes the proposed arrangement unsustainable and ask the firm to review it in light of your budget.

If interest and charges exceed the payment, the balance may grow. Ask for a calculation showing whether and when the arrangement would repay the debt.

For regulated credit debts, appropriate forbearance may include reducing or stopping interest and charges. Ask the firm to explain its decision and complain if it has not properly considered your circumstances.

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? 

There is no general right to have any offer accepted. However, regulated firms cannot ignore their duties to consider suitable forbearance and sustainable arrangements. Statutory debt solutions and court orders have separate effects.

If negotiations fail, obtain free debt advice on the next step. Do not assume that continuing a token payment prevents a claim or that you must pay before a liability or limitation dispute is checked.

Only revise the offer within a sustainable budget; an attractive offer is of little use if you cannot keep it.

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.

Ordinary collectors can request payment and creditors may pursue a legal claim. They do not gain bailiff powers merely by collecting the account.

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.

FCA consumer-credit rules apply to relevant regulated debts. Tax, council and other debts can have different rules and complaint routes.

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.

Complain to the firm first and keep copies and call logs. For an eligible regulated financial complaint, you can normally approach the Financial Ombudsman Service after a final response or after eight weeks without one, usually within six months of the final response. The Ombudsman can require a remedy or compensation; it does not impose regulatory fines. Tax, council and other non-credit debts may have different complaint routes.

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 an approved formal arrangement administered by an insolvency practitioner. It governs payments, fees and assets and binds creditors within its scope.

Many contribution-based IVAs run for five or six years, but the approved terms control. Only included debts remaining on successful completion are released; failure can leave you owing them.

There is no universal statutory minimum debt or two-creditor rule. Suitability depends on the proposed arrangement and your income, debts and assets, so compare alternatives first.

Trust Deed

IVAs are not available in Scotland. A protected trust deed is one possible Scottish option; a Debt Arrangement Scheme programme or bankruptcy may also be relevant.

A protected trust deed has its own rules, usually including four years of contributions and consideration of assets. It does not prohibit every creditor communication, and discharge depends on completion and the debts covered.

Debt Relief Order (DRO)

A DRO may suit someone within the applicable debt, asset and surplus-income limits. The criteria differ between England and Wales and Northern Ireland.

During the usual 12-month DRO period, recovery of listed qualifying debts is restricted and you generally do not pay those debts. Ongoing bills and excluded debts still need attention.

You must report relevant changes. Qualifying debts are normally discharged when the period ends if the order remains in force; not every unsecured debt is automatically included.

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 Scottish bankruptcy. The Minimal Asset Process is a route for people who meet its conditions, and the application fee has been removed. Seek approved Scottish money advice.

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:

• Treat a Letter of Claim or claim form seriously, even if you have offered instalments. Follow the applicable response deadline.
• Ordinary inability to repay consumer borrowing is not itself a criminal offence. Criminal fines and some public debts have separate enforcement regimes.
• A court can order a lump sum or instalments; an affordable result is not automatic. Provide the requested financial information and get advice about responding, varying an order or challenging a disputed claim.

References

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

CONC 7.9 Contact with customers