A typical payment arrangement is an agreement to repay a credit card, catalogue or loan in affordable monthly amounts. This is also called an arrangement to pay.
You can ask a lender for an arrangement to pay, or a debt collector.
The key points are:
- an arrangement is needed if you can’t afford the normal debt repayments;
- do not offer more than you can afford;
- ask the lender or debt collector to freeze interest and not add any charges;
- it normally harms your credit record.
This article looks at making an arrangement to pay, including how to do this, how much to offer and what if the creditor says No.
Contents
Is a payment arrangement right for you?
The advantages of a payment arrangement
- a payment arrangement for a few months gives you time until your income or expenses improve so you can resume normal payments. This means it is normally your best option if you know you have a temporary problem. Perhaps you have been made redundant and need time to find another job.
- for longer-term problems, a payment arrangement where interest is frozen lets you clear the debt more rapidly and in a more affordable way;
- you can increase or decrease what you pay if your situation changes;
- most creditors will accept a payment arrangement and agree to freeze interest if you explain your circumstances but some will refuse if you are continuing to pay other creditors the normal,amount;
- having a payment arrangement means you normally get few letters or phone calls from a creditor; and
- it is less likely a creditor will take you to court for a CCJ than if you ignore a debt.
Some disadvantages of a payment arrangement
- a lender may reject your offer or refuse to freeze interest (see below);
- it may take a long time to repay your debts, even if interest is frozen. In this situation, it is better to take debt advice now than to spend years not making much progress.
- a creditor may take you to court for a CCJ even if a payment arrangement is agreed. This is unusual – it is more likely for larger debts, for business debts, and if you are buying not renting as the creditor can then get a charging order on your home;
- you have to deal with your creditors – some people don’t mind this, others prefer to get some help (see below);
- arrangements will often be for a short time such as 6 months. This is a nuisance, but if at the end of it you explain your situation is the same, the arrangement can be renewed;
- your credit rating will be affected (see below).
Debts this doesn’t cover
The arrangements discussed here are for “normal” loans, credit cards and catalogues.
Where a lender has some extra security, they will normally refuse to accept a lower amount and freeze interest:
- mortgages and other loans secured on your house;
- guarantor loans or logbook loans; and
- car finance eg HP, PCP, leasing.
If you have problems with any of these, talk to a debt adviser about your options.
Bills such as tax, rent, council tax and utilities are different, see What is a priority debt? for a list of these. Here setting up an arrangement to pay is a very good idea, but you may need to pay more to get the creditor to accept your offer. You have to negotiate these priority debt arrangments first, and your credit cards and loans may then have to accept a token £1 a month payments until your priority debts are cleared.
What about overdrafts? An overdraft on an account you aren’t using any more is just like any other bank debt and you can ask for an arrangement to pay that. Or if the overdraft has been passed or sold to a debt collector.
But if you are still using the account though, you need to talk to the bank about what they can suggest – and if it doesn’t seem helpful, think about switching to another bank. Overdrafts can be very tricky to clear.
How much should you offer?
National Debtline’s My Money Steps takes you through setting up a personal budget, converts your income and expenses so they are all monthly, works out what offers you should make to your creditors.
The offer to a creditor depends on how much money you have left after paying for essential expenditure and paying priority debts. This is divided between your credit card and loans, so that the larger debts get more of the money. This is called a pro rata division and your creditors will think this is fair. They will also understand that priority debts will get more.
If you have little money left, the budget tool will suggest:
You could offer a token payment of £1 per month to each of your creditors. This may only be a short-term solution but it can give you some time to work out your other options.
Your budget has to be realistic for many months, so don’t put in really low expenses that you won’t be able to live on. If you aren’t sure, phone National Debtline and talk to them about what figures are reasonable. Make sure you save your budget, in case you want to change/add something later and create a new budget sheet.
Phone or write?
If you want to phone, it’s best to have worked out a rough budget beforehand and decided how much to offer each creditor. A creditor will often want to talk through your budget with you. Having one in front of you will mean you are more confident and less likely to agree to pay more than you can afford.
Also work out a short description of the reason you have problems to tell the creditor. “My hours have been cut” or “My wife has gone on maternity leave” or “I am behind with council tax and my electricity bill and need to clear these arrears” – just say what has happened, you won’t be judged.
If you prefer to write, you can send a letter but email is faster, cheaper and you have a record of what you have sent. Enclose a budget sheet – this shows the lender that you are making a fair offer.
National Debtline has useful template letters you can use. Here the most important ones are:
- making a pro rata offer to creditors
- making a token offer to creditors.
What if the creditor doesn’t agree?
You can’t make a creditor accept, but if you have sent the creditor a budget sheet and you are making pro rata offers to all your creditors, they normally do. So don’t worry about this problem until it happens, as it may not!
In practice, you often don’t have any better options. If you can’t afford to make the normal repayments – which your budget shows – then don’t get into more difficulty by paying more than you can afford. So make it clear that you are not going to increase your offer.
Sometimes a creditor will refuse to make a payment arrangement if you are up to date with the debt. This is annoying when you are trying to do your best but the answer is simple – miss a payment. Cancel any direct debit, standing order or continuous payment authority with your bank and contact the creditors again in a month.
Sometimes a creditor will refuse a payment if they think it’s more than you can afford. If this happens, talk to a debt adviser about your other options.
What is the difference between a payment arrangement and a Debt Management Plan (DMP)?
Not much!
In a DMP, you go to a firm such as StepChange and ask them to set up the payment arrangements with your creditors, and you then just pay the DMP firm one amount monthly which they divide between your creditors. See A guide to DMPs for more details.
The end result for you – and for your creditors – is much the same. Some people like a DMP firm sitting in the middle and organising it as they don’t have to deal directly with their creditors. The more creditors yiu have, the more helpful a DMP is.
Some people prefer to do things themselves. If you have a lot of creditors it can be easier to get a DMP set up, but if there are only a couple it’s not that much hassle to set up payment arrangements.
Creditors are not allowed to refuse to set up a payment arrangement with you and say you have to have a DMP. And they can’t refuse to freeze interest if you are trying to make a payment arrangement and say they only do that for a DMP.
A payment arrangement has the same effect on your credit record as a debt management plan. See how DMPs affect your credit record for details.
Would a Breathing Space help?
A Breathing Space puts a 60 day hold on your eligible debts, during which time the creditors can’t add interest or charges, take you to court or send round bailiffs.
But unless 60 days will really let you solve your debt problem, you will still need a payment arrangement or another debt solution after that. And the Breathing Space is inflexible – all your debts have to be listed.
Many people who want to set up payment arrangements themselves may prefer to decide which creditors to talk to and possibly ignore creditors who aren’t a problem at the moment.
Need some help with this?
If this is the first time you can’t make a debt repayment, or you haven’t paid anything for a long while, you may be worried.
It normally won’t be as bad as you think!
Creditors are used to this, it is part of their business that some people can’t manage to repay on time and their regulator says they have to treat customers in financial difficulty fairly.
But if it makes you feel very anxious, or you have many creditors it feels difficult and confusing to speak to them all, or you aren’t sure if an arrangement to pay is right for you, or a creditor refuses to accept your offer, then talk to a good debt adviser for free and confidential help.
If you think you can only afford token £1 payments and you don’t this will change for years, then you should take debt advice as there may be better options for you. £1 a month may sound good, but it’s only postponing the problem, not solving it. If you are renting then a Debt Relief Order may be a much better option.
Complain if a creditor doesn’t freeze interest
Are you worried about debt management?
How to ask for refunds for all types of debt
Karen says
Yes I’ve put a complaint in with them I’ve also spoke to someone at westcott they have put my account on hold for 30days for marks to get back to me she was very helpful if I have to continue with westcott will i just set a payment plan with them I can’t understand what’s happened I was told in September they had all the paperwork back and didn’t need to do anything else and my first payment was due today
Sara (Debt Camel) says
I don’t know what has happened either. But the difference between this 0% consolidation loan M&S offered you and a payment arrangement with Westcot is that a payment arrangement will likely harm your credit score…
Karen says
Marks and Spencer have just rang me they are going to sent the paperwork out to me again and set it up again and cancel westcott
Martin says
Hi, I have an arrangement for a loan that they don’t charge any interest on due to the potential mid-selling of the loan. The original loan was with Picture who were unregulated and has since been sold on to multiple companies.
I have raised a complaint that although not charging interest they still take the original contractual amount each month. What has happened is the initial
Loan has been cleared 4 years ahead of time but as I had arrears this is all that is outstanding but is having a massive affect on my credit and potential mortgage.
My complaint is if no interest is being charged the contractual Amount would be reduced and the overpayment would go towards the arrears and not to the capital amount. Same as if the BOE increase rates then contractual Payment goes up and down if reduced.
Am I right in my thinking as I only owe arrears but this is impacting me and if they were to recalculate the arrears would have been cleared years ago and would not have an impact.
Thanks
Sara (Debt Camel) says
Who agreed to stop adding interest and how long ago? Was this via the Ombudsman?
Martin says
Hi the decision was taken by idem who bought the loan and they decided that there was some issues with the sale but as picture sold the loan and were unregulated they could do nothing about it and as a goodwill would reduce interest to 0% a few years back. The loan has been sold on again and my complaint is with the new company..
Sara (Debt Camel) says
have you asked to repay at a lower rate?
Martin says
No I have been happy paying the original amount it is only now that I can see that nothing has been set against arrears. If the interest rate changes then surely the contractual amount changes and money would have been set against arrears and I would have had these cleared and not having a further impact on my credit rating.
Sara (Debt Camel) says
i thought you said no interest is being charged now?
Martin says
I am not getting charged interest but my challenge is when I was being charged 9% interest I paid 600 per month. If interest rate is now 0 I should be paying say 400 with the additional 200 being set off against the arrears. Instead they have left the arrears to carry on. I am not disputing the amount just surely the additional amounts should have gone
Sara (Debt Camel) says
how long ago was this allocation of the overpayments? that you are concerned about? And when was the loan sold to the current owner?
What are the arrears remaining and how much are you paying a month?
Martin says
There has been no allocation to overpayments until recently so 600 per month is going to arrears now. The allocation of the payments has been an issue for years. My statements would show a balance outstanding and an arrears balance and a total. Every month the balance outstanding would reduce but arrears would stay the same. Currently the balance o/s is 0 so everything now goes to arrears. The problem is that as long as arrears show they also record an arrangement too which has massive impacts on credit. Current arrears are about £6k and loan was sold about 2.5 years ago
Sara (Debt Camel) says
So the arrears will be gone in 10 months.
It sounds as though you want to complain that idem did not record your payments correctly? I don’t know how likely that is to succeed but I don’t think complaining to the current creditor is going to be helpful.
Laura says
Hi Sara,
I have raised a complaint with Moneybarn as they have marked my payments as missed for all of 2021 even though they have agreed to a payment plan to clear arrears I had built up from loosing my job in 2020. I paid the monthly amount and an additional £100 to clear the balance, they have said they are not responsible for joe credit agencies report this information and they only report it the payments are a month or more in arrears. Is there anything I can do or you can suggest please? It looks really bad on my report that I have 12 “missed payments” thank you
Sara (Debt Camel) says
what are the arrears now?
Laura says
The arrears are 0 they have been cleared since end of 2021
Sara (Debt Camel) says
and the credit report now correctly shows you as up to date? it was just the reporting in 2021 you are worried about?
Laura says
Yes that’s right because it’s for the whole of year and shows 12 missed payments, I am looking to get a mortgage 2026 and think this will impact it.
Sara (Debt Camel) says
I would be surprised if a mortgage lender in 2026 cares whether you had missed payments for a year or missed payments for a few months followed by a payment arrangement. If the next 5 years on your credit record don’t have any problem you will probably be fine. You could discusss this now with a mortgage broker if you are concerned.
Lukas says
Hi Sara,
Happy New Year.
Quick question: I switched accounts from Halifax to First Direct, and when they did change, I left with unpaid debt in Halifax after my account closed.
Halifax told me that I have 30 days to pay for the outstanding.
I called them, and they are happy to make a payment plan for me.
My question is:
A PAYMENT PLAN ON A CLOSED ACCOUNT WILL AFFECT CREDIT RATING OR HARM THE CREDIT FILE.
Is there any difference between paying in full or setting up a payment plan so I don’t have to pay over 1700?
My biggest concern is I don’t want any negative impact on my file.
Your answer will be appreciated.
Sara (Debt Camel) says
A payment plan will hurt your credit score. If it is possible to pay it in full without borrowing more money, that would be a good idea.
Lukas says
Thank you Sara!
I paid full outstanding to avoid any negative marks.
Many Thanks as always – you saved my credit score !
Bex says
I know sometimes Debt collection companies will accept a lower amount if paid in full. Currently in a DMP, but family may be able to help us.
What would be a reasonable amount for PRA (£5k) and Moorcroft (£15k) to accept if we offered them a jump sum payment?
TIA
Sara (Debt Camel) says
how long have you been in a DMP? How large are the total debts? Do you have a house with equity? How much are you paying the DMP firm each month – is this StepChange?
Liz says
Hi Sara,
During my mortgage application with Barclays last year – they were happy to reconsider me 12 months after the end of the AP but I didn’t realised that agreeing to a holiday payment for an overdraft amount not totalling to more than £1900 would show up on my credit file as an arrangement payment between January 2022 till when I cleared it all in april 2022. Is there anyway I can get this removed from my credit file because I would never have agreed to it if I knew it would impact my credit file. How long does it stay on our credit for?
Sara (Debt Camel) says
why did you need an overdraft payment holiday? which bank was this?
Matt says
Hi
I’ve been paying off a £800balance from quid market since august last year. ( £10 a month ) This was agreed as I made an irresponsible lending complaint d they wrote off the interest as a gesture of good will. Now out of the blue with no warning they have added an “ arrange to pay” marker on my credit file. This was not mention in their final response letter when I agreed to accept. Can they do this?
Many thanks
Matt
Sara (Debt Camel) says
I suggest you complain and say you would not have accepted their offer to settle the complaint if they had said they would add an arrangement to pay marker to your credit record.
Having said this, wouldn’t you like this payday loan off your credit record in less than the 6 -7 years it will take at £10 a month?
Matt says
Thanks I will complain and yeah in my complaint I will increase the monthly payments to £30 as long as the negative markers will come off my credit file!
Many thanks again
Matt says
I have another problem with a debt with cash float. The FOS upheld my complaint and so I’ve been on a payment arrangement to clear the balance. I asked for a settlement figure to which I got a reply of £50. The outstanding was £80. I paid it, thinking great another debt out the way.Now I have been getting emails saying I still owe them the £30. I contested this but they are saying technically I am still in arrears and until the £30 has been paid my credit file will reflect this?
Its exhausting dealing with these companies!
Sara (Debt Camel) says
Did you ask for the settlement in writing?
Did the FOS decision say to remove negative marks from your credit record?
Matt says
Yes Cashfloat were told to remove any adverse markers on my file
It was just an email saying settlement amount and then I had an email saying money received!
Perhaps I should’ve got a written confirmation then!
Looks like they’ve tried to deceive me…
Is there anything I can do
Sara (Debt Camel) says
Then I suggest you send them a completing you would not have paid the settlement if you had been told the remaining balance would still show on your credit record. Ask them to change this so that no balance shows and any adverse mr,era re removed, as per the FOS decision.
jm says
Hello,
I’m new here.
When I got married, my husband had a very bad credit score with a lot of debt. I took over his finance and paid off everything. The last payment was made this month. Few months ago, I checked our report on checkafile. I found out that he had an arrangement to pay on his virgin credit file. We are now planning to buy a house but the AP could be an issue. The marker will only be removed in 6 years. The mortgage broker told me that I could have a bigger deposit but we only have 10%. I noticed that in 2018, he didn’t make any payments for 6 months. Could we ask virgin to put a default
backdated to 2018 and remove the AR so that it leaves the credit report this year. I don’t know if it makes sense. Can someone help me.
thanks.
Sara (Debt Camel) says
Yes you can ask Virgin t do this
Maria says
Hi! I have been paying £40 towards a loan. The bank has agreed to let me pay just £40 for 6 mos and its ending in June. Should i ring them then and inform them that no changes to my income has transpired or should i just continue making £40 quid? I get very anxious talking to the bank people.
Sara (Debt Camel) says
What is the rest of your situation like? Can you give some more background – do you have other debts with that bank? With other lenders?
Was this loan difficult from the start, did something big change 6 months ago or was it general cost of living problems?
Maria says
Hi the loan was swindled by a Fraud scam together with another loan from a different bank account. At the same time I also lost my employment and had to relocate to an area of higher cost of living to maintain my visa sponsorship. I am still living with the same landlord and working for same contracted hours on my employer so no changes from the last 6 months transpired. I will apply my permanent residency next year and by then i can do two jobs but til then i am still limited. My first loan agreed for me to pay £50 til january 2026 but this second loan i pay £40 but only agreed for 6 mos which is ending this June thus I am wondering if should i just keep paying £40 til my residency or should i ring them again to extend.
Sara (Debt Camel) says
I think you should ring them up and say your situation hasn’t changed.
Have you taken any advice about the fraud? If not, go to your local Citizens Advice and see if they can help.
RJG says
Hi,
I received a letter from MBNA saying that I needed to contact them to arrange a DMP or pay the outstanding balance by the 15th of May. I had planned to pay the full balance on the 17th of May (payday) so I called them to tell them I did not want a DMP as I am comfortable to make the payment 48 hours later.
Unfortunately the complaints officer and subsequently his manager both told me that if I did not make the payment by the 15th then they couldnt guarantee that the account would remain active and that it will have a default notice sent to creditors and it may be sold to a debt recovery agency.
For context the account is over 5 years old, I made a partial payment of £130 on the 19th of April. The reason for the missed payments is that I had to make BNPL payment to avoid interest.
I am comfortable to make the payment for the credit card on my next pay day, i believe they should have been more flexible – is there something I can request i.e breathing space to stop them recording a default to buy me the 48 hours to pay the moneys owed.
Sara (Debt Camel) says
How many payments have you missed to MBNA?
RJG says
I didn’t pay February & March and I then made a partial payment of £130 in April which was the equivalent of owed payments for the minimum payment to cover March & April (I had notified them and they’d agreed to not charge interest on those 2 billing months. This was an automated option via tha app.
Sara (Debt Camel) says
Well you could send in a formal complaint at the moment saying that they are behaving unreasonably by not allowing you to pay two days late.
I am not clear how this debt is currently shown on your credit record. Your plan to not pay MBNA to clear the BNPL was not a very sensible one.
You could contact a debt advice firm eg StepChange and ask for a breathing space – this will prevent you being contacted about any of your debts but it will not haly problems being reported to the credit reference agencies if you do not pay on time.
Adam says
Does anybody have any experience (hopefully positive) of getting a creditor to change an arrangement to pay to a backdated default? I have been in an arrangement with ShopDirect (Very) since July 2018. If I had missed payments and defaulted this would be dropping off my credit file in the next few months however thinking I was doing the honest thing in setting up a payment plan I am actually doing it more long term harm as it will still show for 6 years after the account is closed.
Sara (Debt Camel) says
yes, ask Very to back date the default. See https://debtcamel.co.uk/debt-default-date/ for what to say
lynne Byrne says
Hi Sara, I was a guarantor for an Amigo loan and myself and the borrower have received a decision on the amount of refund we will receive.
My question is that I am currently in a repayment arrangement with Intrum and have been paying token amounts for a few years for the Amigo loan. However they have sent me a letter recently, out of the blue, claiming that I am not paying and that I need to agree and set up re payments on the Amigo loan. Do I need to stop paying them now as if so, I will cancel the standing order I am currently paying.
Sara (Debt Camel) says
Who sent you this Letter saying you weren’t Paying, Intrum or Amigo?
lynne Byrne says
It was Intrum who stated the following:
“The outstanding debt of £3223.86 remains unpaid. We would not ask you to repay more than you can afford and can accept an offer of repayment that repays your balance over a period of time.”
This is nonsense as I have been paying them £! a month for a few years.
Also I have just read on the letter that was emailed to me that “As your claim has been upheld, we will arrange for your liability as Guarantor to be removed. This means that you will not be liable for any future payments to the loan(s), or contacted regarding it, in future. As this loan was sold to Intrum, you will need to contact them directly if you have any queries about payments made to them, or any recurring payments that are still set up”
Sara (Debt Camel) says
I suggest you Cancel the payment of £1 to Intrum.
Reply to Intrum saying that Amigo have upheld your claim and you have been released as Guarantor – attach the decision from Amigo showing this.
AB says
If you come out of a payment arrangement with a credit card account before the account is settled, so it was a temporary arrangement and then the account was back to normal, will the AP markers drop off after 6 years if the account carries on being used?
Sara (Debt Camel) says
The account will not drop off for 6 years after it is settled. The AP markers should cease to affect your credit score 6 years after the last one.
How temporary do you expect this arrangement may be?
AB says
Hi, I didn’t ask if the account would drop off (it won’t do as it would still be in use) I asked about the AP markets. The arrangement would be for 4 months.
Sara (Debt Camel) says
I was just letting you know in case.
Simon says
Hi Sara
I hope you are well.
I have around 22k of debt. (14k on credit cards and 8k in loans) I have been struggling keeping on top of them all.
I had missed a few payments last month. Some of the companies have offered to go onto a payment arrangement. I would like to know, if i do this. What effect does it have on mu credit file? is it like a default?
i have 6 defaults on my credit file currently which come off in July 2025. Ideally i don’t want anymore. I am aware that these companies will put down that i am on a payment arrangement on my file should i go into one.
The loan companies are tricky as they say i will be in arrears and eventually i will need to make up the difference to get back up to date, which i just cannot do.
I am currently working but have very like money left after bills, mortgage etc around £50 to be exact.
it’s probably going to take me around 2-3 years to pay these all off with interest. But this leaves no money for clothes, holidays etc.
I’m in 2 minds whether or not just to go bankrupt (i currently do not own a house or car) i rent a house.
Sara (Debt Camel) says
do you have a mortgage?
Simon says
I currently rent a friend’s property. He’s fully aware of my situation and is happy as long as the rent is paid on time. Which it always is
Sara (Debt Camel) says
OK, then this ” I am currently working but have very like money left after bills, mortgage etc around £50 to be exact” should say rent rather than mortgage?
Also that figure of £50, is that after you have made the minimum debt payments? how much do these add up to?
Simon says
Sorry, yes it should say rent.
Yes around £50 a month after all bills have been paid.
I just feel so stressful about it. I’m losing sleep.
The £50 is only if I hit my monthly bonus (which is not a gaurantee) If I don’t hit this, then I’m short for my bills by around £434. But I usually hit this no problem.
Hence why I am thinking or either ringing them all up and asking for a payment arrangement for them to be paid off in 2 years. Or even bankrupcy/DRO as I own nothing.
I just wasn’t sure If I rang them all up and let them know ow my situation and asked to free the interest and go on a payment arrangement. Would they put a default on my credit file. Or is it just know as a payment t arrangement on my credit file. Is that worse than a default?
My head tells me to go bankrupt as I will feel like a pressure is lifted, but my credit will be awful for 6 years+
My heart tells me just to keep pushing through with a payment plan
Sara (Debt Camel) says
So with no assets to protect, you should rule out an IVA as an insolvency option. It has no advantages over bankruptcy or a DRO.
If you think you can pay the debts off in 2-3 years with interest but that is on a totally bare bones budget, then it may well be that a debt management plan is your best options, where new interest is stopped.
A DMP is really just a series of payments arrangements with each creditor which is made simpler for you as the DMP firm talks to the creditors and you only have to make one monthly payments to the DMP firm.
I suggest you talk to StepChange about a DMP. If they think any other option is better, they will explain why. https://www.stepchange.org/ Avoid any DMP firm that charges fees – they are exactly the same as StepChange but will take longer to finish as part of your money each month goes on fees not to your creditors.
A DMP is no better or worse than payment arrangements for your credit record. Because in a payment arrangements the debt will often default anyway…
Although defaults are worse for your credit record than payments arrangments, defaults drop off 6 years after the default date, but payment arrangements stay for 6 years after the debt is settled, so they are on their for longer.
Simon says
Yeah i don’t think i would entertain an IVA as i am in a commission based role which makes that tricky.
bankruptcy or a DRO seem like option that could help though. If i go into a DMP i’m still going to have defaults on my credit file for 6 years as well as have to pay the full amount off.
with bankruptcy or a DRO i would possibly only be paying a small amount a month, say £200 (depending on the income an expenditure list i’d go through) for 3 years then it will all be clear right?
i feel like this may be the option that may benefit me as i don’t have a car or house and won’t be applying for a mortgage anytime soon. For the quickest and cheapest outcome. would you recommend this as it has the same effect on my credit file as defaults, right?
Sara (Debt Camel) says
If you can pay 200 a month, that rules out a DRO..
Look talk to StepChange about a DMP. Don’t underestimate your expenses. See what they say.
Simon says
does a DRO only work is you have £0.00 left over after bills?
Also i read that after 12 months if your circumstances change after that 12 months, you will need to pay what you owed back.
I’ll speak to step change. I am leaning more towards bankrupcy over a DMP as it will clear everything a lot quicker and i have no plans for a mortgage etc
Sara (Debt Camel) says
You can have up to £75 a month left after bills and essential living expenses.
I am leaning more towards bankruptcy over a DMP as it will clear everything a lot quicker and i have no plans for a mortgage etc
that’s your choice, just find out the facts first
KittyB says
I’ve had a payment arrangement with Sainsbury’s bank since 2019 for a old credit card debt of £6600. It started in 2019 at £25 a month, but reduced to £10 a month in 2022 due to the COL crisis. I have paid this every single month without fail. In February 2024 I received a letter from Link Financial to say they had bought the debt, but their letter stated: “we will continue to accept the amount you have been paying to the Seller and their appointed servicer as long as this remains affordable for you…” So I just carried on paying as before. Since then I’ve had letters almost every month saying my arrangement has been cancelled or they’ve been unable to agree an arrangement, or I need to contact them to make an arrangement. I have emailed numerous times to say I have a payment arrangement in place, sending copies of bank statements and a copy of my own personal records listing every payment since 2019, and quoting their original letter, but they just ignore this. This is causing me a huge amount of stress. How do I get them to leave me alone, to honour the agreement that was made with Sainsbury’s, as they stated they would in their original letter, and stop harassing me in this way?
Sara (Debt Camel) says
Your agreement with Sainsburys was not set in stone. Sainsburys could have asked you for information on your income & expenses to consider if it should be revised. And now so can Link.
Can you actually afford to pay more? The answer, yes or no, changes your options at this point.
Do you have other debts you are making payments arrangements to? And debts or bills arrears you are not currently paying?
KittyB says
It’s going to be difficult to pay any more each month. I also have another debt I am also paying £10 a month on, this one since 2017. Again, I have paid every single month. Before Link took over, everything went smoothly with Sainsbury’s. I don’t see how Link can say they have cancelled my arrangement, when their original letter said they would honour it , and I have been paying every single month. Different departments and staff at Link don’t communicate with each other either, which adds to the stress. For now, I’ve now adopted “broken record syndrome” and just keep repeating in my emails that I do indeed have a payment arrangement and attaching a copy of their original letter, with their pledge to honour the original arrangement highlighted. I am at the end of my tether, my anxiety is going through the roof, and I just want them to leave me alone to pay the amount I can afford peacefully, as I have done for the last five years.
Sara (Debt Camel) says
If you can’t afford to pay any more, you have several options:
– just tell Link and go through an income & expenditure statement with them. When they realise you really don’t have extra spare money they will probably be happy to carry on getting £10 a month for it
– carry on with your “broken record” approach and put up with the hassle until the point where they threaten you with going to court
– ask Link to produce the CCA agreement for the credit card. See https://debtcamel.co.uk/ask-cca-agreement-for-debt/. If they can’t, then you can stop paying them anything.
– talk to a debt adviser (I suggest National Debtline on 0808 808 4000) about your full situation and your options for all your debts
Paul says
Hi, I went into a dmp 6months ago, the creditor I owed 6400 to has now sold the debt on but they have sold it to the value of 10500, which is what it would have been after the fours years of payments with interest? Can they do this? As technically that interest has not been accrued yet?
I thought it would have been what was left of the principlal loan amount ?
Thanks
Sara (Debt Camel) says
Who is the lender? And which DMP firm?
This often seems to happen with loans… it is never very clear why.
But my first thought would be have you looked at affordability complaints about this and all the other debts in your DMP? If you win one, all the interest is removed from the balance. the complaint goes to the original lender, who then has to get the balance corrected with the debt collector. See https://debtcamel.co.uk/tag/refunds/ which has different articles about different types of debt, each with a template you ca use?
Paul says
Thanks. Lender is Updraft (Fairscore Ltd). DMP is with stepchange.
I’m not sure about the affordability complaints because I feel ultimately responsible. I’ll look into it
Laura says
Hello sara lantern have now acquired my amigo loan guarantor has been released but amigo themselves are still reporting missed payments on my credit report is this legal im so worried that they are just haunting me with this lantern have agreed to payment arrangements but nothing seems changed in seems of reporting if you could shed some light thankyou
Sara (Debt Camel) says
Have you asked Amigo why they haven’t deleted the credit record?
How long will the payment arrangement with Lantern take to clear the debt?
Is there a default on the credit record?
Laura says
When i asked amigo they said that they wouldnt delete or backdate default but i will ask again if it can be deleted this time im not sure it is a small arrangement for now but i may settle in the future if i can afford too and no default has been added by either of them
Sara (Debt Camel) says
have you been paying all the time? or has there been a long break? if a long break, when did it start?
Laura says
Under amigos it was a reduced amount till guarantor claim was upheld but a balance was left because i didnt claim now lantern has it my arrangement has only just started with one payment been done so far but nothing has been reflected on my file apart from the missing payments hence me seeking advice
Sara (Debt Camel) says
how many missing payments were there and how long ago?
Laura says
Missing payments since 2019 guarantor stopped paying in january of this year when her claim was upheld and me paying lantern from this month
Sara (Debt Camel) says
so you can argue that Amigo should have added a default back in 2029/2020. In practice if they refuse to do this, you have very few options as as you didn’t make a claim to the scheme and you can no longer take a complaint about anything Amigo has done to the o budsman because of the scheme.
How much do you still owe, do you have other problem debts and how much are you paying Lantern a month?
Laura says
So do you recommend just asking them to delete the agreement on the record because lantern has it or add a backdated default? The balance is 5k and only paying £20 monthly it is my only adverse credit but the missing payments reporting indefinetly seems unfair and neverending
Sara (Debt Camel) says
I suggest you ask them to add a backdated default
Edward says
This post is very informative! I hope you can assist. My credit is in the mid to high 500s. I have two accounts in collections within the past two years. One is a phone bill which I paid in full for $300. The other is a store card that had a balance high balance of $3,400. I have set up arrangements with the collection agency and have since decreased the store card debt to $1,700. What recourse do I have for possibly fixing these charge-offs? It is possible to get a pay-for-delete agreement at this stage in the game? Can I dispute the phone bill even though its been paid in full? Please advise. I’m young and I made some mistakes, but I don’t want seven years of bad luck :( Thanks so much
Sara (Debt Camel) says
I am sorry but I can’t help with credit record questions for people outside of the UK. In England, pay for delete isn’t possible.
Mike says
Hello. I’m just curious, if the loan disappears 6 years after default from my credit report, do I still have to pay it? For example if I m in payment arrangement plan wich would last longer than 6years due to smaller amounts paying each month.
Sara (Debt Camel) says
See https://debtcamel.co.uk/paying-old-debt/ which looks at this situation
Sandra says
Hi. I set up payment arrangements on my HSBC credit card and Barclay’s credit card around month ago. Barclays blocked card literally after one day after wich is ok and as should be. I tested it if it’s blocked for sure. I did today the same with HSBC card and I was surprised that I was able to pay with it for shopping and even withdraw money from atm. On recent statement there is information that no interest was charged so they set up payment arrangement but why they not blocked the card. So now I m curious what will happen on new statement, will they charge me for cash withdrawal or refund that fee as they should block card immediately. I hope they finally block it as it should be blocked or even closed. I’m curious of Your opinion.
Regards. (this is about UK banks of course)
Sara (Debt Camel) says
No idea. It may hav3 been an error. Why don’t you tell them you want it blocked? Or just cut the card up?
Peter says
Hi Sara i have cc debts 27k not paid for 3 months now as interest around £350 a month if i get the 4 cards defaulted will interest stop so i can enter a payment plan or will creditor go for charge on my house ?
Many Thanks
Peter
Sara (Debt Camel) says
How much are the minimum payments?
Do you have other non priority debts such as loans that you are still paying?
How much can you afford to pay across all the three cards?
Peter says
I can pay £30 each card all priority debts are up to date. I have a loan 6k which I plan to pay all off with selling of car.
Loan payment is £190 a month missed 2 payments this will be cleared with car sold. No finance on car hpi clear.
Sara (Debt Camel) says
I think you should talk to StepChange about a DMP now, see https://www.stepchange.org/how-we-help/debt-management-plan.aspx
That will get the interest stopped. At the moment it is just piling up and you don’t know when they will default you.
Most creditors will default you soon into a DMP especially if you aren’t paying much. And if they don’t you can complain and try to get a default added.
At the moment you are paying a high price with in your debts getting bigger each month in the hope of getting a default added when that may not even be a problem in a DMP.
It isn’t common for a creditor to go for a CCJ quickly, but these things can sometimes move fast if it looks like you are trying not to pay anything and the creditor sells the debt to a debt collector. And it’s rare for a charge over your house to added.
Alison says
I have a default with mbna- I have never made any payments to them and the default is due to drop off in March next year. I only had a few months to wait and then today I got a letter saying it has been sold to Lowell. My question is will I now have 2 defaults showing on my credit file? They want me to set up a repayment plan so will this then continue to show on my file for another 6 years?should I try to do a partial payment? I want to do whatever I can so that this default drops off in March- and I don’t want anything else showing in there -could I just make monthly payments to them without setting up a repayment plan- then this wouldn’t show in my credit file and the default will just drop off in March? Would they be willing to allow this or do they have to set up a repayment plan?Will both defaults with Lowell and mbna drop off? Any advice would be greatly appreciated.
Thanks so much for your help
Sara (Debt Camel) says
My question is will I now have 2 defaults showing on my credit file?
Yes, but this doesn’t matter as only one is counted in credit scoring
They want me to set up a repayment plan so will this then continue to show on my file for another 6 years?
No, the debts with MBNA and Lowell will drop off 6 years after the default date on the credit record whatever you do.
The problem is if Lowell choose to go after a CCJ, that would be added to your credit record for another 6 years
Monthly repayments ARE a repayment plan.
is this your only problem debt?
alison says
No I have another default with Debenhams but this is way old debt opened in 2001 and is due to drop off next month-
I am going to write to them for a copy of the CCA.
Sara (Debt Camel) says
great move for an old debt!
Alison Hemple says
Just one more thing- I have been offered a debt discount with Lowell so I can settle the debt for a lower amount- I understand this will show on my credit file as partially settled but will this drop off with the default next March when it’s been 6years since the default was issued? Thankyou so much
Sara (Debt Camel) says
Yes it will still drop off after 6 years from the default date.
How large is the discount? What sort of debt was this originally?
Kelly says
I am with aqua credit card . My credit limit is £450 and I am aiming to clear it by the end of the year. The balance is currently £350 (what I owe) with £100 available to spend.
I have just asked them if they could reduce the credit limit for me and they have refused saying they would like me to pay another £100 off first.
Surely this shouldn’t be allowed. I hope there isn’t any issues when it comes to closing my account.
Sara (Debt Camel) says
Try asking them to close the account so you cannot spend on it.
Ama says
I’d like to submit an irresponsible lending complaint for a credit card debt I’m making payments on a payment plan monthly. I’m wondering if I should submit the complaint to the original lender or to moorcroft who the debt has been moved to?
Sara (Debt Camel) says
To the original lender
Natalie says
Hi Sara. have a payment plan in place with a Next and have been paying £20 per month I have never missed any payments. It’s been 12 months and want to continue to the arrangement and they have said if i want to continue the payment plan I will have to default, or start making the minimum payments which will include interest. I had a payment plan agreement with Very without being defaulted and they froze the interest so I feel like Next are being unreasonable as I have never missed a payment. I don’t understand why the arrangement can’t continue. I was wondering if what Next have said is normal practice, Or there anything I can do? Thanks, Natalie
Sara (Debt Camel) says
A default is normally in your best interest as your credit record will be clean sooner. A record with a default drops off your credit file after 6 yeas from the default date. An undefaulted record stays on for 6 years after the final settlement date.
Have you looked at affordability complaints against both of them? they may have set too high a credit limit at the start or increased it too high? See https://debtcamel.co.uk/refunds-catalogue-credit-card/ for more details and a template letter you can use to make a complaint
Jasmine says
Hi Sara
I took out a car on finance back in 2019. During the first month I called to adjust the direct debit date to align it with my payday. They said they couldn’t change it for that month, but they would spread that month’s payment over X amount of payments and the direct debit date would change from the following month.
I accepted unaware that it would impact my credit file. I continued to pay my monthly payments in full + a % of the first month amount. My questions are 1. Should the lender have told me about the impact it would have on my credit files? Is there anything I can do to get it removed as they failed to inform me? And 2. Should all months show up as AP or just the original month that was missed/delayed?
Sara (Debt Camel) says
so the first month was spread over all the remaining months?
Jasmine says
Hi Sara
From my statement of account it appears to be over 12 months.
Sara (Debt Camel) says
well really those 12 months should show a payment arrangement and after that there were no arrears and you paid on time.
I suggest you ask the lender to either remove the AP markers completely (as you weren’t warned about this) or correct all the later months.
Jasmine says
Hi Sara
Thanks so much for your help. I’ll contact the lenders and see what they say. Are you suggesting I have a solid argument to ask them to remove the AP on my credit file as they failed to inform me?
Sara (Debt Camel) says
I am saying it is an argument – I wouldn’t go so far as to call it “solid” but it seems reasonable to me, because if you had been told how big the impact on your credit record would be, you could have thought about whether you had any other alternative for this short term problem