A few readers have asked recently about long term debt payment arrangements. What information do they have to give to a debt collector? Can they can be asked to pay more? etc. Let’s look at three different cases:
- an arrangement with a creditor;
- what happens if you use a DMP firm; and
- what if the payment is to a CCJ.
Arrangement with a creditor
Mr A asks: I have had an arrangement with a debt collector for a number of years. I pay £10 month by direct debit so it’s never late. They have begun sending letters asking me to resubmit my income/expenditure. Do I have to do this? Can they do anything if I do not give them this information and just continue with my current payments?
Everyone was happy when the arrangement was set up. Mr A was relieved this debt was “sorted” in a way he could afford. The creditor was getting some money and knew Mr A was paying a fair amount.
A few years later, Mr A is still happy, he doesn’t mind paying this for many more years. But now the creditor is wondering if Mr A can pay more.
This may feel unfair – you have kept your side of the bargain, why does the debt collector want to change it? But this sort of arrangement is not a formal long term contract. It is just a temporary agreement with the creditor to accept less than the original contract said because you were in financial difficulty.
You don’t have to send them a new Income & Expenditure (I&E) form, they can’t make you. But if you don’t, they may think you have more money … in which case they may decide to start adding interest again or take you to court for a CCJ.
So it’s better to give them your I&E details. It’s worth thinking about what your expenses actually are – it’s easy to miss off things if you don’t budget in detail. Using an online tool such as StepChange’s Debt Remedy can help you to get a full list.
DMP firm wants a review
Mrs B asks I’ve been in debt management for three years and it will go on for a lot longer. My DMP firm is saying if I don’t contact them for a review they will end my plan. What would happen then? Do I need a new DMP with someone else? I can’t afford to pay any more as I have had another child.
Some people prefer to use a DMP firm as it means making only one payment per month and not having to deal with their creditors directly. But a debt management plan run by a DMP firm is essentially a series of debt arrangements made with creditors.
In a DMP a creditor won’t usually ask you to send them a new I&E. If one does, just send the letter to your DMP firm and they will deal with it!
However your DMP should do an annual review with you, including doing an updated I&E, and then send an update to your creditors. This review isn’t just check to see if you can pay more – it will also look at whether a DMP is still a good debt solution for you. Sometimes people start DMPs hoping their situation will change in a few years and they can then repay the debts faster. But if things haven’t improved, it’s a good idea to look at your other options. This may be the case for Mrs B.
If you don’t talk to your DMP firm about a review, in the end they may say they can’t run your DMP any more. In that case you will have to talk to your creditors again and make an arrangement with each of them. You could talk to a different DMP firm, but the FCA, which regulates DMP firms, wrote them all in December 2016 reminding them that had to do annual reviews – so switching firms probably won’t help.
CCJ creditor wants you to pay more
Ms C asks I have been paying £25 a month to a credit card CCJ for a few years but now I have been asked to send in details of my expenses and income. Is this legal?
This comes as a surprise to people. After the court has set what you should pay each month, why is a creditor asking for higher payments? The answer again, as for debt management, is that the payments were set at a level that was right for your circumstances at the time, but the creditor is hoping you are now better off.
So it is legal to ask. If you refuse, the creditor can go back to court and ask for a variation to the order. Or if you have a house, the creditor could decide to go for a charge over your house.
If you have missed some payments, the creditor can also apply to the court to enforce the judgment. This could involve bailiffs or by getting money deducted from your wages (called an “Attachment of Earnings”.)
Any other options?
The answer for all these situations was pretty much the same. An occasional check from a creditor or an annual review with your DMP firm is normal. If you don’t supply the information about your current situation, the creditor may take further action or your DMP may end.
As a very broad generalisation:
- if you can afford to pay more, it’s good to start doing this to get the debt repaid sooner;
- if you can’t afford to pay more, or are struggling already, it’s good to look at your full situation, not just an individual debt;
- if you have had a windfall (bonus? payday loan refund? PPI refund?) or a family member could help you, think about offering a full and final settlement.
But your situation may be complicated. A few examples: retiring in the next few years; family getting bigger or smaller; an interest only mortgage; need to move or remortgage soon etc. These sort of issues don’t show up in an Income & Expenditure sheet – that is just a snapshot of where you are right now. So:
- if you are in a DMP, talk to your DMP firm about a broad review of your situation and how it will be changing;
- if you aren’t in a DMP, try to make time for some long term debt advice – check out my list of good places for debt help. This may not feel important at the moment, but debt problems are usually easier to tackle before they become urgent!
What can you do if you can’t afford a water bill?
do I have to pay a debt not on my credit record?
Could a Debt Relief Order help you?
Jane Clack says
A useful and interesting article – clearly and simply explained.
charitynjw says
Hi Debt Camel
So does this cut both ways?
If your financial situation is shown to be worse, would the creditor be happy with a reduction in the payment amount?
Sara (Debt Camel) says
Yes :) However if you have been paying for a few years and now need to pay less, it’s probably best to think if you have any other better options.
charitnjw says
Thanks, Sara.
Graeme Curtis says
hello
I have a debt from negative equity from around £11k in 1999 (nearly 18 years!) and have been paying £20 a month ever since. I still owe around £8K.
Recently i have been contacted by new debt collectors asking for income & expenditure (haven’t heard from the previous debt collectors in years or had an statements from them). They also have sort of asked for copy bank statements and payslips etc. Do I legally have to send them these?
I am going to offer them £2K which will come from a relative…how likely are they to accept this as f&f settlement?
any advice or experience would be welcome.
Sara (Debt Camel) says
Legally you don’t have to send an I&E statement or bank statements, as the article above says. But the chance of the debt collector accepting a low F&F settlement if you don’t is very small. It is a shame you didn’t go bankrupt 11 years ago :(
Howard Fleetwood says
Hi there
Do l need to fill out an income expenditure form when asking for a settlement figure to a creditor.
I am getting the money to settle from my girlfriend.ls filling one out lawfully neccessary.
Thanks
H
Sara (Debt Camel) says
You don’t have to, but the creditor may be more likely to accept your offer if you do.
david smith says
i was told i have to fill out a i&e form as its is a legal requirement and send in bank statements and wage slips off which i don’t have is this true . also they said they can’t do i &e over phone but my sister who works in debt collection said they can . is that also true
Sara (Debt Camel) says
As the article above says, you don’t legally have to to this. But if you refuse, they pay go to court for a CCJ.
It’s really not worth arguing over whether you can do the I&E on the phone. It’s often better to do it on paper as you have more time to think about it. If you aren’t sure what you should put down, talk to National Debtline on 0808 808 4000 about this.
Christine Morris says
I have a few debts, have managed over the years to pay some off. I am now retired and disabled. I am paying £10 month on a mortgage debt , have been paying for approximately 25years, this debt can never be paid, I feel I have tried but it’s all becoming too much. Can I declare bankruptcy?
Also can they ask to use my disability payments towards the debt?
Sara (Debt Camel) says
Do you mind some questions? You are now renting? How much is left from this old mortgage shortfall? How large are your other debts?
Bev says
Do you legally have to include a new partner/spouses income on an I & E form even though debts were from a previous marriage? Surely debts/joint debts incurred from previous relationships have nothing to do with what a new partner earns & he/she shouldn’t be made to include their earnings to create a disposable income for a debt that has nothing to do with them?
Do you also have to give bank statements, bearing in mind that most people are paperless today?
Thanks
Sara (Debt Camel) says
Is this from court or from a debt collector?
Bev says
The original debt management plan which the company were being paid through has stopped. A direct payment & set a new plan up direct with the debtor with a slightly higher monthly payment was tried but they want loads of information including a partners/spouses income details (presumably to create a disposable income but surely a new partner/spouses income can’t be used as it’s nothing to do with a debt from his/her partner/spouses previous marriage?)
Do bank statements have to be provided?
Thanks
Bev
Sara (Debt Camel) says
There is a difference here between what you have to do “legally” and the practical way forward.
Legally you don’t have to tell them anything about your partner or supply bank statements. But legally they may be able to charge interest (if this still the original creditor or has the debt been sold?) and can take you to court for a CCJ – neither of which you want.
A DMP (and that’s what you have, even though you are running it yourself) is an informal arrangement between you and your creditor, you are just trying to reach an agreement as to what is an acceptable payment from you each month.
In a situation where you had a DMP through a firm and have now switched to a DIY one, the creditor may be wondering if you could actually afford to pay a lot more and you left the DMP firm because they told you that you had to. That may explain all the questions.
What sort of debt is this? How old is it (since you opened the account, not since you defaulted)? Is it still owned by the original creditor – if it is, have they stopped adding interest and have they added a default to your credit record? How long will it be before your new DMP repays all your debts? Do you have other debts that are not included in this DMP?
Jackie Littell says
I have been left with a bill from my dads funeral. The funeral people want £1,600. I am on JSA and my father who passsed away on 13th Aug 2018 was the last member of my family. I offered £10 month they refused that and want me to fill in a expenditure form. Do i have to or let them take me to court. I have nothing to lose.
Sara (Debt Camel) says
Have you seen if you can get help with the funeral costs? https://www.gov.uk/funeral-payments