Help - Letters from Creditors...

[snowman365]

Dear Forum

Hope you are all well!

Just a quick update and a request for advice...

I have now stopped paying my creditors their full amount - HSBC, Egg, Cooperative and Student Loans Co. - I wrote to them saying I was no longer able to make the full payments and would be paying each of them a token gesture of £10 each a month.

I amended all my DD's and SO's with my bank to do so. So far, the payment to Coop and HSBC has gone through as they were SO's, but somehow Egg managed to take the full amount even though I changed the DD to £10!!! Do they have the authority to override the amount which I set to pay them on their website?

Well, since then I have had a lot of calls from both Coop and HSBC but have not been answering them - I am a bit of a coward!!! Coop have been calling me about 5 / 6 times a day and leaving messages for me to call them back 'Urgently'. I think they are just trying to scare me.

I have also had 3 letters - 2 from Coop and 1 from HSBC. The first Coop one is a 'Default Notice' saying that I am in breach of my Loan Agreement and saying that if I don't make the payment by 14 days then my name may be given to Credit Reference Agencies and that I may have to pay the remaining balance of the loan (£20,421.22). I have also had another letter from the Coop saying 'Urgent' and asking me to make the payment again. The Coop have not acknowledged that I have sent them the letter.

I have had a letter from HSBC also. They acknowledged that I have sent them the letter. They have been quite reasonable. They have asked me to complete a 'Personal Financial Assessment Form' and return it to them in 14 days.

What should I do???

My plan was to put off paying my creditors fully for a couple of months and put aside a bit of money as a contingency fund, and then either enter into an IVA or go BR. I would prefer not to go BR as I see this as a last resort.

Should I reply to them??? Send them a letter / call them up???

Should I continue paying the £10 a month or nothing at all???

How long can I go without paying them before they are knocking on the door???

What about Egg - will they keep taking the full payment even though I have changed it to £10 a month again??? Should I cancel the DD altogether???

Will my creditors be more likely to accept an IVA if I cooperate with them at this stage or should I keep my head firmly buried in the sand and get my contingency fund???

I am now over my credit limit on the HSBC credit card, and over my overdraft limit on my HSBC account, so am probably going to get charged for this too.

I have set up 2 new Basic Bank Accounts though so my old account is redundant.

The reason I need a contingency fund is because I am having a lot of problems with my car at the moment which is proving to be quite expensive - I have taken it to 5 different mechanics and they are all at a loss to sort it out. Also, I am going out to Canada for a year, possibly longer in February to live and work (my partner is Canadian and she is out there now), so I need some money put aside for a flight, Visa and Travel Insurance.

Any info. / advice would be much appreciated...

[CJ08]

WOW... you have a busy time coming up then!!! well i cant really comment about the creditors etc on what to do apart from speak to the experts.... on the direct debit side i understand it from when i worked for a bank the only person that can change the direct debit amount is the company wishing to claim it and only you can agree to change the dd amount with them basically doing a dd is like a guarantee they will get the money where as a standing order your in control of that.... i would suggest if you dont want the egg dd to go out cancel it with the bank if you dont get any luck with with speaking to them or after you have spoken to one of the experts! Hope everything gets sorted out for you

[Adam Davies]

Hi
You need to decide exactly what you are going to do.
If you accumulate surplus money prior to an IVA or bankruptcy then this money will be asked for by your IP or OR.
It may be better to bankrupt yourself now and then save money for your flight etc after this has been done.
A direct debit gives your creditor the authority to take money from your account,however you can ask your bank to refund it under the direct debit guarantee if the incorrect amount was taken.
Regards

[snowman365]

Ha ha ha yeah - the next few months are going to be pretty hectic I think! It's amazing what turning 30 can do for getting one motivated to do the tings they want to do with their lives!!!

Thanks for your reply. I always thought that i a person set a DD at a certain amount themselves then it could not be altered, but I guess I was wrong! So they may just change it and take the full amount again then...

[TheMatrix]

No a DD gives the person the authority to take what they like out of your bank account, you are of cause covered by the DD Guarantee

A standing order however is a fixed amount which you can set.

[CJ08]

yeah thats right... because its like a credit agreement in other ways where you agree to them taking out the money no more or less unless you agreed directly with them otherwise!! They may take less if you go thru an I&E with them and say you need help (ive been down the same route with egg) but they i think not 100% sure they go on the disposable income scenario! You looking forward to the whole trip then!?

[CJ08]

i forgot to mention you can use the direct debit guarantee as well because if they agree to a set amount and request the wrong payment you can get your money back from the bank thru an indemity claim... heres more info on that http://www.financial-ombudsman.org.uk/p ... rantee.htm

[snowman365]

Hi Andy

Thanks for your reply.

So, I could ask Egg to refund the amount over the £10 I had set it at even though I owed them more as a minimum payment? I'm not sure I'd like to do that...

I think I am going to go for an IVA and hopefully still be able to pay into it from when I am in Canada. I have got a good chance of getting work out there. I really don't want to have to go BR so am going to try and avoid it as best as I can.

I am not talking a huge amount of money - probably about £2,000 maximum. What if there was no trace of this money ie it was all in cash somewhere safe, or in someone else's account? I really don't want to lose that money.

[CoverItAll]

Under the rules of the Direct Debit scheme, that are binding upon all Direct Debit Originators, if you challenge the validity of the payment your Bank must reimburse it to you straight away and contact the Originator of the Direct Debit asking them within seven days to show proof that they should have collected it.

In your case you are not challenging the fact that a Direct Debit Instruction is in force, but rather its amount. How did you instruct your bank to reduce the payment to £10? If they challenge the fact that you instructed them to reduce the payment to £10, can you prove that you gave this instruction?

If you can then they must reimburse you.

[snowman365]

I just wrote to them and said I could no longer afford the full payment and said I would be paying them £10 a month each. I also adjusted my payment amount through my account online. But, from what I can gather from people's replies above, they have the authority to take it anyway.

Should I continue paying the creditors the £10 a month or scrap that idea???

[TheMatrix]

If your going into a IVA, then I would not even make these token payments, and cancel all Standing orders and direct debits you have set up with creditors. Have you spoken to a IP yet?

[snowman365]

Going back to my original questions, should I reply to them??? Send them a letter / call them up???

Should I continue paying the £10 a month or nothing at all???

How long can I go without paying them before they are knocking on the door???

Will my creditors be more likely to accept an IVA if I cooperate with them at this stage or should I keep my head firmly buried in the sand and get my contingency fund???

So many questions - sorry!!!

[lighton]

Hi i am pretty sure you cant amend a dd with your bank . You can cancel it but to amend it you have to go to the company that you have dd with.s/o you can amend i do this every week, but your bank doesnt know how mch a dd is for until it goes out and they cant set a limit.

[CJ08]

I would speak to an IP and get their full advice on what to do before you do anything else if they tell you to cancel them and go on a plan/iva with them then the letters etc would stop! Like been said before if you get surplus it would be asked to be put into the creditors pot!

[snowman365]

If your going into a IVA, then I would not even make these token payments, and cancel all Standing orders and direct debits you have set up with creditors. Have you spoken to a IP yet?

Hi InanIVA

Thanks for your reply!

I have spoken to quite a few IP's - they all seemed to think that I would have a good chance of me being accepted. They were a little wary of me being able to pay it once in Canada though, but like I said I really am trying to avoid BR...