What should you do if a creditor refuses your order of payment?

Here you will find a lot of strategies and sample letters that you can use on creditors who did not accept your offer of payment or stop the interest of your account from going up.

MY CREDITORS REFUSED MY OFFER. WHAT NOW?

Writing offers of payment to your creditors can give you two responses: Either an acceptance of your offer or a rejection of it. If you have received the latter from your creditor then you can always ask him for a reconsideration by using SAMPLE LETTER A.

In this letter, you should give him a detailed description of your current situation. You should also attach your personal budget sheet to this letter.

You can start the letter by indicating the reduced payments that you will give them regularly. You should also include the thought that you are offering this as a "gesture of goodwill."

You should also inform them that your offer has been accepted by other creditors.

Attaching letters from your other creditors as proof can also be a great addition.

Another thing that you should add is that you cannot add another cent to your offer because it will upset your agreement with your other creditors. Make sure you emphasize that you are just trying to be fair to all your creditors.

MY CREDITORS REFUSE TO FREEZE MY INTEREST. WHAT NOW?

Even though your creditor has already accepted your offer of payment, he still hasn't stopped adding your interest. When this situation arises, you should use SAMPLE LETTER B. Sometimes, creditors have the tendency to refuse to stop the addition if interest or they may only allow you to reduce the interest that they are charging.

Your letter should point out that if he should freeze your interest because it will be ordered by the court anyway if you file a complaint anyway.

With an interest that is larger than your offer of payment, you will end up having a bigger debt.

Because the debt wouldn't stop increasing, you will end up not being able pay it off. This will make you feel like you are in a hopeless situation and you would be less motivated to keep up with your payments.

WHAT IF MY CREDITORS STILL WON'T ACCEPT THE OFFER?

If you have already written to your creditors for the second time in an effort to request for reduced payments and you still can't get a postive answer then you need to start looking for other options. This step is particularly important if you have a creditor who refused to freeze your interest. If find yourself in this situation, you can continue to pay the reduced amounts that you have offered and wait for your creditor's next court action.

Another alternative is to pressure your creditor to agree to your offer by using SAMPLE LETTER C which will prompt your creditor to take you to court.

If you decide to push through with sending this letter then you should stop paying your debts in order to show your creditor that you are serious. This will pressure your creditor to react more quickly.

In the letter, you should indicate that you cannot understand why you should continue paying your dues if your creditor has no intentions of freezing the interest. You should only take this option if you are prepared to face a lawsuit against you in the County Court.

Another alternative that you can try is to keep on making your payments while persuading your creditors to stop adding interest to your account.

WHAT IF THE CREDITOR THREATENS TO TAKE ME TO COURT?

Sometimes, even though you feel that you have made a reasonable offer of payment, your creditor will still insist on taking you to court. You may have given a lot of effort to persuade your credit to accept your offer of payment and freeze your interest. You may also be up to date with your regular payments at a rate that you can afford.

Unfortunately, there are some creditors who will accept the offer and still inform you that they plan on suing you anyway.

This letter will inform the creditor that the new Civil Procedure Rules state that people are expected to "act reasonably" by the court in order to avoid having to go through the proceedings. You can also tell the creditor that his decision to refuse your offer may be found unreasonable by the court. You should also emphasize the thought that you will request the court to consider this argument if the creditor pursues the action against you.

You can persuade the creditor to take your offer and agree not to go to court before he goes through with the action.

SHOULD I GIVE IN AND PAY THE AMOUNT MY CREDITOR WANTS?

You shouldn't give up just because your creditors has refused your offer. Just continue paying them the amount that you offered while asking them to reconsider. Make a stand! Allowing your creditors to bully you into paying more than your can afford will cause you to fall behind with your mortgage/rent as well as other essential household bills. You may also end up not having enouch money to get by.

SAMPLE LETTER A

USE THIS WHEN YOUR CREDITOR DOESN'T ACCEPT YOUR ORDER OF PAYMENT

Your Home Address

Date:
To:

Dear Sir/Madam

Re: Account/Reference Number:

I’d like to thank you for your letter/telephone call of..., concerning the account stated above.

I am/we are sorry that you decided not to accept the offer which I/we have presented to you. Most of my/our other creditors have already taken the offers made to them and I/we have begun with our payments. I/we cannot afford to offer you more than £…. per month because this is all I/we can afford between all my/our other creditors, and it would not be fair for my/our other creditors if I/we stop or decrease my/our payments in favor of your company. The offer we made is on a pro rata basis, as used by the County Court.

Please reconsider my offer based on the fact that the other creditors have already agreed to my/our repayment plan. I/we will be making the payments in line with the offer to your company, on a weekly/monthly basis as gesture of good will.

(You can add details of your circumstances and financial situation here.) I/we look forward to hearing from you as soon as possible.

Yours faithfully

(Your Signature)

SAMPLE LETTER B

USE THIS WHEN A CREDITOR REFUSES TO FREEZE THE INTEREST ON YOUR ACCOUNT

Your Home Address

Date:
To:

Dear Sir/Madam

Re: Account/Reference Number:

I’d like to thank you for your letter/telephone call of..., concerning the account stated above. I am/we are sorry that you have decided not to freeze the interest charges being added to the above account. The bulk of my/our other creditors have already taken our offer of payment and have also suspended any interest from accumulating in our account.

They were able to see the point that continuing to charge interest would not help me/us in my/our financial difficulties and will only increase our total debt.

As you may have observed, I have already given considerable sums in order to pay off my/our account. If you continue to add interest charges to it, my/our monthly payments will not even cover the interest. Even the cooperation of my/our other creditors who have already agreed to suspend interest would be endangered.

(Here, you can add details of your circumstances and financial situation.)

I/We would therefore be thankful if you would reconsider freezing our interest. This would help me/us reduce my/our outstanding balance in your company.

I/we look forward to hearing from you as soon as possible.

Yours faithfully

(Your Signature)

SAMPLE LETTER C

USE THIS IF THE CREDITORS DID NOT ACCEPT YOUR OFFER OF PAYMENT, INTEREST IS STILL BEING ADDED AND YOU WANT THE CREDITOR TO TAKE YOU TO COURT

Your Home Address

Date:
To:

Dear Sir/Madam

Re: Account/Reference Number:

I’d like to thank you for your letter/telephone call of..., concerning the account stated above. I am/we are sorry that I/we were not able reach a satisfactory compromise. As I/we may have already told you, I/we can only pay you £… per month right now. And, I/we do not see the point of paying you this amount just to see my/our debt increase when I/we shall be given the opportunity to offer £… per month if we settle this through the courts.

As an added benefit for me/us, once judgment is granted I/we understand that further interest will be suspended. It looks like we will only reach an outcome that would benefit both of us if we allow the courts to decide. Unfortunately, we would end up wasting more money and time attending to court proceedings. (You can add details of your circumstances and financial situation here.)

Of course, you can still take our offer of £… per month along with the suspension of interest.

Yours faithfully,

(Signature)