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Do all of my creditors have to accept my debt management plan payments?

Date: 15 February 2011, Author: James Falla

Using a debt management plan is one of the most common ways to resolve a personal debt problem. We consider whether each of your creditors must agree to the payments you offer and how to gain this acceptance.

If you use a debt management plan (DMP) to solve your debt problems, then unlike a legally binding agreement such as an individual voluntary arrangement (IVA), you will need to negotiate separately with each creditor to ensure that they are happy with the payment that you are offering.

Your creditors are under no legal obligation to accept the payment offer that you make. However they will often do so if they feel that your offer is reasonable given your financial situation.

To ensure this, you must pay as much as you can based on your disposable income.

Your creditors will expect you to state how you have calculated your disposable income by listing your income and living expenditures. As long as your living expenses are reasonable and based on the guidelines which all commercial creditors have generally come to accept then they will normally accept your payment offer.

Be patient

Once you have submitted your payment offer to all of your Creditors, they may not respond to you immediately.

Some creditors may take a number of weeks to acknowledge your offer and accept it. Others may accept the offer but will not be persuaded to freeze further interest or late payment charges until they have seen two or three regular monthly payments from you.

Unfortunately some creditors may refuse to accept your payment offer. They will continue to send collection letters and add interest to your account.

In this situation, it is important to stick to your payment proposal and make sure you continue to pay the amount you have proposed.

Do not be bullied into paying more than you can afford. If your income and expenditure calculations are correct and reasonable, your offer will already be based on the maximum that you can pay.

As the old saying goes, you cannot get blood out of a stone. If you are pressured into paying more than you can afford by one creditor, you will no longer be able to pay what you have proposed to the others and eventually your whole plan will fall apart.

Further legal action

If you are maintaining your proposed debt management plan payments each month but one or more creditors continues to refuse to accept your payment proposal, they may well continue to threaten you with further legal action.

Very often, given that you are making payments as per your proposal, this will simply be a threat by your creditor to try and frighten you into paying more.
In reality the creditor may not actually take any further action against you because monthly payments are being made. However, if the creditor does decide to take action, they will generally apply for a county court judgement (CCJ) against you.

If this happens then you must ensure that you repeat your income, expenditure and payment offer on the CCJ admission form that you receive and send this back to the relevant solicitor or creditor within the given time period.

By doing this it is extremely likely that your payment offer will be accepted. If it is still refused, you do have the option to appeal to the court.

Always pay what you say you will

One of the drawbacks of a debt management plan is that you have to negotiate reduced payments with each of your creditors individually.

They do not have to accept the offer that you make. However, if it is based on reasonable living expenses and your creditors can see that you are making every effort to repay as much as you can, then your offer should eventually be accepted.

Your offer may not be accepted immediately and you should expect to continue to receive payment demands and telephone calls from many of your creditors for a few months after making your proposal.

However, the most important thing is that once you have made your offer, you must start to make the payments in your proposal whether it has been accepted or not.

Once your payments start, this will put you in a much better position to negotiate and will often lead to interest and charges being frozen far more quickly.

Source: Beat My Debt