DEBT LETTERS

I am providing you with a sample of simple template letters that you can use to negotiate with creditors to address your debt problems. I have also advised clients to use them to negotiate and nearly all of them were successful. Also, feel free to tailor these letters to your needs. What is most important is that you communicate with your creditors.

---------------------

1.      Hold on Account letter

2.      Pro Rata Offer Letter

3.      Moratorium

4.      Token Payment Offer Letter

5.      Reconsider offer

6.      Reconsider decision to freeze interest

7.   Creditor not cooperating- you want them to  take you to court

8.   You don’t want to go to court and the creditor is not co-operating

9.     Ex−gratia payment offer in full and final settlement

10.    Debt written off Letter

11.    Six Years Limitation Letter

---------------------

1. Hold on Account letter

Date:

Dear Sir/Madam

Re: − Account/Reference Number:

I am writing to inform you that I am seeking advice and assistance regarding our current financial difficulties.

To this end, I would appreciate it if you could hold any action on the above account for at least 28 days. Also, during this period, could you please freeze interest and/or any other charges accruing on the above account.

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

Yours faithfully

---------------------

2. Pro Rata Offer Letter

Date

Dear Sir/Madam

Re Account No/Reference No:

Since making that above agreement with you, our/my circumstances have changed. I cannot now afford to agree to monthly payments because ...

I enclose a financial statement which shows my total income from all sources, and my outgoings. As you can see I have only £... per month left for my creditors.

The offers I have made to my creditors have been worked out on a pro−rata basis, and I have written to all my creditors asking them to accept reduced payments. Given my circumstances, please would you agree to accept a reduced offer of £...per month.

If interest or other charges are being added to the account I would be grateful if you would freeze these so that all payments made will reduce what I owe you.

Should my circumstances improve I will contact you again. I would be grateful if you would send a paying-in book or standing order mandate to make it easier to pay you.

Thank you for your assistance. I look forward to hearing from you as soon as possible.

Yours faithfully

---------------------

3.  Moratorium

Date:

Dear Sir/Madam

Re Account No/Reference No:

Since making that above agreement with you my circumstances have changed.

I cannot now afford to agree with monthly payments because ... I enclose a Financial Statement which shows our/my total income from all sources, and the total outgoings of my household. As you can see I have no money left to make offers of payment to my creditors.

Given our circumstances, would you please accept no payment at present to be reviewed in six months. If interest or other charges are being added to the account, we would be grateful if you would freeze these so our/my debt does not increase. Should my circumstances improve we will contact you again.

Thank you for your assistance. I look forward to hearing from you as soon as possible.

Yours faithfully

---------------------

4. Token Payment Offer Letter

Date:

Dear Sir/Madam

Re Account No/Reference No:

Since making that above agreement with you my circumstances have changed.

I cannot now afford to agree monthly payments because...I enclose a Financial Statement which shows my total income from all sources, and the total outgoings of my household. As you can see I have no money left to make offers of payment to my creditors.

As you can see there is no available income to pay the creditors at the contractual repayment amounts at present. It would therefore be both sensible and practical to accept token payments of £1.00 per month until such time as my financial circumstances improve. If interest or other charges are being added to the account, we would be grateful if you would freeze these so my debt does not increase. Should my circumstances improve we will contact you again.

Thank you for your assistance. I look forward to hearing from you as soon as possible.

Yours faithfully

---------------------

5. Reconsider offer

Date:

Dear Sir/Madam

Acc/Ref No:

Thank you for your letter of ……………. concerning the above account.

I am sorry that you feel unable to accept the offer which I have made. The majority of my other creditors have accepted the offers made to them and I have commenced payments.

I cannot offer you more because I can only afford £…. per month between all my other creditors, and it would be wrong to cease or reduce payments to our/my other creditors in favour of your company. The offer made to you is on a pro-rata basis, as used by the county court.

In light of the other creditors agreeing to our/my repayment plan, please would you reconsider our/my offer. I will be making the payments in line with the offer to your company, every month, as a gesture of goodwill.

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

Yours faithfully

---------------------

6. Reconsider decision to freeze interest

Date

Dear Sir/Madam

Acc/Ref No:

Thank you for your letter of ………………. concerning the above account. I am sorry that you feel unable to suspend interest charges on the above account. The majority of my other creditors have agreed to the offer of payment and agreed to suspend any interest charges still accruing. They have accepted that to continue to charge interest would not assist me in my present financial difficulties, and can only serve to increase our total debt.

As you are aware, I have already paid considerable sums in interest to my account. If interest charges continue, the monthly instalments I am paying will not even cover that interest. Also, the co−operation of my other creditors who have agreed to freeze interest already would be put at risk. I would therefore be grateful if you would reconsider your decision not to freeze the interest. This would mean that the monthly payments I make would actually reduce the balance outstanding to your company.

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

Yours faithfully

---------------------

7. Creditor not co-operating- You want them top take you to court

Date:

Dear Sir/Madam

Acc/Ref No:

Thank you for your letter of ……………….. I am very disappointed that we seem unable to reach a satisfactory compromise in this case. As I have already explained, I can only afford £…. per month at the present time, and I feel that it is pointless paying this amount to you only to see the debt increase.

I invite you therefore to bring a claim against me for the debt, when I shall have the opportunity of offering £…. per month through the courts. In addition, once judgment is granted I understand that further interest will be suspended in any event. It seems that I can only achieve a reasonable outcome to this matter by allowing the courts to decide, although this will involve us both in extra expense and time wasted with court proceedings.

The offer of £…. per month plus suspension of interest is of course still open to you to accept.

Yours faithfully

---------------------

8. You don’t want to go to court and the creditor is not co-operating

Date:

Dear Sir/Madam

Acc/Ref No:

Thank you for your letter of ………I am very disappointed that we seem unable to reach a satisfactory compromise in this case. As I have already explained, I can only afford £….per month at the present time. This is the only realistic payment proposal bearing in mind the enclosed Financial Statement. You have stated in correspondence your intention to commence proceedings in the county court against me.

The commencement of legal proceedings under such circumstances could be counter to the ‘Overriding Objectives’ of the new Civil Procedure Rules. You will be aware that the Overriding Objectives underpin everything the court does. Moreover, paragraph 4 of the Protocols Practice Direction states that in cases not covered by an approved pre−action protocol, the court will expect the parties “to act reasonably…….. in trying to avoid the necessity for the start of proceedings”.

I would suggest that your refusal to accept my offer could be viewed as unreasonable and I would ask the court to consider this matter with reference to the Overriding Objectives.

The offer of £…. is of course still open to you to accept.

Yours faithfully

---------------------

9. Ex−gratia payment offer in full and final settlement

Date:

WITHOUT PREJUDICE:

Dear Sir/Madam

Re:

I write with reference to the money which you are claiming on the above account.

I can confirm that I am unable to offer to pay the money which I owe in full. However, I can raise £……. and I want to offer this an ex−gratia payment in full and final settlement of the account. This offer is made on the clear understanding that, if accepted, neither you nor any associate company will take any other action to enforce or pursue this debt in any way whatsoever and that I will be released for any liability. I also request that, if accepted, you make an entry on a credit reference agency file relating to the above account as "satisfied" in full.

Payment can be made within 2 weeks of receiving your written agreement of this offer and method of payment.

I look forward to receiving your reply.

Yours faithfully

---------------------

10. Debt written off Letter

Date:

Dear Sir/Madam

Acc/Ref No:

Further to my recent letter, I enclose a copy of our financial statement which gives details of my present financial circumstances.

As you can see my outgoings are more than my income and I am experiencing extreme financial hardship. I would be very grateful if you would consider writing off the outstanding debt owing.

We/I have always taken my financial responsibilities but unfortunately, my circumstances are so bad that I cannot realistically maintain payments of any kind. Please take the following special information into account when making your decision.

As you can see my situation is very unlikely to improve in the future, and my continued high debt level may have a serious effect on our physical and mental wellbeing. I would therefore be grateful if you would seriously consider my request for the debt to be written off.

I would appreciate any help you can give us.

Yours faithfully

---------------------

11. Six Years Limitation Letter

Date:

WITHOUT PREJUDICE

Dear Sir/Madam

Acc/Ref No:

You have contacted me regarding the account with the above reference number, which you claim is owed by me.

I would point out that under the Limitation Act 1980 Section 5 “an action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued.” I would also point out that the OFT say under their Debt Collection Guidance on statute-barred debt that “it is unfair to pursue the debt if the debtor has heard nothing from the creditor during the relevant limitation period”.

The last payment of this debt was made over six years ago and no further acknowledgement or payment has been made since that time. Unless you can provide evidence of payment or written contact from me in the relevant period under Section 5 of the Limitation Act, I suggest that you are no longer able to take any court action against us/me to recover the alleged amount claimed.

The OFT Debt Collection Guidance states further that “continuing to press for payment after a debtor has stated that they will not be paying a debt because it is statute barred could amount to harassment contrary to section 40 (1) of the Administration of Justice Act 1970”. I await your written confirmation that no further contact will be made concerning the above account and confirmation that this matter is now closed. 

I look forward to your reply.

Yours faithfully

---------------------

THE END