Welcome to what I hope is the final instalment in this series about how you go about keeping your creditors off your back in the early stages of a debt problem. In the previous posts I’ve tried to convince you that you don’t need to indulge their pestering phone calls and indeed to do so may well be counter-productive. (I’ve suggested you DO need to keep an eye on the post and I’ll cover what you need to look out for a bit later). So what practical steps can you take to achieve this. Here, technology can be your friend. You can -

1) Change your phone number! Blindingly obvious really, but it’s amazing how many people don’t think of it. Make sure it’s ex-directory of course - and - NEVER ring your creditors from it. If you do they may find out your number and call you straight back on it. If you are worried you might forget, get your service provider to permanently withold the number for outgoing calls. Changing a mobile number can be as easy as getting a new SIM card, they are virtually giving these away with cornflakes these days.

2) Don’t answer the phone! OK that’s silly, but here’s a cleverer version of the same thing. Get yourself a phone or add-on gadget that displays the number of the person calling. You’ll also have to get your service provider to switch on this facility on your line and it may cost a couple of quid per month/quarter. Also, set up the service provider’s answering facility, or get your own machine. Then only answer callers whose number you recognize. Let everything else go to the machine. You can then listen to your creditors rants and mutterings and delete them at leisure.

This also has a beneficial effect. It ’soaks up’ your creditor’s efforts to contact you and may prevent them from trying to contact you elsewhere, for example at work. Here’s the ultimate version of this:

3) Get yourself a ‘creditorline’. Pardon? Yes, a dedicated phone number your creditors can call you on. Think about it. Mobile phones are ‘cheap as chips’ these days, you can get a half decent one for £30, but you don’t even need to do that! Simply get a new SIM card and put it temporarily into an existing phone. Set up the answering service, and record a nice little personalized message, for example ‘Hello, this is (Name), I’m sorry I can’t take your call right now, please rest assured that I am working to resolve my financial problems and will update you as soon as possible. Bye.’ Then (preferably in writing) inform your creditors (and no-one else!) of your new ’single point of contact’ number and tell them that all previous numbers should be disregarded or deleted. They can then call it up, get your nice friendly (and completely meaningless) message and know you have not given them a fake number! They can then continue to call it endlessly, using up large amounts of their pounds, but the beauty of it is it costs YOU virtually NOTHING. You don’t even have to do much, if anything, with it. The ‘basic’ anwering service your are likely to get will dissolve their messages into the ether within a few days. If there’s lots of calls the ‘inbox’ might become full, so you might need to go in and clear it out from time to time. You can even update the message occasionally as your circumstances change!

I think now is probably a good time to deal with a possible criticism of this strategy which is ‘Will this cause my creditors to call me at work?’ The honest answer has to be ‘Yes it might’ - assuming you have a work of course - if not, no problem. However I would strongly suggest you cross this bridge when you come to it. It may never happen, and if it does there are many things you can do about it. Firstly the most likely reason for your creditors to be calling you at work is not because you have not spoken to them elsewhere, it’s because you haven’t paid them, in which case eventually they will call any and every number they can get hold of. So the most effective way of preventing this is to pay them something, and I’ll come back to this a bit later on. However assuming it happens, how do you deal with it? I would suggest following a very standard procedure. Once you know it ‘off by heart’ it’s very difficult for your creditors to deviate you from it. So-

1) One of the great advantages you have is that when creditors are phoning a workplace they can’t start hassling about your debts until they are 100% sure they have got the right person. So try getting the caller on the back foot from the off by not letting them know whether or not they have. If they ask, ‘Can I speak to (name), or, Am I speaking to (name), never say ‘Yes’ or ‘No’ say ‘Who’s calling please?’ Any ‘genuine’ caller will of course tell you.

2) If it’s a creditor they will say something evasive like ‘It’s a personal business call’. They are unlikely to say the name of their company, but either way they’ve let the cat out of the bag. You can then try variations on ‘Sorry, they’re not available at the moment’ or ‘Sorry, you’ve got the wrong number’ or ‘Sorry, they don’t work here any more’. Then put the phone down pretty promptly. Don’t let them start to engage you in any conversation.

3) Now here’s a stupid thing. If YOU accidentally let the cat out of the bag and they are fairly certain they’ve got you, thay can’t start hassling you straight away. They are usually going to have to ask you a ’security question’, e.g. ‘What’s your date of birth ?’, to which of course you reply ‘ And how can I be sure who you are exactly?’, at which point the whole thing just becomes silly and you can hang up.

4) If you aren’t feeling quite that brazen, another thing you can do is give them another number to call, for instance your home phone or ‘creditorline’, e.g. ‘I’m sorry but you need to call another number for that. Its…….’ OK Bye.’ without even really letting them know who you are. This also has the advantage of sounding like a typical business-type call.

As you can see the strategy here is generally to keep your creditors as confused and confuddled as possible and make ringing your work as bad an experience for them as it is for you. One golden rule can be extracted here I think:

Never discuss your debts at work.

If your creditors never get any joy here, they generally won’t come back for more. Divert them elsewhere, even if it means having to speak to them at home a few times.

So what if the problem is more persistent? Again, there is plenty you can do and again, technology can help here. If you have a direct line tell your boss/supervisor/telephone person that you are receiving some ‘nuisance calls’ (you don’t have to say who from, ’sales calls’ is a good one) and see if you can get a new extension number and hence a different outside line number. Remind them not to re-allocate the extension as the ‘nuisance calls’ will come with it. However even if they do you are still fairly safe because, for reasons described above, they are unlikely to just start hassling whoever they get on the end of the phone. Creditors are on very dodgly ground when they ring workplaces and generally know that.

If the particular creditor always calls from a certain number, the telephone system may be able to block this number. It might be a good time to start being extra-nice to the telephone systems person!

Still getting problems? It might also be time to consider sending the creditor concerned a ‘harassment letter’. The Administration of Justice Act (1973) s40 states that it is a criminal act to :

harass a debtor with demands for payment which, in respect of their frequency or the manner or occasion of making any such demand, or of any threat or publicity by which any demand is accompanied, are calculated to subject him or members of his family or household to alarm, distress or humiliation

Calling people at work is in my view a clear case of harassment by the above definition and more so if done to excess. Reminding your callers of this can be very effective in getting calls stopped, or, at the very least, diverted back to your home number. I’ll post a suitable letter once I’ve dug one out!

For now I’ve run out of time (again) so it looks like there will have to be a part (iv) ! Soon !

-Best

Another day, another mailshot from a dodgy sub-prime lender!

Anyway, enough of them. In any debt situation I’m a great believer in making sure you get your creditors, as far as possible, where you want them. When dealing with your debt it is YOU, the debtor, that needs to be in control of the situation, not the other way round. This is very important from a psychological perspective and I will try to cover this in more detail later.

In the previous installment I described how in the early stages of a debt problem your creditors are likely to be all over you like a rash. However if you can’t see the wood for the trees, you won’t be able to find a way out of the jungle. So the first thing you need to do is put your creditors at arm’s length, and one of the best ways to do this, as I described, is NOT to allow them to engage you in any long winded telephone discussions! However as I also said, I’m not suggesting you do not communicate with them at all. Lets pause for a moment to look at things from the creditor’s perspective.

Once someone stops making regular repayments on a debt, the creditor will have no initial idea why this is. The poor old debtor may have simply pegged out with the strain of it all, or, more likely, done a bunk. This happens a lot, and if creditors suspect it they can put your name on a database called GAIN, or ‘Gone Away Information Network’. Then if you turn up again somewhere they can share your new address with all their friends. For now they will just be in panic mode, sending lots of letters and ringing any phone number they can get hold of. So what to do?

Easy. Just send them a very simple letter as follows. You don’t even need access to a computer to do this, just knock up a fill-in-the-blanks template, by hand if necessary, and get several photocopies (6-10p each):

Dear Sirs,

Further to your (letter/phone call/message/whatever) of (date) I am aware of the problem and I am taking steps to address it. I will contact you again as soon as possible with a view to making an offer of payment.

Yours

Surprisingly, this very simple letter can convey a lot of information to your creditors. In it you are saying:

1) I am aware of the problem and am dealing with it;

2) I am not dead and/or gone;

3) I do not do phone/text/email. If you want to get my attention you will have to WRITE to me;

4) I DO intend to make some payment against my debts (whin I’m good and ready), and finally…..

5) I am NOT going to start jumping up and down just because you are!

If you really don’t do the writing thing you can do this on the phone. Just use the above letter as a ’script’ and repeat it endlessly until they go away. Don’t be drawn into answering any other questions. They’ll soon get the message!

This is an example of a ‘neutral’ letter I mentioned in the first part. It doesn’t give your creditors good or bad news, but it is not ‘no news’. The most likely reaction to it is going to be ‘Hmmmph!’. However whilst you have given your creditors a lot of information, both implicit and explicit, you have set their expectations fairly low, which is a good point from which to start. It’s now time to take another quick detour into creditorland.

In the early stages of a debt situation, most people will be worried about what their creditors can or will actually do to them, possibly not least because of the various threats they will be making. The short answer is ‘not a lot, really’, which is much to their frustration and your advantage. It is very important to take this on board, because in the knowledge that your creditors can really do very little to you enables you to take a much firmer line with them than you otherwise might. Lets consider a few things that creditors often threaten you with.

1) ‘Your continued non-payment will have an adverse effect on your credit rating’

Well duh! I can’t believe anyone in a serious debt sitation is going to believe they will get out of it with their credit rating intact! Some even say ‘your account will be registered with the credit reference agencies’ - as if it wasn’t already! Fairly lame stuff really. You’ll have to do better than that - and so to that other popular favorite-

2) Failure to bring your account up to date may result in legal action and a Summons or County Court Judgement being taken out against you.

Yes it might. Eventually. But not now, and probably not anytime soon. Lets look at the reasons for this

1) The bad effect this would have on their reputation as responsible and/or ethical lenders;
2) The cost involved, as they have no means of knowing what they might be able to recover (which is another good reason for not telling them)
3) The fact that they may not even at this stage have issued a Default Notice, which is essential before any such action can take place.

So no Court action means no bailiffs, no charging order, no income attachments, no nothing. In other words all this hot air is fairly worthless, and you are generally safe to ignore it - with one or two exceptions. Phone calls are no problem. Their sole purpose is to squeeze something out of you - information, or, preferably, payment. Or if you are already paying, more payment. Don’t go there. If your creditor has something important to tell you this will come IN WRITING. So don’t bin all those letters - just put them in a nice big pile for now. Later on I’ll tell you how to sort out the wheat from the chaff. I think my own pile made it up to being not far short of a foot high before I’d finished!

So your creditors can holler, but the bark will be far worse than the bite. However because hollering is about all they can do, they will tend to do a LOT of it.

These blogs can get a bit unwieldy, so in the final part (I think) of this I’ll detail some of the very simple and practical steps you can take to get your creditors off your back whilst you are thinking about what to do next.

Debt Free Direct will be familiar to those in the insolvency arena as one of the largest (if not THE largest) of the UK’s ‘IVA factories’. DFD were in the news earlier this year following their refusal to be part of a new industry self-regulation body that was being set up by some of the other operators. DFD advertise heavily in the tabloid papers, and I suspect on daytime TV as well although I cannot confirm this finding it too excruciating to sit through for long enough to find out.

Many IVA companies set up ‘free debt advice’ front-end websites in order to lure potentially lucrative IVA clients into the arms of their salespeople. Recently DFD seem to have gone one stage further than this and set up a full-on registered charity called the ‘Debt Advice Trust’ (Reg. Charity No. 1095705). The format and size of their press adds is extremely similar to DFD’s regular ones. The advert claims to offer help for people ‘really struggling with a serious debt problem’. The smallprint at the bottom goes on to say ‘Typically (my italics) this is where people, despite having a regular income, are refused credit and really struggle to make repayments, often owing between £25,000 to £50,000 - sometimes more’. In other words, if you’re don’t appear to be in the frame for an IVA, please don’t call us! I wonder what the Charity Commissioners would make of this?

-Best

Hi all. The title of this series is in honour of everyone’s favourite wizard, Harry Potter. In a debt situation, most people are at some point going to have to defend themselves against the various things their creditors will throw at them. This can require a fair amount of wizardry, especially at more advanced levels. At it’s most basic level though, which I’m looking at today, it’s mostly just plain old common sense. In the early stages of a debt problem the only people you are likely to be bothered by are your original creditors, ie the people who lent you the money in the first place (your credit card and loan companies). Unfortunately they can be very bothersome indeed and today’s post suggests some ways you might deal with them. First off, there’s something I’d like to get sorted out.

In the early stages of debt advice, one thing people are very commonly advised to do is ‘talk to their creditors.’ The only justification I have seen for this is that it ’seems like the right thing to do.’ I’d like to suggest to you that in reality it is very much the wrong thing to do, for the following reasons.

Often, ‘talking to your creditors’ is mooted as a way of calming down and/or resolving a debt situation. There are many situations in life that can be solved by an amicable discussion, but debt is not one of them. Attempting to do so may well have the complete opposite effect.

When in a debt situation, a lot of peoples initial reaction is to panic - and I’m not just talking about the debtors here! When you stop paying your creditors they will be panicking as much as you are, and probably more. So you are already dealing with people who are already not behaving in an entirely rational manner. If you are flapping and they are flapping you are just going to get into a bird fight, the net result of which is you will end up covered in scratches and bird poo. This is not in your interest, or theirs.

To stretch my bird analogy a bit further, consider this. You are the mother bird approaching the nest. You have only one worm. Which chick gets the worm? Probably the one squawking the loudest. Your creditors will work on much the same basis.

Should you be tempted to call them, or they call you and you answer, you’re going to have to come up with something to say to them. In the early stages of your debt problem, I’m guessing it will be some variant of ”I have no money and no prospect of paying you for the forseeable future.’ The net effect of this will be to set the status of your account from ‘possible problem’ to ‘red alert’ !

Also, beware the sypmathetic ear. What starts out as a ‘nice friendly chat’ can soon turn into something like the Spanish Inquisition. Your creditors will be interested in discovering what assets you may have, so they can work on relieving you of them in settlement of your debts. Personally I’m not very good on the phone. People are far more likely to wheedle things out of me, especially if I’m feeling guilty. And most people in debt are going to feel guilty to some extent at least. (I’d argue quite strongly they shouldn’t, but thats a topic for another day). So I’m probably just going to end up saying something I wish I hadn’t, or promising to make a payment I can’t possibly make and end up even more stressed than I was before.

So in talking to my creditors I am likely to

a) annoy them even more than they already are;
b) have information extracted from me that I would rather keep to myself, and
c) have my arm twisted into making promises I can’t really keep!

I think we can extract a couple of good rules here.

1) Don’t give your creditors bad news. If you can’t give them good news or ‘neutral’ news (more on this later), give them no news.

2) Don’t divulge details of your situation or your assets to your creditors. This will simply allow them to formulate a plan of attack.

For good measure I’ll throw in:

3) Don’t expect you creditors to sympathize with your situation (except in an extremely shallow manner) or help you in any really constructive way.

Now I’ve hopefully convinced you that speaking with your creditors might not be such a good idea, I’ll clarify that a little. I am not saying do not communicate with them at all. Simply that you should not get into any ongoing or 2-way discussions. You do need to communicate with them, but it must be on your terms and at your convenience. More later.

-Best

I didn’t really want my first real post to be on a point of order but it’s about all I’m up to at this time of night. When I started the blog I used the WordPress ‘rich text’ editor and found it was putting the text all over the shop. A quick tour of the technical forums revealed that this editor does not seem entirely bug free. I fixed the problem in the end by importing the text into M/S Word, tidying it up and putting it back (you can view format characters in Word). If you are wondering what on earth I’m on about, you might not even be able to see this editor depending on which browser you use. Luckily you don’t have to use it, and I am now. . . . . not. - Best

Hi there and welcome to the blog. My main aim in writing this is to preview material that I am intending to publish on the website, so please feel free to comment, heckle and especially let me know if you find any factual errors. In dealing with my own debts and helping others to deal with theirs, I’ve tried to develop an integrated strategy which can be applied in whole or part to any debt situation, and it is elements of this I hope to be publishing here in draft form. Some of it is fairly unique and it won’t all be to everyones’ taste, but most people in a debt situation should be able to find something of use. Also my apologies if this comes out wonky as this editor is behaving in an utterly bizarre fashion. All material is Copyright me so no thieving please. More soon, in the meantime please remember there is NO debt situation that can’t be got out of. So lets be careful out there!