Approach to reducing loan repayments

Hi Folks

I have a lot of unsecured debt that I cannot continue to repay at the initial agreed rates. There are 4 different creditors and each loan is roughly two years into the term (varies between 5 and 7 year loan terms). I have been keeping my head above water for the last year or so but now its got to the stage where i cant affors car tax / repairs and have no rainy day fund for issues such as boiler breakdown at home (which occured last month).

I am not looking to have loans written off etc, just wanting some leeway until I find more income(looking for 2nd job with no success).

I am in the process of writing to each laon company and was thinking of stating that I pay out 900 per month in unsecured loans broken down as :

Creditor 1 36%
Creditor 2 31%
Creditor 3 21%
Creditor 4 11%

I can afford total repayments of 600 per month and would distribute the repayments the same. This is the fairest way I can see of dealing with this and I will review my ability to repay on a constant basis and will advise if anything changes.

Just basically need your valued opinion on this approach and if anyone has any experience of negotiating reduced repayments.

Actually, if all interest was frozen, I would be able to make full capaital repay ments so would it be worth outlining this as another option?

Thanks

Complete a full statement of your income/outgoings. Provided that this is honest and amounts retained for living expenses are reasonable, the proposal as stated by you does appear to be reasonable. Send in the statement with the offer. It would have a much greater chance of being accepted if presented through MABs, as some creditors may doubt the accuracy of your financial statement. I'm assuming that the repayments as indicated above are in line with loan amounts, rather than a preference for one creditor over another!

Your strategy of dealing with one loan company at a time is unlikely to work. I'd write one letter to the 4 of them, sending in proof of outgoings and income. Do ask for writedown of previous interest etc, nothing asked nothing gained, and better to ask for more so that you can settle for less. Mabs I presume will deal with all 4 creditors and they are free and well used to your situation so that is the route you should take.

You are entitled to a normal standard of living so if you have no money for repairs then this offer looks like it's doomed to failure unless you are more realistic. Mabs should be able to tell you want the banks are agreeable to.

Thanks for the replies.

Yes, the % figures above are, of the 900 euro going out, how much goes to each creditor, regardless of outstanding loan amount.

e.g. Creditor 1 usually receives 324 per month and will now receive 216 per month etc to be reviewed on an ongoing basis

I'm going to write one standard letter and send to the four of them and wait for their response. I have been in touch with MABS and they have a 3 month waiting list, but I spoke to a very helpful lady whose first words were "Stop beating yourself up over the debts, you are willing to pay, but it may take a little longer" - being as though I havent slept properly in months, it was refreshing to hear an experienced advisor say this!

Thanks again

Well made initial contact with 3 of the lenders this morning and was suprised by the response.

I started with "I would like to discuss reduced payments for a period of time whilst reviewing on a constant basis"

Lender 1) How much would you like to pay, me: Erm, 100 per month: Lender Shouldnt be an issue call us on Friday for a decision

Lender 2) Pop into your local branch and they will be willing to agree what you can afford-dont worry about it we are here to help and a financial constraint is just life I guess!

Lender 3) Yes we should be able to do something, lets meet and have a chat!

I just need to ensure aditional interest/charges are not added

Best of luck with it, remember to keep us updated.

Just some advice - I have spoke to two different people in one financial constitution who have said that the easiest way is to reduce your repayments, go into arrears then we will contact you. I know this will affect my credit rating (probably shot already at this stage), but I was wondering

a) Is it possible for me to cancel DD with my bank which is payable to a third party?
b) Can I then call and make payments using my Debit Card, quoting the account number?

There are also probably charges for going into arrears so I dont particularly want to go this route
Thanks

Is it possible for me to cancel DD with my bank which is payable to a third party?

Click to expand...

You are fully entitled to cancel any DD payable out of your account. Write to the Bank and confirm which DD you want to cancel and from when.

Can I then call and make payments using my Debit Card, quoting the account number?

Click to expand...

No. I don't know of any Bank who would accept payments in this fasion. You will either have to lodge directly in the branch or by CT from another bank.

Just a quick update. I have managed to renegotiate with two of my lenders and to be honest they were a pleasure to deal with. It will mean paying more back in the long run but will enable a little better quality of life in the short term

That's great Scarednow. Well done on your progress and hope you are an inspiration to others. Can you post more details of how you negotiated and what is happening with those debts and also the other loans.

Good stuff! I think this is a good basis for others in the same difficulties. I.e. Don't delay addressing difficulties directly with the lenders. Their primary focus is tio recover as much as possible and generally they are prepared to work with the borrowers in order to achieve that. Once you make a deal on regular repayments it's important that you stick to it. If financial difficulties worsen & you are unable to keep to the repayment schedule, don't delay in contacting your creditors.