Can a Creditor Refuse a Payment Plan?

If you are unable to afford to make the full contractual repayments to your creditors, you can suggest a reduced payment plan. You offer to pay a reduced amount each month until the debts are cleared. If your creditors accept, this makes your debts a lot more manageable. But what happens if creditors do not accept your payment plan?

Speak To Your Creditors

If one or more of your creditors haven’t agreed to accept the monthly amount you have offered, this could be because they believe the offer is too low based on your circumstances. It is beneficial for them to understand your situation in full, so discuss this with them; they may carry out a full review of your income and expenditure. If you can prove to their satisfaction that this is the best offer of repayment that you can make, then they may be more inclined to accept your offer.

Are Creditors Obligated To Accept A Payment Plan?

Your creditors are under no legal obligation to accept a payment plan however they may be willing to engage with customers, and agree a plan, if they have a full understanding of their circumstances. For many individuals, requesting a reduced payment plan is a final step before having to seek alternative debt solutions such as a Debt Relief Order (DRO), Individual Voluntary Arrangement (IVA) or Bankruptcy. A creditor may be keen to accept the offer in order to avoid being subject to one of these procedures through which debt write off is likely to occur. Within a reduced payment plan, your creditors will still ultimately expect to be paid in full.

Even if you are not reasonably able to afford your payments, your creditors can still refuse the payment plan and take further action to collect the debt, like sending bailiffs, for example. By agreeing to a payment plan and accepting lower payments, it takes creditors longer to recoup their investment, so they may be reluctant to do so.

What if a creditor refuses my offer?

If your creditors will not agree to a payment plan, you need to look into other options for dealing with the debt. You could look at utilising a company or charity to negotiate a Debt Management Plan on your behalf. This is similar to what you have been trying to do yourself; however, the company will have experience in dealing with creditors and will take the stress of having to deal with multiple creditors away from you. If your creditors reject the offer of repayment, then further collections activity can continue including the application of fees and charges or legal action.

If you are unable to pay back the debt, you should consider options like an IVA (Individual Voluntary Arrangement), DRO (Debt Relief Order), and Bankruptcy. These are formal debt solutions that, in some cases, allow you to reduce the total amount of debt that you owe. They also give you legal protection against creditors so they cannot continue pursuing you for debt payments.

What should I do if a creditor sends me a default notice?

Being issued with a default notice doesn’t necessarily mean that you will be taken to court. It is a standard document that a creditor must send if you are not meeting your contractual repayments. Legal action is usually a last resort for creditors, so they may still be willing to work with you. 

Contact Swift Debt Help for expert advice

If you are having difficulty paying your debts and your creditors are unwilling to accept a payment plan, get in touch today for some expert advice. Our team can take you through alternative debt solution options and find one that works for you. Get in touch on 0161 843 1516 or email us today.