Can I get my creditors to freeze interest and charges?

posted by in Living with debt

Interest and charges can quickly add up

Interest and charges can quickly add up

No debt management provider can guarantee that they will stop interest and charges.

The only way you can be 100% assured that you won’t get further charged is if you opt for a legally binding debt solution, such as bankruptcy, IVA (individual voluntary arrangement) or a DRO (debt relief order).

Unfortunately your creditors are within their rights to add charges as they’re stated up front in the terms and conditions that you sign when you agree to take out the credit.

We have a dedicated team that works with creditors to understand our process and why stopping charges is beneficial for everyone.

Many debt management companies will claim that they’re better at stopping interest and charges but this isn’t true. It’s against the Financial Conduct Authority’s rules to imply this, so if you’ve been wrongly advised it’s important that you report the company involved.

If you’re not on a DMP already and you’re struggling with interest and charges we can look at your situation to determine what options are available to you. Get in touch to find out how we can help you.

Pavan Gata-Aura is a qualified debt advisor with 6 years of experience. She enjoys spending time with her two children, fundraising for charities, has spent time volunteering in Africa and takes part in organised races.

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Tags Living with debt
  • Matthew Leonard

    I do think the law needs to be looked at in this regard. If a debtor enters into a DMP with a recognised charity such as CCCS then it should be mandatory for them to stop interest/charges forthwith; it’s in their interests as well as the person on the DMP.

    At the moment I have a complaint lodged with the Financial Ombudsman’s service relating to a Debt Collection Agency (DCA) almost doubling the amount of the debt that I originally owed to the creditor even though I informed them at the outset that I was going into DMP with CCCS. I await their decision.

    I should also point out that there has been some negative comments on other internet forums stating that ‘CCCS are paid for the financial services industry so always take the creditors side in any dispute.’ Whilst I cannot personally comment on this, if CCCS do get funding from the financial services industry (who most of us owe money to) this should be made more explicit.

    • Hi Matthew, thanks for your comment.

      Re: our funding – creditors pay what’s known as a ‘Fair Share Contribution’ (FSC) to us, in recognition of the unique service CCCS provides. FSC comes from creditors returning a voluntary, non-contractual and charitable donation of the monies repaid via debt management plans.

      However, creditor wishes have no bearing on the advice we give to a client to positively help their debt problem.

      Hope this helps!

  • Helen Grayson

    Whilst third party debt management can be a useful thing for some. Most advisors will simply accept tacitly any liability or alleged debt… after all, the more of your debt they manage, the better.

    NEVER accept liability voluntarily, even where you strongly believe yourself to be liable. You should always start from zero – insist that liability be properly demonstrated, including a copy of the actual instrument by which the liability was established and proof of your receipt and subsequent acceptance any other relevant notifications, changes in terms/charges, etc.

    Often all they can provide is a letter claiming that you entered into an agreement, Often they send you a blank agreement. You need THE ACTUAL instrument that establishes your liability.

    If they (or some agents of theirs) are harassing you by phone or at the door – then you should be charging for this service! It’s simple … formally revoke implied rights of access, set a price for consultation and ask them to respond within 28 days showing where in law they believe they have a right to tresspass or to be entertained in person – and where in law you must entertain them at your own cost.

    They cannot, so after 28 days you serve them notice of estoppel and reiterate your fees for entertaining them in person. By making use of this ‘service’ they become liable – and their liability to you simply offsets your alleged liability to them. In other words – you don’t even need to seek payment, you just let them know they have been billed as per the agreement.

    There are many approaches to debt. I find it best to slow them down, insist that they demonstrate every claim, never admit nor deny liability, never refuse nor agree payment. And do not suffer harassment freely.

    When they invariably pass it off to third parties, refuse the service. Let the collector know that liability has yet to be established and they will quickly pass it back to their client. You should NEVER pay these collection costs. At the same time … as agents, these collection agencies create a liability for the principal under your agreed fee schedule.

    An IVA should be a very last resort. Unfortunately, people that handle debts for you will usually accept all debts at face value. This is NOT in your interests.

    It’s amazing how many reductions you can get if the principal believes you might be about to enter voluntary bankruptcy for example. It is surprising how many times doorstep collectors will infringe your fee schedule and result in large offsets. Regularly, debts just get dropped if you doggedly insist on seeing the instrument which establishes your liability and don’t accept letters saying it exists or examples of the document you might have signed.

    The #1 rule is that you should never accept or deny liability – Debt Advice/Management will generally accept everything.

    The #2 rule is that you should demand actual proof of liability – Debt Advice/Management will just ask you “and do you owe this?” … you are NOT the person that should be answering that question. Debt management companies will simply sell you out – they don’t want the paperwork, they just want to reach agreement fast and take their cut.

    The #3 rule is that you should never refuse to pay, nor agree to pay according to some schedule. You cannot be taken to court if you are awaiting proof of liability. You can always offer to make payments on your own terms and should never enter into their default agreement as it binds you in the eyes of the law. Let THEM refuse YOUR offers – Debt Advice/Management will simply enter you into such default agreements and insist you keep up with payments.

    In short, a debt managemnent company IS NOT YOUR FRIEND. They are a quick route to a binding IVA agreement and set you on a precarious path to settle all accounts, in full, unquestioned… where one missed IVA payment can cancel the deal irrecoverably and denies you any other remedy.

    Essentially, for a cut they’ll happily set a noose about your neck and remove any flexibility or contestments you otherwise had in law. It’s a faustian bargain, whereby you contract your financial soul for a little certainty.