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Persistent Debt: Things you Need to Know after you Receive a Letter

Have you got a persistent debt letter from your creditors? It might surprise you as you can’t remember whether you’re in debt or not. And, when you are making the repayment, then receiving such persistent debt letters might confuse you. Further, the letter might read out to you to increase the monthly repayment amounts.

Usually, persistent debts apply to credit card debts. If you’re paying off the charge, interest and fees for more than eighteen months in a stretch, then you might get a warning through the persistent debt letter. It simply means that you’re not paying towards the credit debt that you actually owe. Additionally, new credit card rules might affect the repayment scheme. The creditors should help you out if you coordinate with them. Here’s how you should handle the persistent debt cases without damaging your finances.

Persistent Debt: The Definition

You can merely feel any hazard until you grab the persistent debt letter from the creditor. Basically, it is applicable for your credit loans. In case, you are paying more to the charges, interests and fees addressing your credit debt rather than the credit balance, then there are chances that you come across a persistent debt letter. Additionally, it took the same activity to run for eighteen months, then you would certainly get one. 

With the persistent debt letter, the creditor wants to remind you that you’re not paying enough to the credit card balance. The creditor would offer you relevant help. Here are a few things that they can suggest:

  • They might advise you to pay off the debt faster if you can afford
  • In case you continue with lower payments than required, then the creditor would specify the consequences. And, the consequences can be your card suspension or even a negative impact on your credit file.
  • Finally, if you can’t afford to pay hefty payments, then you can inform your creditors.

Then, the creditors would decide the best debt repayment plan that you can possibly afford. In case you’re not satisfied with the consultation, then you can hire a financial advisor for handling your economic and financial condition.

Lenders would encourage you to make repayments with more than the minimum amount. If you don’t take any serious action or don’t go for the help offered by the credit card company, then they can send you a reminder. Well, you would receive a reminder letter when you are consistent with low payments for 27 months in a row. 

Actions that the Lender can Take

If you’re still ignoring the persistent debt letters, reminders and warnings and it’s been 36 months since you carry on with the lowest payment, then the lender would write to you. This time, they might take serious action against you. The creditor would ask you to avail the decided debt repayment plan within the deadline. Additionally, they might contact you to explain all the details. If you don’t take any reasonable step towards repaying the credit card balance, then they might suspend your credit card.

However, you can get rid of your debt issues. If you really get your credit card back to work, then you can manage your finances and afford the payment with the avalanche method. If you have received an action letter from your lender, then you can go for a consultation with your creditors. 

Minimum Repayments Might Trigger Persistent Debts

If you think that repaying the credit debts would help you even with the minimum repayments, then you are misguided. The minimum repayment would address only your charges, fees and interest over the credit debts and not the credit balance, at all. 

With minimum monthly repayments, your credit card company might not stay happy. It might not affect your debt repayment plan for the short-term. However, it might not prove beneficial for long-term statements.

What if the Creditor Increases the Payments?

The new rule regarding persistent debts might be the true breathing place for a class of debtors. The rule indicates that the creditor can’t impose greater repayment amounts forcefully. So, you need not switch to hefty monthly payments for tackling your credit debts. However, it might bring a change to the minimum amount that you were paying.

The new credit rules state that the minimum repayment should include an amount that pays off 1% of the outstanding credit balance and relevant charges, fees, interest. Thus, your creditor can extend the minimum repayment amount and you have to pay them. In case you can barely afford the minimum payment, you can contact the creditor, building society or bank. Or else, you can get in touch with the financial advisor near you.

Can you Stop your Lender from Contacting you?

Generally, lenders contact you when your repayment goes to credit card charges, interests and fees. And, you’re paying less attention to the credit card balance. In case, you want to prevent your creditor from contacting you furthermore, you need to start paying more than the minimum repayments. This would lower the outstanding credit debt that you actually owe and you would be clearing it off sooner.

So, just increase the monthly payments regarding your credit card debts. Your creditors would spare you from continuous calls and letters. Make sure that you can keep up the payments as long as you can afford them. Moreover, the credit card lender should offer you an affordable plan and payment suggestions. Bear in mind that paying more would clear off the outstanding credit debt quickly. And, your creditors would hardly contact you, if you’re on the right track of repaying those debts.

How to Deal with Persistent Debt?

Nobody wants his or her credit card to get suspended and not paying the persistent debt can affect your credit file, too. If you’re determined to overcome the persistent debt applied to you without affecting your finances, then there are many ways. Make sure that you strictly follow a monthly budget to keep an eye on your income and expenditure records. However, here are some dedicated methods to successfully recover from persistent debt and its stress.

Avail of 0% Balance Transfer Card

Switching to a balance transfer card would simply take your credit debts to a new assigned credit card. And now, you have the credit debts at 0% interest. But, you might have to pay a nominal fee to transfer the credit debts from the old to the new credit card.

If you have to pay less towards interest, then you can focus on paying off the credit debt balance. However, it’s a wise idea to check if you qualify for a 0% balance transfer card. It might rely on your credit file rating, the persistent debt and the number of credit cards associated with the debt. So, talk to your financial advisor or money expert for detailed information.

When you can make the Payment?

If you were used to making minimum payments, but you can afford much more, then it’s time to pay more. Throw out as much money as possible to your credit debt repayments, and it would help you get out of debts quicker than you think.

You can try the avalanche method for repaying your credit card debts. It is a proven method to reduce the stress associated with lump-sum debt amounts. Check if you can handle the circumstances with this dedicated method.

Open up to your Creditor

Ignoring letters from the creditor won’t let your persistent debt get wiped out. So, stop overlooking them and take some serious action. If you can’t afford more than the minimum repayment, then you can talk to the lenders. In case your creditor imposes any change on your repayment plan, then you have the full authority to challenge it.

Mostly, creditors do assist the debtors with flexible and reasonable debt repayment plans. You can ask your creditor to cut the charges or freeze the interest so that you can address the credit balance directly. 

What’s the Way out?

If you’re facing persistent debt letters for more than thirty-six months, then your lenders might agree on the term of clearing off the debt. They might offer you exciting plans and repayment policies to meet up the payments. They might allow you to get rid of the persistent debt in the next three to four years. Additionally, they might suspend your account.

In case you can’t cope with the scheme, then your lender might advise you to write off the debt. It might reduce the interest rate on the money you owe to your creditors. And, you have to be consistent with the minimum payments. Otherwise, it might negatively impact your credit file. Seek financial help from your debt advice experts.

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