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Last Updated: Monday, 29 May 2006, 21:16 GMT 22:16 UK
Reader diary: Dealing with my debt
Sayara Beg
Sayara Beg wants to reach a deal with her creditors
Thousands of people in the UK are struggling with ever-increasing levels of personal debt.

BBC News website reader, Sayara Beg, 36, a freelance IT consultant from East London, emailed to tell her story of dealing with debt.

CPS:CROSSHEAD STYLE="cross1">Diary entry one: May 1

I am heavily pregnant and in debt.

My debts are not a result of going on spending sprees and exotic holidays. Instead, I and my husband have borrowed to finance our future.

My husband Thomas owns a French restaurant in Holborn, London.

To buy the restaurant, my husband and I had to re-mortgage the family home and my two small buy-to-let properties.

Since when did bank managers assume the right to question when their customers decide to have a baby?

After last July's London bombings, the restaurant suffered a considerable drop in custom.

In November 2005, I became pregnant as planned. My husband and I were very pleased and excited. I had miscarried once before since my first daughter and we desperately wanted more children.

Debt spiral

Financially things seemed to be fine. Restaurant takings, after the earlier problems, had recovered.

But by late February our restaurant business began to show signs of struggling.

My bank advised I take out a personal loan in my name, which I accepted in desperation.

Soon after, my contract came abruptly to an end. I managed to find another temporary job, but when I told them that I was pregnant they gave me my one month notice.

From late May I will no longer have a job and the debts are getting on top of us.

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To make matters worse, in a chance phone call from my bank manager I told her I was pregnant and she immediately questioned whether this was the right time for me to be having a baby.

Since when did bank managers assume the right to question when their customers decide to have a baby?

I told her that I will be writing to her and all my creditors setting out a financial arrangement that should cover matters during my maternity.

CPS:CROSSHEAD STYLE="cross1">Diary entry two: May 7

I will not have enough income to pay any of my mortgage, credit card, secured and unsecured loan repayments from June onwards.

I have decided to write to my creditors to see what can be done.

Instead of burying my head in the sand, I am determined to be open with my creditors about the financial problems and see if they can help.

After all, we are always being told by the banking industry if you are in trouble you should talk to your lenders about it.

Sayara has invested in her husband's restaurant

I considered selling my buy-to-let properties, but they are mortgaged up to the hilt and doing the sums I found I would lose money rather than make it.

I also need the rental income during my maternity.

Desperate case

I need to be careful about the wording of my letter to the credits to demonstrate the desperation of my situation.

I need to do some research and the only means I have for researching at this time of the evening is the internet.

So I begin surfing like mad.

I do a google search of debt management and get lots of results of debt companies offering consolidation loans or fee paying debt management companies, neither of which suit my situation.

Eventually, I suggest a year-long payment holiday, with interest frozen until I return to full time work after my maternity leave.

I cannot afford to take yet another loan and I do not meet the minimum criteria for most of the debt management companies to manage a plan for me with or without fees.

What I need is the appropriate wording to convince my creditors that I am a desperate case and find the right communication style to negotiate a debt plan with each of them.

I change the search to words like bankruptcy, insolvency, financial planning during pregnancy and I get some slightly more interesting results.

I try the following websites:

  • www.insolvencyhelpline.co.uk - good but small set of sample letters
  • www.insolvency.gov.uk - good for giving an insight into the process of going bankrupt or insolvent
  • www.nationaldebtline.co.uk - good set of sample letters

Eventually, I suggest a year-long payment holiday, with interest frozen until I return to full time work after my maternity leave.

I send off my letters, hoping for a positive result.

CPS:CROSSHEAD STYLE="cross1">Diary entry three: May 16

My bank manager is the first creditor to respond. Sadly her response is very negative.

She leaves a message, telling me that she is disappointed to receive my letter and again implies that I may not have thought about the timing and impact of my pregnancy properly.

Again she tells me she can not help me. She explains how she does not have the authority to help me in such a situation and she finishes the message off by giving me the (incorrect) phone number of the bank's personal credit services department and wishes me good luck.

I eventually get through to the bank's personal credit services department.

They were a little more helpful, suggest I put a budget plan together and offer to make some kind of payment.

I say I will get back to them soon with a budget plan.

I know that the public view of debtors is that they are profligate - spending money they don't have in the shops. My position could not be further from this often mistaken impression.

Lenders respond

Kensington Mortgages respond too, in writing.

They say that they do not have a payment holiday policy, nor do they freeze interest or charges and that I must continue to make payments or face the consequences.

They do enclose in their letter a leaflet of some kind of debt counselling service, but it is not clear whether it is their own service or a third party.

I will send them a budget plan as well and see if they might give way a little.

They [The creditors] are still proving very difficult to communicate with

Halifax respond saying they can only offer a six month holiday plan to start from June. After that payments will start again and they do not freeze interest.

They send a formal application form to complete and return, which I do immediately.

My buy-to-let mortgage providers Birmingham Midshires and Mortgage Express do not respond, so I phone them both and they apologise for the delay, but confirm that a letter will be in the post to me.

Birmingham Midshires say that their policy is to only offer a payment holiday of two months, which has been granted to start from June, but after that I will have to contact them again if I have problems.

Mortgage Express say that they do not have a payment holiday policy and that I should send them a budget plan, but that they will expect June payments to still be made.

Halifax Visa and Barclaycard say they have not received my letter. I will send them a budget plan and the copy of the last letter.

My impression, before I began, was that creditors blame people in financial trouble for not taking action early enough.

Here I am trying to take action early - telling them what is what and proposing a solution - and they are still proving very difficult to communicate with.

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.

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