Read through this whole thing, and feel for you.
Easy to say "go round and see him in person", but as someone else said, it's a risky option, and may just end up with him explaining the same thing on the door step - if he ain't got the money, he ain't got the money.
The way I would handle things is with two options:
1. Carry on via your bank - if they can help sort it quickly then great.
2. If the guy has a sob story about not being able to afford a refund, and is still offering the instalments, then you have every right to charge regular late-payment fees. Send him an official invoice - clearly stating that all amounts outstanding after 28days will incur a charge of £10 for a reminder letter, and a 15% interest charge. Then every month, as he sends you his instalment, take that off what he owes you and send him another letter with a revised balance + charge + interest. Make sure it's all done recorded.