Managing Your Creditors

Now that we have completed our income and expenditure form it is time for us to now use this information to negotiate with our creditors, we will need them to agree to our proposal so that we can move forward in a positive way.

We will have to share all of the information we have gathered to allow them to make an informed decision, the vast majority of creditors will be sympathetic to your situation, and assuming that that you are honest and upfront they will work with you to allow you the opportunity of paying back your debt.

The first thing we must do is write to all of your creditors to explain your situation, we can make this a short and concise letter which will include a copy of your new income and expenditure sheet showing all the offers of payment on a pro rata basis, see example below:    

Letter to your creditors

Before we write our letter we need to understand our message, quite simply we are putting ourselves onto a debt management plan, more importantly we are doing this without the need to pay a third party which means we have more money to spend paying off our debts, this should bode well with your creditors as it means they get more money each month.

We also need to let our creditors know that our intention is increase payments where possible at our earliest opportunity. It is important to remember that we intend to repay all of our debts as soon as possible.

Below is an example first letter which can be used for all of your creditors, remember to change the relevant details for each one while also making sure you retain a copy of every letter sent; this will be important if any dispute arises during the process of negotiation.

click for larger image / download word file

You should find that in the majority of cases your creditors will be willing accept your offer for at least a temporary period, it is important to remember to be honest with all of your creditors and to keep them updated with any changes to your circumstances.

In some cases you may find that your offer of payment is not accepted in the first instance. If this is the case it vital that you stick to your guns as any deviation from your plan will affect your ability to pay all of your creditors.

It is far better to allow your creditor to place you into default, if they do reject your offer it is important that you make the payment you have offered anyway and continue to do so. In the vast majority of cases your account will be passed over to a debt recovery agent, when this happens forward your income and expenditure form along with your offer of payment All debt recovery agents including solicitors have an obligation to consider your personal circumstances when looking at offers of payment.