Repayment Plans DIY debt solution

Summary: This paper explores options for those in debt to set up repayment plans with their creditors.

Facing facts

It may be that we have come to the point of realising that some action needs to take place in order for to break the credit trap we find ourselves in. Many people make all debt repayments as required but find their remaining income is not enough to live on - and have to use further credit. The overall effect is that a lot of money is being paid to the creditors, but the net result is that the debt is not reducing.

Contacting creditors

Creditor reaction to requests for help can vary significantly. Many are not going to offer help too easily for fear of being inundate with customers wanting special treatment. For many creditors, payments have to be actually missed before they can put you on to their department to offer some help.

Communicating information

It is helpful to draw up a simple statement of your overall financial position. Household income (from all sources) should be listed. Then a list of outgoings should be made, including all household and personal costs. Hopefully this will lead to a balance that could be offered as a repayment plan. Creditors may be willing to accept reduced payments and freeze interest for a period of time.

Multiple creditors

When a debtor has a number of creditors then the available balance needs to be divided fairly between all of them. If a creditor can see that you are paying what you can reasonably afford, and each creditor is receiving their proportionate share of what you can afford, they are far more likely to accept the plan. There are companies that can help with this process - e.g. Stepchange, CAB, National Debtline, and Debt Help Charity.

You can't pay what you don't have

Simple but true. It is always important to prioritise outgoings - so mortgage/rent, council tax/utilities, food and essential travel are all more important. Creditors have every right to push to get their debt repaid, but you can't allow yourself to be pressurised to pay what you genuinely can't afford. When this happens - always try to communicate with your creditors and always try to pay something, even if it's only £1/mth as a token payment.