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Letter 4 - Offer of pro rata payments and request to freeze interest Template letter

Offer of pro rata payments and request to freeze interest

This letter template is to be used by a debtor who cannot pay their contractual monthly payments to their creditors, but wishes to offer what they can afford through pro rata payments, distributing to each creditor based on the size of the debts owed.

Suitable for:
  • Someone who has overstretched themselves financially, lost or reduced their income for some reason or had an increase in their regular living expenses, and;
  • Someone who has available disposable income for their debts but not enough to cover the contractual payments.
Benefits:
  • Shows goodwill to the creditor and is viewed as favourable by the creditors.
  • Interest may be also be frozen by the creditor so that all payments are put towards reducing the debt itself
  • Demonstrates that you are paying as much as you can afford.
Disadvantages
  • If this arrangement were to continue, it could take a long time to repay the debt.
  • Creditors are not legally bound to any informal arrangement and could take further action.
  • If interest is not stopped then the debt could stagnate, with the monthly payments simply covering the interest itself.

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