How To Get Rid Of Debt Problems Step 3 -- How To Negotiate Reduced Payments With Creditors


First, make a list of your creditors (NOTE: you should only attempt to re-negotiatepayments on your UNSECURED debts if you wish to avoid the riskthat an item upon which a debt is secured could be re-possessed)

Add to this list the outstanding balance owed to each creditor.It is essential that you are accurate with this balance. Youshould find the balance on the most recent statement from eachcreditor on your list. If you cannot find a balance figure, callthe creditor or write and ask for a current outstanding balance.Only when you have an accurate outstanding balance for eachcreditor on your list can you proceed to the next step.

From your financial statement (prepared in the last of thisseries), subtract the total of your outgoings from the total ofyour income. The resulting figure is your disposable income.

You need to divide the disposable income figure amongst yourlist of creditors in proportion to the outstanding balance owedto each. This is why you need an accurate balance before youstart. Otherwise, your creditors will not accept your proposal.

When you have done this, write a letter to each creditor quotingyour name, address and account number, offering to pay theamount you have calculated for that creditor.

You will need to include a copy of your financial statement witheach letter, and you will need a valid explanation for yourhardship, which now prevents you from paying the full amountagreed initially.

It is not difficult to see that the success of your proposalwill depend on how well you have put together your financialstatement. The amounts you have claimed for each item ofexpenditure will need to be acceptable to your creditors.Unfortunately, there is no hard and fast rule I can give you forthis. it is entirely dependent on the combination of yourcircumstances, which is unique for everybody.

If one or more of your creditors rejects your proposal, theywill probably indicate why. It will then be necessary to re-jigyour financial statement and re-send it to all creditors with anew letter. Certainly this can be time-consuming and tedious butthere is no easy answer to this.

Rob Hawkins is the owner of Debt Consolidation UK. His company Chiltern Debt Management UK has helped more than 50,000 people to get rid of debt problems, and won the coveted 'Debt Counsellor of the Year 2004' award.