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How to agree reduced payments with your creditors

How to agree reduced payments with your creditors

Agreeing the reduced payments is normally the hardest part of getting a debt management plan in place. However, if you follow the standard process it should be successful.

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Send your payment proposal to all the creditors

Each creditor included in your debt management plan (DMP) must be sent a copy of your reduced payment proposal. This can be done by post. However most of them will normally be happy to receive an electronic copy via e-mail.

The proposal must include a copy of your income and expenses budget. This proves how much you can afford to pay into your plan each month (your monthly surplus income).

You must also provide a full list of all the debts included and what you owe each one. Show the amount you propose to pay each of them going forward.

The information in your DMP proposal should show your creditors you are making your best effort to pay as much as you can and that you are treating all of them the same.

How long will it take for creditors to agree your reduced payments?

There is no hard and fast rule about how long it will take for your creditors to agree to your reduced payments offer. Some might accept straight away. Others might take a few weeks to respond.

If you have not received a response from a particular creditor after 2 weeks you should give them a call to find out the status of your file.

It is possible that they will claim your proposal was never received. If this is the case you need to be prepared to resend it (easy to do if you sent the original by e-mail). You should confirm whether there is anyone in particular it should be addressed to.

If you are posting your proposal, make sure you use a “signed for” delivery service. You will then have proof of delivery.

Start to make your proposed payments straight away regardless of whether you get acceptance. Some creditors may not agree until they can see you are making payments regularly.

What if a creditor refuses your reduced payments?

As long as you have shown them you are offering as much as you can afford, there is every chance the creditors will accept your offer. But they don’t have to.

If one does not agree, it may be possible to satisfy them by increasing the payment offer slightly. But it is vital you do not to agree to increase the amount to a level you cannot afford. If you do this you will not have sufficient cash to maintain the other payments you have agreed and the whole debt management plan is likely to fail.

If you are unable to agree a sustainable reduced payment with a creditor, continue to pay them what you offered anyway. This will mean they are less likely to continue enforcement action against you.

Where one of your creditors does not agree, they will often continue to add interest and charges to your accounts. This situation is best resolved by either trying to repay them faster or, in extreme cases, using a different debt solution.

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