Letters To Creditors - The First Step

If you're starting to have trouble meeting your debt repayments, grab the bull by the horns and contact your creditors. Here's how.

One of the horrible things about struggling with debt is having to deal with creditors chasing you for their money. They can be very persistent, particularly with customers who try to wish away their financial problems by ignoring them. It's very tempting to stick your head in the sand when you're scared.Nevertheless, creditors have a responsibility to deal with you in a fair and sympathetic manner and they are much more likely to accommodate you if you are equally straight with them before they get so fed up with you that they sell your debt on to even more intimidating debt collectors.If your difficulties are hopefully just temporary, begin by drawing up what's known in the business as a 'Statement of Affairs'. It's a list of your income, expenditure and your debts so you can work out how much surplus income you have to distribute among your creditors. Armed with that information, use the following sample letter to try and persuade your creditor to cut you a bit of slack:---Dear Sir/MadamRE: Grabbit & Run Credit Card - Account Number:123456789I am writing to tell you that due to unforeseen circumstances, I'm sorry to say that I will be unable to meet my financial commitments in full for the immediate future.This is due to ...give brief details of what has led to your problems ie: losing a job, relationship breakdown, ill health.I enclose a list of my creditors, which shows the balances left to pay and my regular monthly payments to each together with a list of my income and household expenditure. You will note from the statement that I have a monthly disposable income of £xxx, from which I propose to deduct £xxx per month for emergencies, leaving a monthly balance of £xxx.In view of my circumstances, I am asking all my creditors to accept lower payments on a pro-rata basis for the time being and I would, therefore, ask you accept a reduced payment of £xxx to be reviewed in six months. I would also be grateful if you could consider freezing interest and charges so that the debt does not increase further. I appreciate that this may seem like a low offer but it is the most that I can afford to pay regularly and reliably at the moment without being unfair to my other creditors.I would add that in the event of my circumstances changing for the better, I would, of course, increase payments as and when I am able to do so.I would like to assure you that I take my responsibilities very seriously and with careful planning and your kind assistance, I hope that I will eventually be able to get back on track and satisfy my debts in full.Yours faithfully---The important thing is to offer to pay only what you can afford. There's absolutely no point in making an offer of payment that you won't be able to maintain. If you want your creditors to give you some leeway then you mustn't break your promises. Make sure too that you start paying what you've offered regardless of whether they accept it or not. It shows goodwill on your part and you'll get credit for effort if a creditor later decides to take further action through the courts. Besides, a judge is not going to make you pay more than you can afford so your creditors shouldn't expect you to either!Find out more about how to Get Out Of Debt & use our Statement of Affairs calculator.