Negotiating with creditors
Negotiating with creditors can be difficult and may take a long time. The arguments you use when you are negotiating will depend on a number of factors, such as whether you have both priority and non-priority debts, whether you have any assets you can sell, whether you have any available income, and whether your situation is likely to improve or not. Creditors will also want details of the income of your partner.

You need to be clear about what you want the creditors to agree to. You must be realistic about what you can offer - for example, if there is no prospect of you getting a job in the near future, you may only be able to offer very small amounts such as £1.00 a week, called 'token offers', to each of your non-priority creditors.


How much to offer
Priority creditors will generally be less flexible in what they will agree to than non-priority creditors, because they know they can take stronger legal action against you. You must remember that, when paying off priority debts, such as council tax or income tax, you will have to pay off the amount you are currently liable for, as well as putting something towards the arrears.

When you are working out what to offer to your non-priority creditors, try to divide up the money that you have available, according to the size of the debt. The bigger the debt, the bigger your offer of repayment should be. However, you can only do this if you have a reasonable amount of money available in your budget. If you do not have much money left after essential expenditure, you will have to make token offers to your non-priority creditors.

If your creditor is using a debt collector to collect money, there is Office of Fair Trading (OFT) guidance that must be followed. If debt collectors fail to follow the guidance – if they are intimidating or pretend to have more legal powers than they have, for example – the OFT can take action. You can find out more about the OFT guidance at http://www.oft.gov.uk/ If you are being harassed by your creditor you should get advice.


Making your offer
When you tell the creditors how much you can offer, explain why you are offering to repay in this way.

Tell the creditors:-

** how much you are offering them, and what the regular payment intervals are - that is, whether you are paying monthly or weekly.
** the truth about your financial situation. The creditors will look at the families income as a whole. This means that if you have a partner, civil partner or spouse who is working, the creditors will expect them to make some contribution to help pay off your debts. whether your situation is likely to improve, or not. If it is going to improve, tell the creditors when this is likely to happen.
** whether you have both priority and non-priority debts. If you have priority debts, explain that you are going to pay these off first, and say what you are offering to each of your priority creditors.

If you are not confident about negotiating with your creditors, or you are finding it difficult to negotiate with them, you should contact a free advice agency.


Responses from creditors
Even if you believe that you have sent all the information to your creditors that they need, you will sometimes find that creditors will not accept your offers at first. Creditors will often try to find reasons to pressurise you into paying more than you can afford. Or one creditor may ask you to pay more, proportionately, than you are paying other creditors. If you find this is happening, you should seek advice from an advice agency.

Creditors may challenge your budget and claim that you can afford to pay more than you are offering. In such cases, you will have to be prepared to provide proof of your income such as wage slips and benefits details, and proof of your expenditure, such as copies of fuel bills, details of rent payments, or mortgage payments.

If creditors do not reply to your offers, start paying them what you can afford anyway, and seek advice from an advice agency.