Here you will learn a few tips about how to deal with your unsecured creditors should you find yourself in the uncomfortable position of finding it difficult or impossible to keep up your agreed repayments. This is known as a debt management plan. Although in theory it is possible to do this for yourself, you might find that you would benefit from the help of a professional debt manager
You should note that the information provided here refers only to your unsecured creditors which are lenders such as credit card companies, your store cards, student loans, and other loans such as overdrafts or personal loans. Secured loans such as your mortgage, rent arrears or car hire purchase agreements should be your first priority and you should ensure that you deal with these first.
The first tip is what not to do: do not in any circumstances ignore letters or phone calls from your unsecured creditors. Contact them as soon as you can even if it is just to tell them that you are trying to work things out and will get back to them within a few days with suggestions about what you are going to do.
At the same time you can ask them to at least temporarily freeze the interest and late repayment charges that they are adding to your loan.
Also, request that they do not initiate any proceeding against you such as insolvency or Count Court actions and that they put a hold on any such proceedings they might have already initiated.
Be honest about your circumstances and how you see they might pan out over the coming months. For instance if you have lost your job, you can indicate how long it will be before you expect to get a new one.
Keep notes of everything that is said by both parties, and as soon as you have ended the call, write a letter to them that restates the conversation and everything that was agreed.
You need to work out how much you can afford to repay towards your loans and you should distribute what you can afford evenly amongst them pro-rata to how much you owe.
Set out your offer in a letter to each of your creditors and include evidence that this is a realistic offer by including a detailed budget of your income and outgoings and list your debts to other creditors.
