Work out a budget plan while you are waiting for replies from creditors, using the expenditure sheet. List the money coming in each week or each month. Try not to mix them up. To calculate weekly income to a monthly amount, times the weekly income by 52, then divide it by 12.
To calculate a monthly income to a weekly amount, times the monthly income by 12 then divide it by 52.
If your income varies from week to week or month to month work out an average amount.
To do this add together 4 weekly or 4 monthly amounts. Then divide them by 4 this will give you an average income over a period of 4 weeks or 4 months.
When you have listed your income including, wages, benefits and contributions from others living in your home, make a list of your expenditure.
Start by listing all the priority payments. For example; mortgage/rent, gas, electricity, council tax
List your normal monthly or weekly payments separate from the amounts you may be paying extra for arrears. If you do not pay for all items on a weekly or monthly basis you will need to calculate what the average cost is for the period the bill covers.
For example, a gas or electricity bill is for a quarter. To work out a weekly amount, divide the amount on the bill for the quarter by 13, this will give you an average weekly amount.
To work out a monthly amount, divide the amount on your bill by 3, this will give you an average monthly amount.
If you pay your television licence, car tax, car insurance yearly, work out the monthly cost by dividing the total by 12.
To work out a weekly amount, divide the total cost by 52.
At this stage do not list payments you are making to loan companies unless the loan is secured on your home or they are hire purchase.
When making your list of expenditure, allow an amount for items of clothing, dental and prescription charges unless you get them free. These figures will vary according to the need of each family. When your list is finished add the items of expenditure together to give you a weekly or monthly total. Total E on your expenditure sheet you will then need to list any amount you have agreed to pay for arrears. When you have listed your arrears payments add the together Total F on your expenditure sheet. Add together total E and F to give a total expenditure. You will then need to take away the total expenditure away from your total income. Hopefully you will have some income left over. This is the amount of money you have to pay to your creditors (available income) If you have a minus figure and no available income. Ask for further help and advice.
It may be because some items of expenditure are high and you may need to look at how you can cut back. It may be because you have arranged to pay a priority creditor more than you can afford.
Ask for further advice if you are not sure
If you have arrears to priority creditors and have not made an arrangement with them, you will need to do this before making arrangements with non-priority creditors. Ask for further help if you are not sure what to do. You can now make a list of all your creditors. Use the creditor sheet on the back of your expenditure sheet.
When you receive replies from creditors you can enter the amount you owe to each creditor next to their name. When you have listed all the creditors and the amounts you owe add all the amounts together to give you a total.
If you do not agree with the amount the creditor says you owe or you think the information they have supplied is wrong ask for further advice
Debt self help guide: Step 3- offers to creditors
When you have listed all your creditors and the amount you owe add the figures together to give you a total debt.
To calculate the amount you can afford to pay each creditor divide each individual amount you owe to a creditor by the total debt. This will give you a percentage figure. Times this figure by the amount of available income you have left over after you had taken away your expenditure from your income. For example:
Monthly available income £56.00
Creditor
| Balance Outstanding
| Monthly Offer
|
Barclaycard
| £2654.26
| £26.10
|
Lloyda Bank
| £1228.02
| £12.07
|
Lombard Tricity
| £862.96
| £8.48
|
TSB Visa
| £950.00
| £9.34
|
TOTAL
| £5695.24
| £55.99
|
Barclaycard £2654.26 ÷ £5695.24 x £56.00 = £26.10
Lloyds Bank £1228.02 ÷ £5695.24 x £56.00 = £12.07
Lombard Tricity £862.96 ÷ £5695.24 x £56.00 = £8.48
TSB Visa £950.00 ÷ £5695.24 x £56.00 = £9.34
If you are not sure what to do ask for further advice
When you have prepared your expenditure sheet and worked out what you can afford to pay your creditors, you will need to prepare a financial statement. You will need to send a financial statement each creditor, with another letter explaining the amount you can afford to pay.
You can use the financial statement sheet and letter included in these pages
Clearly write your name and address at the top of the page. State the number of people living in your home and include the ages of each dependant child (a dependant child is child who you receive child benefit for). Make sure you have entered the date.
Copy the income and expenditure details from the sheet you used to work out income and expenditure details. If you are receiving benefits list the name and amount of each benefit separately. On the back of the financial statement, copy the list of creditors, the amounts you owe and the amount you are offing to pay to each creditor from your expenditure sheet you used to work out what you could afford to pay.
When you are happy with what you have prepared you can send the offer letter included in these pages with your financial statement to all your creditors.
If you are not sure what to do ask for further advice. Start to make payment at the reduced amount from the date your next payment is due. If you have not been paying and the creditors have passed your account to a debt collection agency or solicitor, you may need to make payment to that agency.
If you are not sure what to do ask for further advice. When you have completed all 3 steps above you have done the most important thing to prevent the situation from worsening.
Will they accept my offer?
Hopefully your creditors will accept your offer of reduce payment and you will continue to make them without any further problem. However, most creditors will only accept your offer of reduced payment for a limited period of time and will review your situation after the time stated in their acceptance letter. When the account is due for review you will need to contact the creditor again and explain any change of circumstances. If there are no changes in your circumstances you will need to write to the creditor to ask them to continue with the present arrangements.
Always keep a record of the payments you make.
If you are not sure what to do ask for further advice
What if they refuse my offer?
Creditors sometimes refuse offers of reduced payment. Continue to make payment at the reduced amount offered. Write back to the creditor and explain the you are unable to increase your offer of payment. If they have stated that they are unable to accept your offer because items are expenditure are high and should be reduced. You will need to decide whether the expenditure is high or whether the creditor is being unreasonable. If they have refused your reduced offer but will accept a reduced offer higher than you have offered, you will need to decided whether you can afford to increase your offer to that creditor. However, if every creditor asked you to do this you situation may be unmanageable. If you are not sure what to do ask for further advice
What if a creditor takes me to court?
Creditors do not have to accept your offer of reduced payment or agree to suspend payments and interest charges. If they are not happy with the amount you are offering to pay, they can take you to court to obtain a money order judgement. You will receive a summons for the balance outstanding plus court fees and solicitors costs. With the summons you will receive an admission form N9a and a defence form N9b. If you agree with the amount of money claimed you will need to complete the admission form N9a in the same way as you completed the financial statement, listing income, expenditure, and the amount you are offering to pay. The form is to be completed and returned to the creditor or their agents, stated of the summons within the time stated. Do not send the form back to the court. They may accept your offer of payment and you will receive notification of the judgement for that amount you have to pay from the court. Providing you continue to pay this amount no further action can be taken against you.
If the creditor refuses your offer payment, the court will decide whether the amount you have offered is reasonable and they will send you a judgement for the amount they think you can afford to pay, depending on your financial situation. Providing you continue to pay this amount no further action will taken. However, if you disagree with the amount you are ordered to pay by the court, you will have to write back to the court within the time stated saying why you object. The court may then change the amount you have to pay or give you a date and time to attend court when you will have the opportunity to explain your situation to a judge.
What if I disagree with the amount the creditor says I owe?
If you disagree with the amount the creditor is claiming you will need to complete form N9b defence/counter claim and state your reasons why you disagree. You will then be sent a date and time to attend court when you can explain why you disagree. At this hearing the judge will decide whether you owe the amount and whether you have a good enough reason for disagreeing. If the judge is undecided, the case may be adjourned to allow more time for you to obtain further evidence to support your case.
If you are not sure what to do ask for further advice
What if they take me to court and my situation changes?
You can apply to the court for a variation of the order by completing form N245. This form is like the admission form. List your income, expenditure in the same way you did when you completed the admission form. This form has to be sent to the court that ordered you to make the payment. There is a fee payable for making an application. Check whether you have to pay before making an application. Most people in receipt of a means tested benefit do not have to pay.
If you are not sure what to do ask for further advice
What if my situation is so bad that I can not afford to make a payment?
You may be able to negotiate a suspension of payments for a period of time. However, you will need to look at your situation and to look at whether your situation is likely to improve in the near future.
Always ask for further advice
Name:___________________________________Telephone number:____________
Address:_____________________________________________________________
____________________________________________________________________
No of people in property:________No. of children:__________Ages:_____________
|
| Net weekly/monthly wages | | weekly/monthly expenditure |
| Average wages | £________ | | Mortgage/rent | £________ |
| Average wages | £________ | | Secured loan | £________ |
| Maintenance | £________ | | Endowment/life ins | £________ |
| Other income | £________ | | Buildings/contents ins | £________ |
Total 1
| £________ | | Water charges | £________ |
| | | | Gas | £________ |
| Benefits | £________ | | Electricity | £________ |
| Child Benefits | | | Council tax | £________ |
| Family Credit | £________ | | TV licence/rental | £________ |
| Income support | £________ | | Telephone | £________ |
| Other benefits (state) | £________ | | Fines | £________ |
| | £________ | | Housekeeping | £________ |
| | £________ | | Cigarettes/alcohol | £________ |
| | £________ | | Prescriptions/dentist | £________ |
| | £________ | | Clothing | £________ |
Total 2
| £________
|
| Child care
| £________
|
Total Income: A
|
|
| Maintenance
| £________
|
1+2
| £________ | | Meals at work/school | £________ |
| | | | Public transport | £________ |
| Priority arrears payment | | | Car insurance | £________ |
| | | | Road tax | £________ |
| Mortgage/rent | £________ | | Petrol/repairs | £________ |
| Secured loan | £________ | | Hire purchase | £________ |
| Endowment/life ins | £________ | | Other (please state) | £________ |
| Buildings/contents ins | £________ | | | £________ |
| Electricity | £________ | | | £________ |
| Gas | £________ | | | £________ |
| Water charges | £________ | | Total B
| £________ |
| Council tax | £________ | | | |
| Fines | £________ | | | |
| Hire purchase | £________ | | Total income: A
| £________ |
| Telephone | £________ | | minus
| |
Total C
| £________ | | Total expenditure: B+C
| £________ |
| | | | =
| £________ |
| | | | Available income for creditors
| £________ |
| | | | | |
| | | | | |
List of creditors
| Creditor | Balance outstanding | Contractual payment | Reduced payment |
| a/c no: | | | |
| a/c no: | | | |
| a/c no: | | | |
| a/c no: | | | |
| a/c no: | | | |
| a/c no: | | | |
| a/c no: | | | |
| a/c no: | | | |
| a/c no: | | | |
| a/c no: | | | |
| a/c no: | | | |
| a/c no: | | | |
| a/c no: | | | |
| a/c no: | | | |
Letter to Creditors
Dear Sir/madam,
Account number:
I have been advised by Blackburn advice centre Blackburn to write because I am unable to maintain normal payment because
To enable me to fully assess my situation and to advise me further I would be very grateful if you would complete the enclosed form and return it to me. It may take up to 6 weeks to receive replies from all creditors and therefore, I ask for your consideration to accept a good will payment interim and agree to suspend interest charges and recovery action for the 6 weeks. As soon as I have replies from all creditors I will be able to contact you with an offer of repayment.
I thank you for your assistance and look forward to your reply.
Yours faithfully,
Make an offer to creditors
Dear Sir/madam,
Account number:
I have been advised by Blackburn advice centre to write because I am unable to maintain normal payment to the account. Please find enclosed a financial statement with an offer of reduced payment.
I am experiencing financial difficulties and having problems keeping to payments because
You will note from the financial statement, I am only able to offer you a reduced payment of £ each month. I realise this offer may be lower than the amount expected, but I feel it is realistic and at a level which I should be able to maintain.
I would be very grateful if you could accept my offer and waive further interest charges on the account for a minimum period of 6 months. In order for me to make payments, please could you forward the relevant payment book or giro credit slips. However, should my situation improve within this period, I will contact you with the relevant details.
I thank you for your consideration and look forward to your reply.
Yours faithfully,
Creditor questionnaire: send with letter to creditors
Please complete and return this form
Name of account holder(s) _____________________________________________________
Address of account holder(s)____________________________________________________
Name of creditor______________________________________________________________
Address of creditor____________________________________________________________
___________________________________________________________________________
Type of account ______________________________________________________________
Account number______________________________________________________________
Amount of original credit _______________________________________________________
Outstanding balance_________________ Contractual payments _____________________
Is ongoing interest being charged?______________ What is the APR?__________________
What is the monthly interest? ___________ Are there arrears (please specify) _____________
Is agreement covered by the consumer credit act 1974?(please attach copy of agreement)
_______________________ Term of agreement ___________________________________
Is the agreement secured? _____________________________________________________
Is the agreement covered by insurance? (if yes, please send details and a claim form) _______
Has a default notice been issued? (please attach a copy)______________________________
What action has been taken/is pending? ___________________________________________
Have you agreed to freeze interest charges? _______________________________________
Have you agreed to suspend recovery action?_______________________________________
Whom do I contact regarding the account? _________________________________________
Signed:
Position:
Date:
