Falling behind with Credit Card, Loan, Overdraft, HP, Catalogue payments etc?

It is all too easy to slip into debt, you find yourself struggling, miss a payment, fall behind, find yourself 'robbing Peter to pay Paul' and before you know it you have spiralled into debt, with letters, phone calls, Debt Collection Agencies and pressure from all sides.

Once you have sorted out your priority debts (see Debts On Your Home) you need to make a list of all other debts, such as credit cards, loans, overdrafts, HP, catalogues and other personal debts.

Work out your monthly budget, taking into account everything you have coming in, and all your payments out, including any arrangements you have made for your priority debts. Look at any money you have left and how this can be used to make payment arrangements with your creditors. A good way to do this is to consider what portion of your total debt belongs to each creditor, and allocate a similar portion of what money you have left.

If you do not have any money left to pay creditors, please scroll down to the 'If you cannot afford to pay off debts' section further down this page.

Negotiating with Creditors

Even if creditors do not reply to your offers, start paying them what you can afford anyway, and get advice from an organisation such as the Citizens Advice Bureau.

If your creditor is a credit-card company, it should allow you a 'period of grace' of up to 30 days to agree a repayment plan with a non-profit debt advice agency, such as a Citizens Advice Bureau. During this time the company should 'leave you in peace' to make arrangements, not contact you and freeze any action on your account. You need to request this in writing. The 30 day period can be extended to 60 days if you can show that you are making progress on repayment but need extra time.

Debt collection agencies have also agreed to allow a 30 day 'breathing space' to seek advice from a debt advice agency. Again, you need to request this in writing. During this period, they should not try to contact you in any way and freeze any action on your account.

If you need help to negotiate with your creditors, I would suggest you contact the Citizens Advice Bureau, who are very knowledgable and supportive. Click here to visit their website and find your nearest branch. 

I know, for me, the worst thing was the constant phone calls, letters and jumping every time the door knocked. Creditors are not allowed to harass you. If you feel you are being harassed by your creditors, get advice about what to do, as the creditor may be committing a criminal offence.


Other options

If you do not feel able to negotiate yourself with creditors, you may wish to consider:

• Using a Debt Management Company to negotiate and make offers on your behalf. For more information about this click here.
• Applying for an Administration Order. This is a court order that allows you to pay only a proportion of the debt. You will need to get legal advice to apply for an Administratin Order. The Citizens Advice Bureau will be able to advise you.
• An Individual Voluntary Arrangement (IVA). More information about this is detailed in our IVA's and Bankruptcy section.

• Loan consolidation, where you put all of your debts into one loan. Think very carefully about this as interest rates are often high and you may end up paying significantly more in the long run. 

If you cannot afford to pay off your debts

If, after you have worked out your budget, you do not have any money left, no way of gaining extra income, and nothing to sell, to offer your creditors for a payment plan, you may need to consider:

• asking your creditors to write off your debt. However, this is rare and is usually only considered if exceptional circumstances, such as someone who is seriously long-term ill or very elderly.
• A Debt Relief Order. This is an order, granted by the Insolvency Service for those who cannot pay their debts. However there are a lot of conditions, and you will have to pay for the order. To find out more about this, click here.
• Bankruptcy - for more infomation about this please see our 'IVA's and Bankruptcy' section.