If you don’t have any priority creditors you can jump to Step 6.

Step 4 - Send Holding letters to your non-priority creditors

You need to let your non-priority creditors know that you have a problem, and that you will be making offers to them once you've negotiated repayments with your priority creditors. Contact each of the non-priority creditors as early as possible and explain why you're in debt. If you phone them you should follow up the call with a letter, confirming what you said on the phone.

Go to the Sample Debt Letters at AdviceGuide and use the 'Holding Letter' outline to make your own personal version to explain to your creditors that you are having financial difficulties which you are trying to sort out. Ask them to postpone any legal action until you are able to make an offer of payment.

If you are not able to negotiate repayments with each of your priority creditors contact your local CAB for assistance.

Step 5 - Negotiate with your priority creditors

Record your Priority Debts on the Debt page of the Financial Statement you loaded on your computer and started to complete in Step 2.

Bearing in mind how much you have to offer all your creditors (from the bright yellow area in the Debt page of the Financial Statement), you now need to contact each of your priority creditors to negotiate repayment. You must remember that when paying off these priority debts you may have to pay off the amount you're currently liable for each month as well as putting something towards the arrears. Priority creditors may not be very flexible in what they will agree as they know they can take strong legal action against you. If possible arrange repayments that still leave you something to offer to your non-priority creditors.

Before you contact them you may find it helpful to read the relevant section of Adviceguide:

Record all the negotiated payments in the Payment offer/month space on the Debt page of your Financial Statement.

Forward to Steps 6,7 - Negotiate With Non-Priority Creditors

Back to the main Debt Kit Page