Being in debt is no longer a unique situation; most of us at some time in our lives owe money. But it is when you become out of your depth that the problems occur being late paying bills or missing the payment altogether incurs late payment charges and fines. These can mount up pretty fast and can add substantially to the debt.
There are however a few ways in which you can grant yourself some “breathing” space if you find yourself in this situation. The key to everything is communication; most people will probably see the banks and credit card companies as very hard nosed organisations that have little time for their customer’s problems. But this is not always the case, you need to tell them what’s going on, why you have not paid them and what you intend to do to put things right. If they have no contact with you then they can only assume that you are not intending to pay them and start sending the letters and fines. If it simply a case that you have arrears that you can’t pay right now but will be able to pay in the near future then write to your creditors (the people you owe money to), to see if you can arrange a repayment schedule for those arrears. If you feel that you can no longer maintain the monthly payments then there are some letters you can write to explain this.
These letters assume that you can no longer meet the repayments set by your creditor, and that you intend to make them an offer of what you can pay each month.
1. Holding letter this tells your creditors that you are having problems and it asks them to tell you the outstanding balances on your accounts, and advises them that you intend to make them a pro rata offer once you have all the information.
2. Offer letter gives details of the offer that you are making them and instructs them to suspend the interest on the account while you are paying the reduced amount.
3. No offer letter this assumes that you cannot afford to pay them anything and can be used if you are out of work or claiming benefits.
All these letters discussed above are available to download from the citizens’ advice bureau website. You can also find out more information about dealing with debt from their site. It is important to point out that these letters do not constitute a legally binding agreement and the creditors can reserve the right to terminate any agreement at any time, however most creditors will see this more favourably than simply doing nothing.
