Ways To Pay Off Debt -
Creditor Negotiation Guide:
Stage 1: Contact Your Creditors

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How To Negotiate Debt Settlements

Ways To Pay Off Debt - What Is The Purpose Of This Guide?

More and More of us these days are asking the question "how do I get rid of debt?" If you are in financial difficulties, you have taken the right first step in seeking help and advice on ways to pay off debt. This step by step Debt Management Guide will take you through the actions you need to take in order to get to grips with your financial situation and take back control of your life. The main focus of this section of the website is to show you a way of getting out of debt if you choose not to borrow money or use the services of a Debt Managmenet Company. This page covers the first stage of a four step process for paying off your debt. Use the links on the right of the page to see the other stages in the process.

Following the advice in this Debt Management Guide should be your first option, before you consider IVAs, Debt Management Plans, Debt Consolidation Loans or other such services, which can all involve additional costs either in interest or in fees. If, after reading this guide, you do not feel confident enough to go through this negotiation process yourself, you may then decide to go down one of the other routes. My intention is simply to ensure that you have all the information you need to make the best decision for your circumstances. Part of the information I will give you is to enable you to have the option of tackling your debts yourself, the idea being that you pay nothing to third parties and therefore have more money for creditors and can get rid of the debt that much faster.

Ways To Pay Off Debt - Contact Your Creditors

The first step in the management of your debt is to contact your creditors (the people you owe money to). You can't expect help or understanding from your creditors if they are not aware of your situation. They need to know that you are in debt and seeking help and advice to try to manage it. You should create a list of all your creditors and write to them to let them know about your circumstances. You should also get them to confirm the exact amount of money you owe (if you are not sure of this already). A sample letter can be found below.

Ways To Pay Off Debt - Drafting Your Letter

The letter needs to include an explanation of the reasons for your debts (redundancy, illness, marriage break down, etc) even if it is just that things have gradually built up and got out of hand. You will be asking them to confirm full details of amounts owing so that you can make plans for offers of repayment as part of overall plan for how you get rid of your debt.

Check replies carefully with regard to the amounts your creditors say you owe them. If there are any excessive penalties or interest charges it is worth challenging them to see if they can be waived or reduced.

It will be a good idea to start organising your creditor paperwork systematically as you are going to need to keep all paperwork that builds up, and you want to be able to find things easily. Keep copies of all letters you send as well as those you receive. Consider having a folder for each creditor or a file with a section for each creditor. Keeping everything in one place will make the process easier to manage.

Ways To Pay Off Debt - Sample Letter To Creditors:

Cut and paste the following text and adapt it to your own details:

Creditor name
Creditor address

Dear Sir/Madam

Account number/agreement number, etc

I am writing to let you know that I am currently experiencing financial difficulties due to........ and therefore have found that I am unable to meet the full payment due on my account. I assure you that I am working hard to resolve the situation and will write to you again soon with a Financial Statement and details of the best payment offer I can manage.

I would be grateful if you could let me have the following information to assist me in compiling an accurate list of my debts, with view to making offers to my creditors:

• Type of agreement (secured or unsecured)
• Total balance owing
• Terms of repayment and interest or penalties applied
• Any arrears
• Any insurance policy attached to the agreement

I look forward to receiving your reply, and will write again as soon as I have all the information I require.

Yours sincerely,

If you prefer more detailed guidance on the process of how to negotiate with creditors to write off a large part of your debts, please refer to the page on how to Learn Debt Negotiation

Go to the next stage in your guide on Ways To Pay Off Debt, which tells you how to Prioritise Your Creditors.

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