Keep Communicating With Creditors

Redundancy, divorce, illness or unexpected caring responsibilities can all alter your financial stability at short notice. Add to this the current cost of living crisis and it can be easy to lose control of debt and miss payment deadlines. Not only can this cause a lot of stress at an already difficult time, but it may also affect your credit rating, impacting your ability to get access to credit in the future.

While it can be tough to admit that you’re experiencing financial difficulties, it’s far better to work with the companies you owe money to by letting them know what’s happening. They can then help you come up with a new solution that can better support you during these tough times.

Tips to help you take back control when circumstances change

Write a budget

Work out a budget so you know how much you have left each month after paying your essential bills and priority debts. Find any recent bills and statements, including bank statements, payslips, debit and credit card statements, and receipts for anything paid for in cash. You’ll then be able to create a ‘standard financial statement’ – your creditor will know what this is.

Online budgeting tools can be useful, like those found on the National Debtline website. And there are a number of free debt advice charities that can help, too – try Step Change or Money Helper. If you need help working out a budget, you can always contact your nearest Citizens Advice.

Contact your creditors

Call, email or write to each creditor you owe money to and ask if you can negotiate a new repayment plan. Explain your change in circumstance and include a copy of your budget. This will show creditors you’re only spending money on essential living costs and that the offer you’re making is fair.

Make sure you:

• explain why you’re in debt – for example, because you’ve lost your job
• outline how much you can afford to pay each week or month
• ask if they can adjust your repayment plan to help you through this difficult period.

The main thing to remember is to not put off contacting creditors, even if you’re unsure you can pay anything at all. Working in partnership with anyone that you owe money to is absolutely the best option.