Communicating and negotiating with people you owe money to can be a stressful situation. Whether it’s an in-person meeting, or by letter or over the phone, we have some tips to help you tackle your debt, including:
It is not always possible or ideal to meet with a creditor in person, but it can be useful to discuss mortgage arrears and options. You can take steps to make the meeting go well.
Before the meeting
- Have all paperwork, letters and your financial statement to hand.
- Make a list of what you want to say and what you want to ask.
- Bring along a friend for moral support and to take notes.
During the meeting
- Take notes during or do them immediately after the meeting.
- Make a note of who you spoke to, what their job is, what was agreed and any action you or the creditor have agreed to take. Use our contact creditor log to keep track.
- Record any dates for payment and for review of the repayment plan.
After the meeting
- Follow up on anything agreed and keep records.
- If you post any documents relating to a mortgage, keep copies and use registered post, as it can save you time and money if anything goes missing.
Writing letters or emails
Sending and receiving letters and emails with your creditors has the advantage of presenting a situation clearly. They are also a record held by both parties of what has been said and agreed.
You may feel a letter or email may not fully explain your situation and you want the ease of a telephone call to explain how it is affecting you. But written communication can protect you if you think a telephone call or meeting would cause you distress or make you get angry and say something that might damage negotiations.
When writing to creditors include:
- Your financial statement
- Your explanation of your circumstances.
- Proof of income (pay slips or social welfare receipts)
- Receipts of any above average expenditure
If you have had to spend a lot of money on something like your health, proof of medical bills will prove this cost. Read about reasonable living expenses in our blog. This will give you an idea of how much you can afford, you can allow more in a voluntary arrangement.
You can use sample letter C and adapt it to fit your situation. Remember you only have to tell a creditor what is relevant to explain your circumstances, you do not have to disclose any unnecessary personal information.
Our table below has specific tips for you when writing.
|Make sure you have the correct address||When an account is in arrears, creditors can pass the debt from section to section within an organisation. Or they can pass it to an external collection agent or solicitor to try to get payment. Use the details from the most recent letter, email or phone call.|
|Use a creditor contact name if you have one||Getting your letter or email to the correct person the first time will save time and avoid it getting lost. Always make a note (on your contact creditor log) if you are given a different contact name, section or address by phone.|
|Use the correct reference or account number||To avoid your letter or email getting lost, make sure to always quote your account number and any reference numbers you can see on paperwork. This helps you locate the correct section or person dealing with your file. All court papers will have a case number you can use.|
|Provide your name and address||Make sure to provide the right name and address in your letter or email, especially if you have changed your name or address since taking out the credit.|
|Keep a copy||Keep a copy of all letters and emails you send and receive. It helps you to keep track if you keep a separate folder for each debt. You can use your contact creditor log to note all contacts made. Keep a copy of all emails and request a read receipt to make sure it has been received.|
|Get a receipt of postage if sending your letter by post||A receipt from the post office will act as a reminder of posting dates but will not necessarily prove what you posted. Post can be tracked, but will cost more. This is worth doing for mortgage or court-related letters.|
|Pay attention to the structure of your letters and the tone||The clearer you can make your points, the better. A useful structure to use is: Start with why you are writing Give some background Outline the action you have taken, will take or you are asking the creditor to take Aim to be assertive and respectful in your tone. For an example, see our sample letters.|
If possible, arrange with the creditor when it is convenient to talk. Don’t take a call without being prepared. Some creditors will book a call with you. This will allow you to find a quiet, private space to have a conversation with all your paperwork to hand.
Before the call
- Make sure you have a quiet space and won’t be disturbed.
- Prepare notes for what you want to know and say during the call.
- Have your financial statement and the latest bill or letter to hand and copies of any letters you have sent or notes of other telephone conversations.
- Highlight reference numbers and contact details so you can find them quickly.
During the call
- Have a pen and paper ready to take notes.
- If you are making the call, make a note of the number you dialled and the name of any section you were put through to – it will speed up the process if calling again.
- Always ask for the name of the person you are talking to and make a note of it.
- A lot of unfamiliar jargon can be used in business and finance. If you do not understand something, ask the creditor to explain. Ask for it to be in plain English.
- Always remain polite and try not to take comments personally. The person is just doing a job. If someone is being unprofessional or rude to you, ask to speak to their supervisor and make a complaint.
- Summarise to the creditor what you think has been agreed or decided and clarify any further action that you or they have agreed to take.
After the call
- Using your creditor log, make a note of your call, who you spoke to, and what was agreed if anything and any agreed actions.
- If you doubt the arrangement will be honoured, confirm the call in writing.
- Do what you have agreed to do as soon as possible.
- Note the date of any agreed follow-up call or review.
- If the call does not answer your questions, set them out in a letter.
Negotiations are always a tense affair. You have your offer and to get to it, you have to be prepared and stay firm. Your creditor’s job is to get you to address your debt situation. Try to set out your circumstances as clearly as possible and show that what you are offering is the best you can do. Here are some tips for negotiating arrangements that are realistic and affordable.
Before you negotiate
- Choose the best way of making contact – letter, email or in person is better than by phone unless matters are urgent or you prefer to talk on the phone.
- Be prepared – have your facts and figures to hand.
- Copy any letters, statements, account number and contact names.
- Make sure you have prepared a financial statement that is realistic, affordable and honest and that is supported with proof of income and proof of any above-average expenditure, for example, care costs for an elderly relative.
Stay calm and collected in difficult moments
- Try to remain detached – when creditors are negotiating with you they are just doing a job, try not to take any comments personally and say the facts of your case again.
- Be open and honest about your situation – but remember, you do not have to tell any personal information you feel is private and not relevant.
- Try to be as polite, accommodating and as flexible as possible.
- If you are on the phone, try to stay calm at all times. If you are getting angry, frustrated or upset, end the phone call. You can call again when you feel better or ask to speak to someone else if the person you are speaking to is being rude to you.
- If you decide to write, see our sample letters or contact MABS for help with writing a letter.
Stay firm with your offers
- Know what you can afford to pay and do not agree to pay more. Restate that your offer has been carefully worked out based on your ability to pay. Let the creditor know if you have made changes to your finances to pay as much as possible.
- Ask for interest and other charges to be suspended where payments are not enough to reduce your debt and also let the creditor know if other creditors have agreed to suspend.
- Point out how it works better for both the creditor and the customer if an arrangement is affordable and you can stick to it.
- Assure the creditor if your circumstances change you will let them know immediately. And if they do change, keep your word.
If your negotiation is not working out
- If one creditor is not happy with your offer, let the creditor know if some or all of your other creditors have accepted your offer. They may be more open to the plan if other creditors are working with you on it.
- Ask for a more senior contact person who can work with you while you tackle your debt problem.
- Ask for short-term acceptance for your proposal; say 3 to 6 months followed by a review. Then make sure to make your repayments as planned.
If your creditor does not accept your offer
- Start paying the amount proposed anyway. This shows good faith and a good payment record if it goes to court. But if your payments do not reduce the debt because of interest and other charges, you need to keep negotiating to get the interest and other charges stopped. Read more about a money management action plan.
- Write again asking the creditor to reconsider, you can adapt our sample letter D, or contact MABS for help with writing a letter.
Once you’ve contacted your creditors and made an offer, read our tips for dealing with replies to your offers.
- It may be the case that your creditor will take court action. Courts can be sympathetic to genuine difficulties. Always respond to court letters and attend when required. Use your financial statement to show you are unable and not unwilling to pay.
- Get legal advice, if you think you do not owe the debt.
- Read up on your rights as a consumer and if you have not been treated in accordance with the Consumer Protection Code or other Codes that apply, you can make a complaint to the creditor. If you are not satisfied with the final decision, you may be able to make a complaint to the Financial Services and Pensions Ombudsman.