Fighting Debt - help in dealing with debt

3) PRIORITIZING DEBTS

After completing your Expenditure and Income form 'SOA' you should now have a better idea of what your disposable income amount is. Using the list of debts created for all priority and non-priority debts you can now start to calculate how much you can offer and afford to pay to each creditor. Remember make sure you can afford an offered amount and stick to it. If you experience difficulties later on then a creditor is more likely to be sympathetic if you have been attempting to pay. Keep your creditor aware of any difficulties of payments agreed to in writing.

If you are not sure of the actual balance owed and need the details, write to the creditor asking for the information. Do not believe an amount advised of in a phone conversation and make sure you have written evidence from the creditor of the amount. You can use the template letter 'request of balance' to send to the creditor.

Although an amount should have already be included in your SOA for all priority debts it is also worth looking to see if you can pay a higher amount to clear a priority debt quicker.

PRIORITY DEBT ADDITIONAL PAYMENTS

List each priority debt in order of:

Risk - ie lose home, car, etc

Interest charged on amount owed

For non priority debts, creditors tend to be easier to negotiate with as the debts are unsecured. If a creditor took you to court it is likely that the court would look at your SOA and decide an affordable amount possibly less then you were initially offering. However if a creditor did take you to court you would then have a CCJ so avoiding this route is preferable.

NON PRIORITY DEBT ADDITIONAL PAYMENTS

List each non-priority debt in order of:

Highest Debt Balance

Interest charged on debt

Interest frozen on debt

If interest has been frozen on a debt then this can be considered a lower non priority debt than one with interest still being charged as long as the creditor will accept the lower payment offered.