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Negotiation with Creditors

The process of negotiation with creditors can be a lengthy and difficult one. Creditors will want to know the following:

  • What other debts the individual has and if this is the reason theirs cannot be paid (in the case of non-priority debts)
  • Whether the individual has any assets they can sell to cover the debt
  • Whether the individual has any available income
  • Whether the individual's situation is likely to improve or worsen
  • Whether the individual has a spouse or partner who could pay the debt

The Amount to Pay Off

In some cases, the individual can make token offers. This means that they offer a token sum of, say, £1 per week to each non-priority creditor if their situation is not going to improve in the near future or they are unable to work.

Priority creditors are likely to take a stronger stand and it is important that the individual continues to pay anything they are currently liable for as well as trying to repay the arrears (e.g. with Council Tax or Income Tax).

In general with non-priority debts, the size of the repayment should correspond with the size of the debt i.e. more should be paid towards a larger debt than that paid towards a smaller debt.

When offering to repay a debt, the creditor will need to know the truth about the individual's financial situation and how much you are offering them on a regular basis. Please remember that a creditor will expect an individual's spouse or partner to help pay off the debt if they are working.

Responses from Creditors

Occasionally a creditor will not accept the offer of repayment. They may wish to persuade the individual that they can pay more than that, or that you pay them in particular more than any other creditors. If this is the case the individual really needs to seek advice and the Advice Centre strongly recommends that you do so, either by contacting an adviser at the Centre or by contacting another free advice agency.

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