Personal Difficulties   >  Debt Repayment Schedule

Some people with serious debts problems do not wish to consider formal insolvency proceedings. An alternative to formal insolvency is a debt repayment schedule, also known as debt rescheduling.

As soon as you become aware that you are unable to meet your monthly commitments as they fall due, you should contact your creditors to advise them of your personal circumstances. Creditors may be prepared to give you more time to pay or they may agree to reduce payments for a period of time until your circumstances improve. Your local citizens advice bureau, trading standards office or money advice centre may be able to assist you in trying to reach such an agreement with your creditors. There is also a number of debt advisor companies throughout the UK who advertise in the media.

Meston Reid & Co can assist in this process and the initial meeting involves no cost to the individual/partnership seeking advice.

 

What is a debt repayment schedule?

A debt repayment schedule allows you to make reduced repayments to your creditors over a number of years. Payments are made  at a reduced rate until the debt is cleared in full, or until you are able to make repayments again at the previous level. The repayments are based on what you can afford after a realistic income and expenditure account has been prepared.

Your expenditure account should include:

• rent/mortgage
• council tax
• electricity/gas
• house insurance
• telephone
• food
• transport
• clothing
• children’s expenses (if applicable)

Your expenditure will cover all normal household expenses, without taking into account any creditor payments.

You will then be able to calculate the amount that you can pay to your creditors on a monthly basis i.e. because you now know what you can afford to pay.

 

How much to offer

When you work out what to offer your creditors it is normal practice to divide the available money in relation to the size of the debt. The larger the debt, the larger the repayment sum is likely to be from the monies you have available.

 

Making the offer

When you tell your creditors how much you can repay, explain why you are offering to repay them in this way. Tell the creditors the truth about your financial situation and how much you are offering to pay them and how regularly. You can also request that interest is frozen.

The more open and honest you are, the greater the likelihood of acceptance of your offer.  If the offer sounds to be complicated, or is based on the provision of limited financial information, creditors may decide not to support you.

Response from creditors

Your creditors may accept your repayment offer but are under no legal obligation to do so. Unless all of your creditors agree to your proposal you may find that you remain under pressure from one or more creditors and may have to seek independent insolvency advice with regard to a more formal route of debt relief e.g. protected trust deed or sequestration.

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