Other Options

If you are struggling with debt then it is essential you act quickly. By looking at your budget and making savings you may be able to reduce your monthly spend and make sure your priority debts (mortgage or rent) are covered. It is also essential that you speak to your creditors and explain the situation. Whilst this can be daunting (if you are receiving demands and threatening phone calls) most lenders will listen and should offer a short-term solution.

Self Help

By completing a budget plan and sending this (along with proof of income) to your lender they can see the position you are in and should accept an offer of payment. Creditors cannot expect you to miss your rent or utility bills in order to pay them and it is important they understand that you have other essential bills (food and clothing) to pay.

At Debt Trust Direct we can provide a free budget plan (call us on 0800 084 2885) and we will even help you fill it out.

Token payments

If your budget plan shows (after essential bills are paid) that you have no money at all to pay towards your debt then you can offer your creditors token payments. These payments are often as little as £1 a month but they show your willingness to pay and that you are not just ignoring the problem. By offering a creditor as much as you can afford you are acting in a responsible way and any court will appreciate that.

As such token payments can stop legal action and buy you some time. It is worth noting (although some lenders may say differently) that creditors are obliged to accept these token payments and if you keep sending the cheques they will have to apply them to your account.

Full & Final settlements

If you are in arrears or making token payments then a full and final settlement could be an option. Basically it is an offer to pay off the balance of your debt for a reduced amount – often 50%. As you are in arrears then creditors will listen to any reasonable offer and sometimes offer a full and final settlement themselves.

Lenders accept that a certain percentage of customers will fall behind and that some will never pay at all. As such billions of pounds worth of debt is written off every year or sold on to collections companies for a fraction (often 10%) of its book value. Lenders are obviously keen to avoid this happening and therefore an offer to settle the debt for 50% is often seen as a better option.

By completing our free 30 second debt test we can tell you if you qualify for a full and final settlement although the problem is then raising the funds (usually through a consolidation loan, relatives or credit unions) to make a lump sum payment.