Working out your budget

If there's a shortfall

If you don't have enough left over to meet your minimum repayments on unsecured debts, you will need to write to your lender explaining your situation. They may accept a reduced payment plan based on what you can afford, so you can pay your debts off in manageable amounts. You should always aim to pay all your unsecured lenders something, as even a token payment will demonstrate your commitment to repay your debt.

If you do need to reduce your repayments, it can affect your ability to get credit in the future. See the section on understanding your credit file for more information.

Be realistic

Before you write to your lenders with a Repayment Proposal, it's important to ensure that your information is accurate and a true reflection of your circumstances. The more credible your Budget Plan is, the more likely your lenders are to accept your offer, but ensure that what you are proposing to pay is going to be manageable.

Your lenders will already have guidelines for average spending on food, clothing, utilities, etc. and will be comparing your Budget Plan with these figures. Although your proposal needs to be realistic for your lenders to accept your offer, it is important to include a certain amount for unexpected costs.

Reducing or waiving interest and charges

Your lenders may also agree to reduce or waive interest and charges to help you reduce your debt. However, they aren't obliged to do this and, if you can't or don't keep up the reduced payments, they could re-apply these charges to your account.