What steps can I take to help the situation?
If you are struggling to meet your financial commitments you should prioritise your payments and pay all your essential bills first such as your mortgage, loans secured against your property, utility bills, insurances, council tax and housekeeping. These bills should be paid before making any payments to credit cards or loans.
We have also made a series of letter templates available for you to download below. An explanation is provided in each instance to help you decide which is the most suitable for your requirements.
Which letter to use
You'll need a different letter depending what you want to ask creditors for. You should also detail the reason why you are writing the letter and how long you anticipate this situation to last for. Remember, the more detail you can provide, the easier it will be for the creditor to understand your circumstances and grant your request. Here is a list of the letters and when to use them:
Holding letter - You can use this letter to ask creditors to hold off for a short period while you work out your budget or get advice.
Offer to non-priority creditors - You can use this letter when you have some money available to offer your non-priority creditors. You can use the Summary Financial Statement to work out your budget and fair offers to each of your non-priority creditors.
No money to offer creditors’ letter - You can use this letter when you have no money available to offer to your non-priority creditors. You can use the Summary Financial Statement to work out your budget and to see whether you have money available to pay your non-priority creditors.
Request to write off the debt’ letter - You can use this letter when you can't make an offer of repayment and your circumstances are not going to improve.
Ending a hire purchase or conditional sale agreement’ letter - You can use this letter to end a hire purchase or conditional sale agreement. You might need to do this if you can't afford the payments any more. Before using this letter, it might help to read information about hire purchase and conditional sale agreements or seek independent financial advice
Remember:
Keep all parties that are named on the mortgage up to date with your difficulties, including any guarantors.
If you have a Loan Protection insurance, check with them whether you can claim.
Speak with the Department of Work and Pensions and request if you are entitled to any state benefits to enhance your income.
Seek independent debt advice. You can speak to a free independent adviser who can help you with your priority debts and negotiate with your creditors.
Free debt advice is available from organisations such as, Citizens Advise Bureau, Stepchange Debt Charity, Payplan and National Debtline.