Having now established what money you have available to pay your debts, and placed your debts in order of importance, you can now begin to pay off the money you owe.

Make sure you remove your living expenses from your available money and begin to contact your priority creditors to find out how much you need to pay them.  At this stage it may be possible to negotiate with your creditors but remember that you will need to back up any communication you have with them with some evidence to support what you are saying. Whatever money you have left after having paid your priority debtors can now be used to pay your remaining debts.  Try to distribute this money fairly amongst each of these creditors, giving each of them some of your remaining income.

You can use the methods listed in the following examples to help you work out how you should split your available money amongst your remaining creditors.  It is a system which is often applied by the Courts and you should find that most Creditors will accept it.
 

Creditor (1)
Take the debt you owe to Creditor (1) (£7,500) and multiply this by your available income (£300).

7,500 X 300 = 2,250,000

Then divide this figure by your total debts (£10,000).

2,250,000 ÷ 10,000 = 225

£225 represents the monthly sum you should offer to pay to Creditor (1)

Creditor (2)
Take the debt you owe to Creditor (2) (£2,500) and multiply this by your available income (£300)

2,500 X 300 = 750,000

Then divide this figure by your total debts (£10,000).

750,000 ÷ 10,000 = 75

£75 represents the monthly sum you should offer to pay to Creditor (2)

• a copy of your budget
• a list of the people you owe money to
• a simple explanation of how you have determined your offer of payment. 

You might want to include your workings as outlined above.

If your creditor does accept your offer of payment, remember that they may review your arrangement from time to time in order to assess whether or not your financial situation has changed.

^{The information provided in the Customer Advice section of our website is intended for general information purposes only. The information provided applies to England & Wales only, and is not a full statement of the law.}