It can help to explain why you find yourself in this position if the reason is helpful to your case (telling your creditors that you lost lots of money betting will not endear them to your cause, further, your creditors may decide to take legal action as you are likely to return to gambling at some stage).

You need to state what you can pay and when this will happen. You should request a written acceptance of your offer, and that they will stop interest accruing on your debts.

The mood of your letter should be that you had a problem, that you cannot get out of it overnight, and that you need their help and understanding to achieve a satisfactory solution for all.

Creditors do not need to accept your proposal. Some may agree to, say, a three or six month arrangement, then review. Others will accept easily, and a small number may refuse (with the latter, you need to plainly express that you offer something for everyone, or nothing for all).

Answer creditors letters promptly; be open and fair; never be bullied or bullish. As a debtor you will get intimidating letters and telephone calls, they will ‘want this now, and ‘that by then’ or ‘we will do that’. Creditors believe that ‘the louder you shout (at debtors), the more you will get paid’ (and it works). By showing your creditors that you are in control of your debts and your future, you will stop them shouting and get them to start listening! Completing an Income and Expenditure Statement

An Income and Expenditure Statement is similar to the form you probably completed to get the very debts we all face today. The purpose of the form is twofold:

a) For you to calculate how much money you need to live on.

b) To indicate how much money you can set aside for your creditors.

The form has four parts:

1. Income

Your total income (including any spouse). The statement can be a joint proposal for a couple.

2. Living Costs

Every expense, but excluding any debts i.e. your weekly rent would go in this part, but not any arrears. A monthly hire purchase payment is not a living expense; the whole balance is a debt.

3. Priority Debts

Gas, Electric and Water Rates.  Rent Arrears.  Maintenance (ex-partner and children)
Court Fines.  Vat and Income Tax.  National Insurance.  Television Licence

4. Non-priority Debts

Every other debt not included in part 3 is a non-priority debt (whatever the creditor may tell you).

Some guides to completing the statement are: Use monthly or weekly figures throughout the statement. Do not mix the two.

Housekeeping:

A couple £70 per week, single person £40, each child £25.
Quarterly Bills:

Add together your last 4 bills (being, one year) then divide by 52 if you are using weekly figures, or divide by 12 if you are using monthly figures.

Clothing:

A contentious figure of £5 per week is the maximum amount your creditors are likely to agree to (your creditors expect you to ‘pull in the purse strings’).

Telephone:

Having a telephone for a reason other than health or work will not please some of your creditors (unless they use the telephone to contact you at 9 p.m.). You must keep this figure low and relevant to your current position.

Finally, do not underestimate your living costs or lose sight of this opportunity. Having to immediately reduce the amount of money paid to your creditors will not leave you any room for manoeuvre at a later date, and may well lead to some creditors taking legal action. The first few months of any arrangement are crucial in determining your creditors support: you have been warned!