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Like many DIY jobs some people are more confident, have more time and are happy doing the job themselves. Whereas others believe that certain jobs should be only done by professionals. Here, we will guide you through the process of resolving your debt problem yourself and provide you with the letter templates.
If you need help at any point use our forum or alternatively if wish Debtwatchdog to do the donkey work then either give us a call or just submit your SOA for one of our debt experts to review, remember this is free.
If you are banking with one of your creditors it is important to change your bank account. If you don't then your creditor will just dip into your bank account and take any funds which they are owed.
Draw up a Statement of Affairs (SOA). This is breakdown of your financial position and lists all of your assets, liabilities, income and expenditures. For your convenience we have provided an SOA calculator which will guide you through drawing up an SOA. Do not try and exaggerate the amount you spend on food, petrol, utilities etc as this may harm your application with your creditors.
Obtain an accurate balance. Once you have completed your SOA the next thing you are going to do is write to all of your creditors, stating that you are experiencing financial problems due to ... and would like to obtain an accurate statement of your balance. Spend some time considering what you will put in your letter with regard to the reasons behind your debt problem. Creditors will be less sympathetic if the reason is partying or bought too many Christmas presents. However, if your financial problems are as a result of an illness or losing a job then creditors will be more likely to agree your request for lower monthly payments.
Download Creditor Information Request Letter
Revise your SOA. Once you have received all the letters back form your creditors update your SOA accordingly with the correct figures. With the revised SOA you will be able to see how much available/disposable income you have to offer amongst your creditors.
Offer letter. Write back to all of your creditors with a pro rata offer from your available income. If you have no available income you can write to them using this letter template.
Download Pro-rata offer letter
Download No Available Income Letter
Set up a direct debit to all of your creditors with the offer amount. You must ensure that your creditors receive the cleared funds on time. If you don't this may jeopardise your agreement.
A debt management plan is not the final hurdle in getting you financial life back in order -it is the first step. Thrift and budgets are the keywords for the rest of your life. You will find it difficult to get credit because your credit score will be severely affected consequently you will need to change your priorities in life. Treat this as a positive and look at ways to economise and live within your budget. The only things you should be spending on are the essentials; food, clothes and a roof over your head, oh and one other thing, time. Invest time in thinking and planning; food shopping, costing your next major purchase and just getting things into perspective.