If you’re starting to fall behind on your repayments for any type of debt whether that’s a bank loan, payday loans bad credit, car finance, or any other loan type, it can be a stressful experience. Sometimes, you just need a little bit of breathing space in order to get your finances back under control and this is where a payment plan with your creditors can help. Here, we’re taking a look at some of the top tips to help you to arrange a payment plan and get back in control of your finances.
Understand How Much You Owe
Before you contact your creditors to try and arrange a repayment plan, it is important to have a clear understanding of exactly what you owe, all of your income, and all of your outgoings. This can help you to see how much you can clearly afford to repay on a monthly basis without impacting your lifestyle. It is important to remember that the longer it takes your debt to be paid off, the more interest may be accrued.
Contact Your Creditors
Once you have a clear understanding of exactly how much you owe and how much you can reasonably afford to pay back, you should contact your creditors. This should be done as quickly as possible as late repayments without notice could cause you serious money issues in the future. Contact your creditors via the phone or failing that via email or letter to provide them with an offer of how much you can afford to pay.
Give them as much detail about your situation so that they can truly understand what you are facing. It’s also important to not feel pressured into agreeing to a repayment plan that you don’t feel you can afford. Ultimately, the creditor’s main aim is to get the loan money back so they may try and push you for a repayment plan that you may not be happy with. The amount that you need to pay back on your debt management plan doesn’t need to be set in stone either and it may change depending on your circumstances.
Send A Written Offer
Even if your creditors have verbally agreed to your payment plan on the phone, it is recommended to also provide a written offer to your creditors so that there is a paper trail of the offer. This can also help to make your case if the payment plan had not yet been agreed to. The letter should be as detailed as possible, showing your creditors how much, you can afford to repay and over which period of time, backed up by an income and expenditure statement.
This statement will provide more visibility for the creditor to get a real understanding of your affordability and to help improve the offer they provide you for your repayment plan. There may be a number of personal or professional reasons why you may need to arrange a payment plan, such as job loss, an unexpected illness, mental health issues such as depression, or even a personal issue such as a divorce or death in the family.
Start Your Repayments
Start making your repayments as per the repayment plan immediately. It is also generally recommended to not take on any further debt such as a credit card or additional loan if you’re already on a payment plan. If you are struggling with the repayment plan that you have agreed to, you may be able to follow this process again to make a change to your plan and the repayments that you are making.