Offers to Creditors
Offers to Creditors
If you’re asking your creditors to accept reduced payments to your debts, for example if you’ve decided to manage your creditors yourself instead of entering a debt management plan, you’ll need to make sure that the offers are fair to have the best chance of them being accepted.
To do this, you’ll first need to know what you can afford to pay towards your debts each month. If you haven’t already made a budget, you’ll need to list all of your income, all of your essential outgoings, and deduct the outgoings from the income to see what’s left over. This is called your disposable income. Once you know this, you can work out what to pay to each debt.
Firstly, list all of your debts and work out what you owe in total.
Then use the following calculation:
(Debt balance * Disposable income)/Total debt = Pro-rata offer
Example:
In this example, the disposable income is £160
| Debt | Balance | Calculation | Pro-rata offer |
| Bank Loan | £4,550 | (£4550*£160)/£12450 | £58.47 |
| Credit Card | £6,700 | (£6700*£160)/£12450 | £86.10 |
| Store Card | £1,200 | (£1200*£160)/£12450 | £15.42 |
| Total Debt | £12,450 |
Offers to Creditors: FAQs
Yes. If you enter a Debt Management Plan (DMP) or Individual Voluntary Arrangement (IVA), a debt solution company, like Angel Advance, can negotiate with creditors on your behalf.
Once your DMP or IVA has been approved, we take over creditor contact so you don’t have to. This includes:
- Making offers to creditors for reduced monthly payments
- Requesting that your creditors freeze interest and charges, so your balances don’t increase
- Handling ongoing contact and correspondence
This means fewer stressful phone calls and/or letters, and the reassurance that your payments are being managed for you.