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What To Write In A Letter To Creditors

Do you have debts gathering on credit cards or store cards and you’re not sure how to pay them off?  Perhaps your debts are building up and you owe money to multiple creditors. It’s time to take an honest look at who you owe money to and how you are going to pay it before your debts become completely unmanageable.  There are several debt solutions available to you and some include a legal process. However, if you are hoping to avoid that, you could start by writing a letter to your creditors to explain your situation. For example, perhaps you are sick and cannot work so you can’t make the repayments. Here are some ideas of what to write in a letter to your creditors about.

  • Holding Letter
  • No Money To Pay
  • Offer To Non Priority Creditor
  • Request To Pay Off Debts
  • Why Write A Letter
  • Tips For Writing A Letter
  • Conclusion

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Holding Letter

It can be stressful when your creditors are contacting you for repayments and even threatening court action, especially if your circumstances have changed suddenly.  However, you could ask them to hold off for a short time, to give you an opportunity to seek debt advice or to make a budget. It’s always worth trying to explain your situation first. 

For example, perhaps you are off work sick and your income has therefore reduced but your situation will improve in a few months. You could write to each creditor and ask them to freeze your repayments and any interest until you return to work. Then, you will be able to continue your repayments.

No Money To Pay

If you are in the situation where you have no money to pay back your creditors at all, then it’s still worth writing to them to explain this. 

Maybe you are waiting on benefit payments to come in. Or perhaps you have spent all your money this month on essential bills and you have nothing left. 

You could explain this to them with a copy of your budget or financial statement. Put a list together of income and expenses to show that you have little or nothing left to use on repayments at this time. It may help to add that you are hoping your situation improves because you are expecting an extra income or payment in the future. But currently, you are just asking for a pause until then. 

Offer to Non Priority Creditor

What if you find yourself with some money left over, but you can’t make the full repayments? Once again, it’s worth writing your creditors an honest letter about what you can afford. 

For example, say you have credit card debts and you should be paying back £50 per month. You could write to each creditor saying that you are currently able to pay back £10 per month instead. Also, you have every intention of paying them back in full, but this is all you can currently afford.  There is a possibility they will agree to this new arrangement.

Request to Write Off Debts

Sometimes, you may realise that your financial situation is not going to improve soon.  You can’t make any promises about smaller repayments or even being able to pay over a longer period of time. In which case, you can still use these tips in what to write in a letter to creditors to  explain your situation. Tell them that you are unable to make repayments and ask if they’d consider writing off your debts completely. Of course, this would warrant an extreme situation for a creditor to agree to this, but it’s worth a try. 

Why Write A Letter

It costs creditors time and money to pursue you for payments. Therefore, writing a letter to your creditors is always better at the start rather than later when they may have already sent you court papers or letters about their intentions.

Ultimately, creditors can be reasonable and you stand a good chance of having them agree to your terms if you are honest. 

Tips For Writing A Letter

If you don’t know where to start, there are several sample template letters online.  Another good idea is to seek free advice from a debt adviser who can help to explain what to put in the letter.  Here are some tips on how to write it;

  • Keep it original, you can use a template for ideas, but make sure it’s about your information and your situation
  • Be completely honest. If you are covering up any information about savings or money you have to pay off debt, then you could get into serious trouble.
  • Address it to a named individual in the letter and make sure they know who you are when you sign off at the end.
  • Don’t shirk responsibility, simply explain why you are in this position and unable to make repayments.
  • Provide an action plan. How are you going to make smaller repayments or pay off the total debt in a longer period of time? Make sure you know how you are going to achieve it and include this with your letter. 

Conclusion

To conclude, now you know what to write in a letter to creditors, you can see that it’s worth trying, but not necessarily an easy job to convince them to pause your debt or write it off completely. However, for some debts, particularly if they are small, it might be in the creditors best interest to stop pursuing you.  As well as this, perhaps you are in a situation where there is no likelihood of them ever getting enough money back. Hence it’s not worth them continuing to ask you. In which case, writing a letter and asking for the debt to be written off could be a positive first step towards clearing your debts.