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Can I negotiate with my creditors?

If you’re struggling to keep up with payments to your creditors you can try to negotiate reduced payments.

You can do this on a temporary basis, for example if your income will be reduced for a short time.  Or you could try to negotiate a permanent reduction in the payment.

If you're going to try negotiating reduced payments, you should start with your priority creditors, such as your mortgage, rent or utility bills. If you're struggling to pay your priority debts, it may be a sign that you'd benefit from debt advice

How to negotiate reduced payments

If you want to negotiate with your creditors to lower your monthly payments you’ll need to show why you can’t afford the current payments. They’ll usually want to see a household budget showing your income and your essential living costs, to see how much you can realistically afford. We can help you put together a budget.

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If your creditor agrees to you making reduced payments, it’ll affect your credit rating. If you’re paying less than the full payment you originally agreed each month this will be recorded on your credit file and may make it harder to get credit in future. Eventually, your account may default.

Often, creditors will only agree to reduced payments for a set period, typically six months at a time.  At the end of this period they’ll want an update on your situation. They may decide to not agree to reduced payments, and this could lead to your creditors passing your debt to a collection agency, or even taking court action.

Some creditors may agree to long-term reductions in your payments by offering to refinance your debt. In effect, this means giving you a new loan to pay off your existing debt spread over a longer time.

The advantage of this for you is that it may have less impact on your credit rating, because there won’t be an ongoing record of making reduced payments. But the disadvantage is that you’ll almost always pay back more in the long run.

Help with negotiating reduced payments

If you want help negotiating with your creditors, contact us. We’ll help you put together a budget and work out the best way to deal with your debts. There may be a better solution than negotiating reduced payments.

If the best way to deal with your debts is to offer reduced payments to your creditors each month, a better alternative may be a debt management plan. This works in a similar way, except rather than you negotiating with your creditors, we do the work for you.

Use our online debt advice tool or call us (free from all landlines and mobiles) to find out the best option for your situation.

"Get in touch with StepChange, you'll wish you'd done it sooner" Rob, Wiltshire