Your 5 Steps...

• 1. Acknowledging Your Situation
• 2. Your Financial Details
• 3. Calculate Offers
• 4. Submit & Negotiate Offers
• 5. Commit to Your New Payments

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Your 5 Steps...

It may seem as there's no way out of your current situation and that you're not ready to entrust the help of us, therefore we have detailed a 5 Step Plan for you to help yourself out of debt...

Our five steps are what makes us different from other debt management providers in the marketplace...

1. Acknowledging Your Situation

The first step in relieving your debt is to acknowledge the fact that you are in financial trouble. Although this may seem evident, it is imperative that by understanding your situation, you can set a certain amount of time throughout your week to focus on managing your finances from here on in.

As you are already on our website, the first step is nearly complete. All you need to ensure is that you can commit time to consistently manage your debts. If so, you have now begun your journey on the road to recovery.

If you feel committing time may be an issue, then give us a call on 0845 2020 808, one of our friendly advisors will be able to give you FREE advice on any avenues which are open to you.

2. Your Financial Details

Ok, so you have now decided that it’s time to take action against your debts. As with anything, you now need to start from the beginning, in this case using our P.O.P. Action… Prepare, Organise and Plan.

Prepare

• Firstly, we would recommend buying a folder, as from experience it will get tricky if you don’t keep on top of your correspondence!
• Next you need to find some way of logging your actions, as you may need to refer back to them at a later date. You may wish to use a blank sheet of paper or a Microsoft Excel spreadsheet.
• Lastly, a calculator is required to help with the mathematics involved. If you are using an Excel spreadsheet, then you may not require one.

Now take the last statement(s) you received from all of your creditors. Hopefully, you have kept these to one side. If not, you may need to call your creditors to ask for accurate balances on the account. If you have overdraft, this constitutes as a creditor. In these cases, you will need to open a separate basic account with another bank. If you were to continue payments into your current account, your bank may see their balance as a priority and take a larger payment, meaning you are unable to make contributions to other creditors.

Organise
Once everything is prepared, next step is to organise yourself. Organise your file how you wish. However, we would recommend you separate your file into the following sections:

• Correspondence to Creditors
• Correspondence from Creditors
• Log
• Workings/Rough Drafts

Obviously, you may not have anything to insert into the sectors, but they will soon fill-up, be sure of that!

Next stage is to list your creditors on either a piece of paper or a Microsoft Excel spreadsheet, using the statements which you collated earlier. You could view a template by clicking on the icon

Make sure to list the creditor name, account number and balance outstanding in the first three rows, but leave the rest clear for now.

Once you are certain that you have listed all your creditors, calculate the total balance outstanding. Although this may be daunting and it’s something you’d rather not see, it is required to move forward.

By having all your creditors listed on one page, you are no longer shuffling through pieces of paper. These can all be filed under Correspondence from Creditors for the time being.

Next stage is to list your monthly or weekly incomings and outgoings on what is known as a Financial Statement. It shows the creditors how much income is coming into your household and what your living costs are. You can view a template by clicking on the icon
Please note, when completing this form, creditors will not allow for excessive payments in certain fields such as Council Tax & Utilities.

Once you have completed the template, you should know exactly how much you have incoming and also outgoing. Next stage is to subtract the outgoing total from the income [INC – OUT], the figure remaining is what is known as your Disposable Income - the amount available to pay your creditors. Calculating your Disposable Income is also useful for you to budget throughout the month to avoid overspending.

Plan
Now you have organised your file and outlined your debts, the next stage is to Calculate Offers to your creditors. But before you do, you should plan ahead on how you are going to maintain the management of your debts.

You need to set a date in the week/month when you are going to make your monthly payments to the creditors. This may be the day after you are paid or on a day off work.

Ensure you can keep on top of your correspondence as and when it comes. This may mean that you spend a few minutes every night working through it or it’s kept to one side and dealt with one certain days of the week (ie. Tuesday & Thursday nights). However you wish to work it, make sure you always keep on top of it, as if you become complacent, you may find you’re back in this position again.

Also, some creditors may not contact you after you have sent your offer, so you will need to call them regularly and chase the status of your account. Some creditors close their departments after 5pm, so it may mean you have to call at work or on your lunch. Remember, each creditor is looking to take payment from you as soon as possible and you may feel pressured over the phone. Do not make any payments to creditors earlier than your set weekly/monthly date as this could hinder your ambitions.

3. Calculate Offers

Now you have lay the foundations and have organised your debts, the next stage will certainly put your calculator through its paces! The idea is to now work out a fair offer to your creditor based on the percentage of the total debt owed to them.

The best way to do this is show an example.

Mrs Z owes £24,000 to 6 different creditors, as detailed below:

Creditor A: £6,000
Creditor B: £2,500
Creditor C: £1,500
Creditor D: £11,000
Creditor E: £2,750
Creditor F: £250

Obviously, as Creditor D’s balance is significantly higher than Creditor F’s it wouldn’t be fair that they get the same payment each month. This is why we pro-rata the offers based the percentage of the total debt.

The percentage of the total debt owed is detailed below:

Creditor A: 25%
Creditor B: 10.42%
Creditor C: 6.25%
Creditor D: 45.83%
Creditor E: 11.46%
Creditor F: 1.04%

The equation is:

[Creditor Balance / Total Balance x 100 = Percentage of Debt]
for example [6000 / 24000 x 100 = 25]

As Mrs Z has a Disposable Income each month of £350, this is then split between the creditors based on the percentage owed.

The Creditors will therefore receive the following:

Creditor A: £87.50
Creditor B: £36.47
Creditor C: £21.88
Creditor D: £160.41
Creditor E: £40.11
Creditor F: £3.64

The equation is:

[Monthly Disposable * Percentage of Debt]
for example [350 * 25% = 87.5]

It may be that your figures total to a penny or so above your disposable income, in this case, the total figure is £350.01. You could simply lower the biggest payment by a penny to bring it back down. Therefore, Creditor D will receive £160.40.
Once this has been completed, it is then time to refer back to the Creditor Statement and complete the final row with your proposed payments. Be sure to complete the totals too.

4. Submit & Negotiate Offers

So now we’ve worked out how much each creditor will receive, the next stage is to send the offers to them. You can view a template by clicking on the icon

Use the addresses on your statements and prepare letters to each creditor. Be sure to include a copy of your Financial Statement and your Creditor Statement in every letter.

Once your letters have been sent, we recommend waiting for 10 days to give the creditors chance to respond to the letters. After 10 days, chase all your creditors for acceptance of the reduced payment. Once you have acceptances in for all creditors, schedule a date for your payment to be made and ensure you make payment to all of them on this date.

5. Commit to Your New Payments

Once you have confirmed your reduced payments to the creditors, the next part is ensuring you make all proposed payments to each creditor on either the weekly or monthly basis agreed. Most creditors will only accept offers for up to 6 months, so it is vital that once you get to this point, you ask them to extend the arrangement if required.

Remember, you can use our 5 steps to help yourself out of debt, or for the same amount, you can make one monthly payment to us and let us do all the work for you. Although we do charge a fee, it is taken from your monthly disposable, so you’re not paying any extra for our specialist help. Call 0845 2020 808 for FREE advice.