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How To Get Rid Of Debt Problems Step 3 -- How To Negotiate Reduced Payments With Creditors
First, make a list of your creditors (NOTE: you should only attempt to re-negotiate\rpayments on your UNSECURED debts if you wish to avoid the risk\rthat an item upon which a debt is secured could be re-possessed)
Add to this list the outstanding balance owed to each creditor.\rIt is essential that you are accurate with this balance. You\rshould find the balance on the most recent statement from each\rcreditor on your list. If you cannot find a balance figure, call\rthe creditor or write and ask for a current outstanding balance.\rOnly when you have an accurate outstanding balance for each\rcreditor on your list can you proceed to the next step.
From your financial statement (prepared in the last of this\rseries), subtract the total of your outgoings from the total of\ryour income. The resulting figure is your disposable income.
You need to divide the disposable income figure amongst your\rlist of creditors in proportion to the outstanding balance owed\rto each. This is why you need an accurate balance before you\rstart. Otherwise, your creditors will not accept your proposal.
When you have done this, write a letter to each creditor quoting\ryour name, address and account number, offering to pay the\ramount you have calculated for that creditor.
You will need to include a copy of your financial statement with\reach letter, and you will need a valid explanation for your\rhardship, which now prevents you from paying the full amount\ragreed initially.
It is not difficult to see that the success of your proposal\rwill depend on how well you have put together your financial\rstatement. The amounts you have claimed for each item of\rexpenditure will need to be acceptable to your creditors.\rUnfortunately, there is no hard and fast rule I can give you for\rthis. it is entirely dependent on the combination of your\rcircumstances, which is unique for everybody.
If one or more of your creditors rejects your proposal, they\rwill probably indicate why. It will then be necessary to re-jig\ryour financial statement and re-send it to all creditors with a\rnew letter. Certainly this can be time-consuming and tedious but\rthere is no easy answer to this.
Rob Hawkins is the owner of \rDebt Consolidation UK. His company Chiltern Debt Management UK has helped more than 50,000 people to get rid of debt problems, and won the coveted 'Debt Counsellor of the Year 2004' award.
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