Self Help Toolkit

www.mydebtandme.co.uk

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The mydebt&meself-help toolkit

contents


Building your personal budget

Your personal budget template

Who are your creditors?

Unsecured creditors form

Proposed payment calculation

Contacting your creditors

Template letter

Frequently asked questions

What actions are available to mycreditors?

Notes


• provide you with a better understanding of your monthly finances and identify the amount you have available to pay to the people you owe.

• highlight areas of cost saving available to you by switching providers of certain services.

• in dealing with the people to whom you owe money (your creditors), The self-help toolkit even includes a template letter which you can use to contact your creditors to agree a realistic and sustainable payment plan.

Things to consider

• do not feel embarrassed about your current position as a significant percentage of the population have similar debt problems.

• deal with your debt problems today because if not they will be always be there tomorrow

• make sure you only agree to pay what you can afford

The fact that you are looking at the mydebt&me self-help pack means that youhave taken a pro-active decision to tackle your on-going debt problem.

By following the easy to complete steps set out in the self-help toolkit will assist you as follows:

Building your personal budget


IncomeYou will need to insert all the sources ofincome your household is in receipt ofin Section 1 of the personal budgetform.

It is important that these details are asaccurate as possible if you are tocalculate the amount of spare moneyyou will have at the end of each month.

Where possible the figures should betaken from wage slips or letters ofnotification of award. Alternatively thefigures can be obtained by checkingyour monthly bank statement.

OutgoingsYour outgoings details will need to beinserted in Section 2 of the personalbudget form and covers all of yourspending.

Accuracy is again essential as it willhave a bearing on the amount of sparemoney you will have each month.

You will be able to obtain a significantamount of this information from yourbank statements.

Amount available for yourcreditorsTo work out the monthly amount youhave available to your creditors go toSection 3 and insert the total amount ofyour income and outgoings into theirrespective boxes. Deduct theoutgoings from the income and thebalance will be the amount available toyour creditors.

Important NoteYour personal budget needs to beaccurate and realistic and shouldinclude all income and outgoings.Should you miss or omit any expensesyou may find it difficult to make anyagreed payments which may result inyou encountering further difficulties inthe future.

The preparation of the personal budget is the key part of you being able tomanage your debts. By using the income and expenditure statement (seeform on next page) you will be able to work out what you can realisticallyafford to pay, on a monthly basis, to you creditors.

The completion of the form will give you the opportunity to assess the level ofyour expenditure on all of the services you use (gas, electricity, telephone andbroadband, motor and household insurance) and you may be able to makecost savings by looking at other service providers for a better deal.


Personal budget form

Your Income (Section 1)

Your Wage or Salary (After Tax) £

Partners Wage or Salary (After Tax) £

Job Seekers Allowance £

Income Support or Pension Credit £

Tax Credit (working and family tax credits) £

Retirement or works pension £

Incapacity benefit £

Maintenance £

Non-dependants contributions £

others (including pensions) £

Total Monthly Income £

Surplus Income (Section 3)

Total Monthly Income £

Total Monthly Expenditure £

Income - Expenditure £

Expenditure (Section 2)

Mortgage £

Mortgage endowment policy £

Second mortgage £

Rent £

Council tax £

Water rates £

Ground rent/ service charge £

Building and contents insurance £

Life insurance /Car insurance £

Gas £

Electricity £

Car Fuel £

TV licence £

Magistrate's court fines £

Maintenance payments £

Vehicle Hire Purchase £

Other Hire Purchase £

Travelling Expenses £

Household Food and Toiletries £

Clothing £

Mobile Phone £

Broadband/ home phone/ Sky package £

Prescription and Health costs £

Child minding £

Others (including pensions) £

Total Monthly expenditure £

I hereby certify that the figures above are anaccurate representation of my current financialsituation.

Name:

Address:

Signature(s):

Who are my creditors?


Secured creditors• Creditors’ who have lent you money

and obtained a legal charge on your assets (Mortgage lender, Secured Loan on your home and Hire Purchase creditor on your motor vehicle),

• If payments are not continued then they have the right to re-possess the asset subject to the charge,

• These payments should be included in the outgoings section of the Personal Budget Form,

Unsecured creditors• Someone who has lent you money

without security for the money owed,

• Payments to these creditors are not included in the outgoings section of the Personal Budget Form,

Your creditors will generally fall into two categories:

Preparing unsecured creditor formYou will need to take particular care in completing this section as you willneed, if you are to achieve a successful outcome with your creditors, to ensurethat you include all the people to whom you owe money.

You will need the following details for each creditor:

• Full name of creditor• Your account number / reference• The current amount owed

These details can now be entered on to the Unsecured Creditors Form (see next page)

Remember to only include your unsecured creditors. Secured creditors need to beincluded as a payment in your personal budget form as an outgoing.

To calculate the amount of your total unsecured creditors just add up theOutstanding Balance column on the unsecured creditors form.


Unsecured creditors form

Name of Creditor Account Number / Outstanding Proposed Reference Number Balance Monthly

Payment

1 £ £

2 £ £

3 £ £

4 £ £

5 £ £

6 £ £

7 £ £

8 £ £

9 £ £

10 £ £

11 £ £

12 £ £

13 £ £

14 £ £

15 £ £

16 £ £

17 £ £

18 £ £

19 £ £

20 £ £

21 £ £

Totals: £ £

I hereby certify that the figures above are an accurate representation of my current financial situation.

Name: Signature(s):

Address:

Make Further Copies of this pages if you need more room

Proposed payment calculation


Having worked out the amount you have available to make payments to yourcreditors from your Personal Budget and the total amount owed to yourcreditors from the Unsecured Creditors Form you are now in a position topropose a new monthly payment to each creditor.

The figure that you will need to insert, for each creditor, in the ProposedMonthly Payment column of the Unsecured Creditors Form can be calculatedas follows:

Proposed payment =

Outstanding balance x Your total monthly disposable income

Your total unsecured debt to each creditor

To assist you in making this this calculation, two examples are set out below:

Example 1Monthly disposable income: £215Total unsecured debt: £3,982.47Outstanding debt to Santander: £1,209.01 Monthly payment:

£1,209.01 x £215 = £65.27 per month£3,982.47The amount of £65.27 would be added in tothe proposed monthly payment column,against the specified creditor on theUnsecured Creditors Form.

Example 2Monthly disposable income: £215Total unsecured debt: £3,982.47Outstanding debt to Nat West: £307.59Monthly payment:

£307.59 x £215 = £16.60 per month£3,982.47The amount of £16.60 would be added in tothe proposed monthly payment column,against the specified creditor on theUnsecured Creditors Form.

You are now in a position to write to your creditors setting out your proposalfor paying your debts.


Contacting your creditors

You will find this part of the self-help process the most daunting but toassist you an example letter has been included for you to use to send toeach of your creditors.

You will need to add to the letter name and address of the creditor, youraccount reference number and the proposed monthly payment you areoffering to the creditor. These details will be on the Unsecured CreditorForm.

Additionally you will need to enclose copies of the following documentswith your letter:

• Copy of your monthly personal budget

• Copies (not the originals) of your payslips, bank statements, HP agreements and any other documents to support your income and outgoings

• A copy of your Unsecured Creditors Form with your proposed monthly payments to each creditor

Remember to retain a copy of all the correspondence for your own records.

Example Letter


An example letter to a creditor, you will need to change the details for each ofyour creditors (word template available on the mydebtandme website)

{Your Address}

Date{Creditor Address}

Dear SirsRe: {Account Number}

Over recent months I have been struggling to maintain my monthly credit and loanrepayments, including my monthly commitments to the above account.

To help resolve these issues I obtained professional advice from mydebt&me. Theadvice they gave was free and mydebt&me have recommended I deal with you directly.As a result of this advice I propose to make payments directly to you with nodeductions whatsoever.

Now because of the advice received I am in a position to offer payment to you and myother creditors whilst still maintaining an acceptable standard of living.

In support of proposed payment plan, I have enclosed the following documents.

• A monthly income and expenditure statement, with supporting documentation• A list of all my creditors and the proposed monthly payments to each of them

(including yourselves).

I want to be able to pay the balance of my account in full, but this unlikely to happen ifinterest continues to accrue on the balance at a greater rate than I can afford to payyou monthly. In these circumstances, may I please request that once I have made anumber of regular payments to you, save over 3 months, you would considersuspending the future interest and charges on the account to enable me to honour mycommitment to you?

On the basis that my offer is deemed acceptable, I will pay you the sum of £______ toyou every month until the balance on my account is cleared. Should my financialsituation improve I will advise you of the details and increase my payments accordingly.I would like to thank you in anticipation of your co-operation in this matter and I canconfirm that I have contacted all my creditors in the above terms

Yours Faithfully

{Your Name}


Frequently asked questions

When will my debts to be paid off?

It is difficult to predict how long you will need to have this arrangement inplace as your monthly payments can be effected by the following factors:• Fluctuations in your income due to illness, reduction/increase in salary

and changes in any benefits received• Whether your creditors will agree to freeze on-going interest and

charges• Unexpected increases in household expenditure

Any of the above factors will either lengthen or shorten the time it wouldtake you to re-pay your debts in full.

You must immediately get in touch with your creditors should yourcircumstances change in order to re-negotiate your monthly payment.

Will my creditors freeze interest and charges?

The answer to this question is that some will and others won’t. Butgenerally they will open to reason. Common sense will prevail as it makesno sense for them to accept a payment from you and continue to addinterest at a greater amount.

When can I cancel my current payments to my creditors?

As your creditors agree to the payments proposed in your offer letter youcan cancel any existing standing order payments and direct debits andcreate new ones for the lower amount. To ensure a smooth transition youwill need to consider:

• The date(s) that you receive your salary(s)• The date(s) of your existing payment to each of your creditors• The date(s) that you will have funds available to pay the reduced

payments.

What actions are available to my creditors?


Default Notice from creditors

Your creditors will, if they have not already done so, issue a default noticeunder the Consumer Credit Act 1974 which will be recorded on your credithistory.

The default notice advises you that you are in breach of the terms of yourarrangement, and that unless you take steps to address this issue the creditorcan terminate the agreement. However, by submitting the self-help plan youare taking some form of action but a default notice can still be issued as awarning to other lenders.

Court action by creditors

Provided the contents of your self-help plan as a true reflection of yourcircumstances it is unlikely that creditors will start legal action to recover theirdebt. This is because:

• The self-help plan demonstrates that you are unable to afford the original monthly payment

• If they decided to proceed with legal action you would simply provide the court with a copy of your self-help plan showing what you can afford. No court would make an order asking you to pay more than the amount shown in the self-help plan.

If you have been honest and disclosed all the facts you will have nothing to worryabout. It is important to remember that the court will be sympathetic to theindividual who is pitted against the might of a large financial institution.

If your circumstances change and you would like to discuss your situation with usagain, please call us on 01257 429242 or email us at [email protected]


Becoming debt free - for notes:

Tel: 01257 429 242

go to:mydebtandme.co.ukto download thistoolkit and for furtherinformation on ourservices

Suite 1, Oak House, High St, Chorley, Lancashire, PR7 1DW

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