How to speak with creditors

How to speak with creditors

author: Adele Kitchen

By Adele Kitchen

If you’re in financial difficulty, it can feel daunting to open up about it, especially to someone you’ve never met. However, telling your creditors about your money struggles will help them to help you.


We know this can feel uncomfortable and you may not know where to start. So we’ve created a checklist to get you through those difficult conversations - and put you back in the driver’s seat.

Contact creditors before they contact you

Ideally, it’s best to contact your creditors to let them know if you’re not able to make your next payment - before they contact you. If you give them enough warning, they may be able to put a plan in place to prevent any damage to your credit score. They may even be able to put phone calls on hold to give you some breathing space.

Note: There’s no guarantee that they will do this, but it’s always worth asking. If you don’t ask, you don’t get.

Before you get in touch, do your homework...

1. Know your rights

Creditors that are regulated by the Financial Conduct Authority’s (FCA) have a responsibility to treat you fairly. This doesn’t mean treating you the same as every other customer. Instead, it means taking your individual needs into account. They need to do what’s best for you, depending on your financial circumstances.

If you go onto the FCA’s website, you’ll find lots of information about how they expect creditors to treat customers in financial difficulty. We suggest you have a quick look through this before you speak to your creditors, so you know what your rights are.

Plus, we’ve compiled advice on what steps to take if you’re struggling to make payments due to the Coronavirus pandemic.

2. Make a budget

Creditors are likely to ask for a full run-down of your income and outgoings to build up a clear picture of your finances. You can be a step ahead by checking your bank statements to see how much you have coming in and going out each month. Download your free budgeting form to get started.

Creating an accurate budget will help you to figure out how much you can afford to put towards your debts - after your essential bills are paid. If you’re not in a position to pay the full contractual amount each month, you can use your budget as evidence of this to negotiate with creditors.

Tip: Always make sure that your priority bills are covered first (such as your mortgage, rent, council tax, food etc), otherwise there could be serious consequences to non-payment.

What do I say to creditors if I can’t pay?

1. Make notes

Before you pick up the phone, get a pen and paper handy to make notes. Take down names and dates so you have a record of the phone call. So if there is any disagreement in future about what was said, you always have something to refer back to.

Also, keep a copy of any letters you send and receive, for your records.

2. Gather accounts details

Make sure you have your account details to hand, including your reference number. If you have a password linked to the account, have this with you in case they need it for security reasons.

3. Explain your situation

As long as you feel comfortable doing so, explain why you’re experiencing money problems at the moment (e.g. if you’re out of work or suffering from an illness). They’ll most likely go through your income and expenditure with you, so make sure you have that to hand.

Remember, everyone’s situation is different, and creditors should treat each customer fairly and on an individual basis.

4. Stick to what you can afford

After going through your income and outgoings, be prepared to answer some questions about your outgoings. If there’s room to make a few cutbacks so you can meet your debt repayments, then this is something to consider. Creditors will see it as a good thing if you’re willing to make small sacrifices.

Having said this, you should never feel pressured into paying more than you can afford. And if it’s unrealistic to trim back on essential outgoings, then stick to your guns and let them know that it’s not feasible. They should be able to work around this and come to a fair arrangement.

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5. Explore your repayment options

Depending on the creditor and your individual circumstances, they may be able to offer you a: 

  • Payment holiday - where your lender allows you to take a break from making payments in the short-term. Interest will continue to accrue in the background.
  • Token payment plan - where you temporarily pay a reduced (token) amount to your creditors if you know your finances are going to improve in the short-term.
  • Reduced repayment plan - where your lender agrees for you to pay less than the contractual monthly amount for a fixed period of time.
  • Request a debt full or partial write-off - if you are seriously struggling with debt. Creditors normally only agree to fully wipe off debts in the most serious cases.

Remember, there’s no guarantee that they’ll agree to one of these options. They may even suggest a different route. Each creditor follows its own policies and criteria. But there’s no harm in exploring your options to find the most suitable one for you.

6. Ask questions

Before agreeing to a plan, make sure you ask the creditor if they’ll be any impact on your credit score. For example, a reduced or token payment plan or partial write-off may have a negative impact, depending on the lender.

Also, find out how they expect you to catch up with the arrears once the plan ends. Taking an agreed payment holiday, for example, should not directly impact your credit score. But it could have a knock-on effect.

This is because your repayments may increase after your payment holidays ends (to make up for the missed payments and interest). If you can’t afford the increase and you miss payments in the future, this will reduce your score.

Alternatively, you could…

1. Write them a letter

If you’d prefer not to talk with creditors over the phone, you could send them a letter instead. Just be aware that it may take a little longer to get a response.

Both StepChange and Citizens Advice have made sample letters for you can use. Just input your own details and make some tweaks as needed. Remember to also include a breakdown of your income and outgoings, as this will help creditors to work out what you can and can’t afford to pay them.

2. Speak to a debt organisation

You could call debt organisations like StepChange or Citizen’s Advice for free, impartial advice. They can even contact creditors on your behalf if you don’t feel comfortable doing so.

For more tips, check out 10 ways to get out of debt faster.

Disclaimer: All information and links are correct at the time of publishing.

author: Adele Kitchen

By Adele Kitchen

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