Step 5: Deal with non-priority debts

Once you have identified your priority debts, those that remain are your non-priority debts. Remember, you should only make arrangements to pay your non-priority creditors if you have followed steps 1–4.

Start by sending holding letters. Explain why you can’t maintain your monthly payments, mentioning your cancer or treatment if appropriate. You’ll then need to work out pro rata payments. This means dividing up your disposable income fairly to pay off at least some of the debt owed to each non-priority creditors. You can calculate this by:

Individual debt x total disposable income ÷ by total debt = payment arrangement for each creditor

Finally, send letters to your creditors offering monthly repayments at this rate. Make these offers on either a weekly or monthly basis. Include a copy of your financial statement to show how you reached your figure.

If you have no disposable income, tell your creditor. Ask them to not take any further action on your account, including further interest and charges, for 3–6 months. It may also help to get specialist advice from a free debt advice agency.

Identify non-priority debts

Non-priority debts are less urgent than priority debts. You should still try to pay them whenever you can, but only after you’ve paid any priority debts. The consequences of not paying non-priority debts are likely to be less serious.

Debt collection agencies

Creditors can employ debt collection agencies to collect debt on their behalf, or they may sell your debt to these agencies. This means debt collection agencies may contact you about money you originally owed elsewhere. Collection agencies can also sell your debts to one another, which can make it even more confusing for you. It can be difficult, but you need to keep track of who each debt is owed to.

It’s important to remember that debt collection agencies are not court officials and don’t have the same power as bailiffs. It’s important to remember these debts remain non-priority. Some of these agencies can make you feel threatened. They may even be connected to a firm of solicitors, which makes them sound very official. This doesn’t give the agencies any extra authority or make their debts a higher priority. Whatever they want you to believe, these agencies have no greater powers than the original creditor. If you feel harassed by debt collectors, you can make a complaint. Call the Citizens Advice Consumer Helpline on 03454 04 05 06 for further information.

Be careful to treat all of your creditors the same. It’s essential to pay them all a fair share from the money you have available. Don’t make a big payment to just one or two creditors. If any creditor feels they are being treated unfairly, they may be less ready to make an agreement with you.

You can use the table below to make a list of your non-priority debts. Remember to update it regularly. Amounts can go down if you make regular payments that are large enough. Likewise, your debt can actually go up if you make smaller payments (eg if they don’t cover the accruing interest) if the interest rate increases or if you’re charged for late payments.

Debt (original creditor)Type of debt (priority or non-priority)Amount owedAgreed payment (weekly or monthly)Transferred to (if your original debt is sold on to collection agencies)

County Court Judgements

Many creditors may threaten county court action if you fall behind with payments and are unable to pay the suggested amounts. If the debt is pursued through the county court, the financial statement will be very useful for you to identify your available income.

In most cases you won’t have to attend a court hearing and it will be dealt with through the post. The court will write to you and order you to pay an amount. This will be based on the financial statement you’ve completed and any requests made by the creditors.

If you can’t afford the amount you’ve been ordered to pay, you must get advice from an organisation such as PayPlan, StepChange Debt Charity or the National Debtline straight away.

Negotiate with non-priority creditors

Keeping your creditors updated on your circumstances can help them discuss potential problems with you. However, if you have long-standing debt and have not heard from your creditors for a number of years, it may be worth seeking advice before contacting them.

It’s important to remember that you should only negotiate with non-priority creditors once you have dealt with priority debts (step 4). Once you have reached agreements with your priority creditors, you can start to follow the steps below.

If you can’t afford to make an offer to your non-priority creditors, send offer letters to non-priority creditors (see below).

1. Send holding letters to non-priority creditors

A holding letter is a letter that requests more time to sort out your debt plan. It explains your situation and asks creditors to temporarily stop any action against you. Always ask them to freeze the interest and stop any penalty fees so your debt doesn’t get worse. It’s a good idea to send these to your non-priority creditors while you’re trying to reach agreement with your priority creditors. See this sample letter 1.

2. Complete your financial statement

If you have agreed to make repayments to your priority creditors, you should complete your financial statement with these amounts.

3. Work out how much to offer each non priority creditor

Calculate pro rata payments to creditors based on the disposable income you have. Pro rata means an amount that is in proportion to the debt you have with each individual creditor. This is how you would calculate a pro rata offer to your creditors:

Individual debt x total disposable income ÷ total debt = payment arrangement for each creditor.

Disposable income should have been worked out on either a weekly or monthly basis, and offers should be made on the same basis.

The below example shows how pro rata offers would work.

Calculating a pro rata payment

In total, Linda’s non-priority debts from credit cards and unsecured loans add up to £20,000. Unsecured loans aren’t backed by property such as your home or car, so your property can’t be repossessed for non payment. After she has paid her essential living expenses, her mortgage and outstanding taxes (priority debts), Linda has £100 a month left over. She wants to divide this up fairly to pay off at least some of the debt owed to her non priority creditors.

Here’s how Linda worked out a fair payment offer for a loan for which she still owes £3,500:

£3,500 owed to an individual creditor x £100 disposable income per month ÷ £20,000 total debt = £17.50 per month payment offer.

When she writes to the bank about her loan, Linda can include a copy of her financial statement and explain how she worked out the pro rata payment offer.

4. Send offer letters to non-priority creditors

You can use this sample letter 2. Include a copy of your financial statement with each offer letter. This will show creditors how you reached the offer figure. Start making any payment you’ve suggested in your offer and don’t wait until they reply. Agencies like StepChange Debt Charity or National Debtline will help you do this for free – so that all the money you can afford goes to your creditors and not in fees.

Not all creditors may accept your offer and they may ask you for a greater payment. If this happens, write back to them. Explain that you’re treating all non-priority creditors the same and can’t offer them more than another. Tell them about other creditors who have already accepted this arrangement.

If you can’t afford to make an offer

Once you have entered details of your priority debt repayments (agreed in step 4), your financial statement may show that you have no disposable income left to pay your non-priority debts.

You should contact your creditors and make them aware that you have no disposable income, and ask that they withhold any further action on your account for 3–6 months (see sample letter 3). You’ll also need to request that your creditors don’t add any further interest or charges to your account during this period.

See the section on other possible options for dealing with your debts.

If you have terminal cancer

If you have terminal cancer and treatment isn’t an option, you may be able to discuss this with your creditors. At this stage, it may be a good idea to suggest to your creditors that they write the debt off immediately, as the possibility of your future earnings may be limited (see sample letter 4). Your creditors may never formally agree to write off a debt, but they may decide to take no further action.

We have more information about what happens to debts left behind after you die.

Next steps

  • Make a list of all your non-priority debts and send a holding letter to each creditor while you get advice.
  • Contact the Macmillan financial guides (0808 808 00 00) or a debt organisation for advice or help negotiating with creditors.
  • Work out how much you can afford to offer each non priority creditor and send a letter to each one. You can use our sample letters as examples.

Back to Managing debt and borrowing

Debt and borrowing overview

Living with cancer can bring extra expenses. Learn how to manage your debts using a clear step-by-step process.

Step 1: Increase your income

Increasing your income is the first step to managing your debts. Check your entitlement to benefits and insurance payouts.

Step 2: Reduce your expenses

Once you have made sure you have as much money coming in as possible, there are ways you can reduce your expenses.

Debts you leave behind

If you have debts when you die, it reduces the value of your estate. This means your beneficiaries will receive less money.