Step 5: Deal with less urgent debts

Once you have identified your priority debts, the ones that are left are your non-priority debts. Remember, you should only arrange to pay your non-priority creditors if you have followed steps 1 to 4.

Start by sending holding letters. Explain why you can’t maintain your monthly payments, mentioning your cancer or treatment if appropriate. You will then need to work out fair payments to each non-priority creditor. This means dividing your disposable income (money left over once you have paid all your essential living costs). 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 to 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 important than priority debts. You should still try to pay them what you can afford, but only after you have paid any priority debts. The consequences of not paying non-priority debts are likely to be less serious.

Non-priority debts could include:

  • credit card bills
  • unsecured loans
  • an overdraft on a bank account.

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 is important to remember that debt collection agencies are not court officials and don’t have the same power as bailiffs. 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 tell you, 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 is 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 more unlikely to make an agreement with you.

You may find it useful to make a list of your 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. For example, this could happen if:

  • the payment does not cover the increasing (accruing) interest
  • the interest rate increases
  • you are charged for late payments.

County court judgments

Many creditors may threaten county court action if you fall behind with payments and are unable to pay the suggested amounts. If the creditor takes you to the county court because of the debt, 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 have completed and any requests made by the creditors.

If you can’t afford the amount you have been ordered to pay, you must get advice straight away from an organisation such as Advice NINational DebtlinePayPlan or StepChange Debt Charity.


Talk with your 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 is important to remember that you should only talk with non-priority creditors once you have dealt with priority debts. Once you have reached agreements with your priority creditors, you can start to work through the steps on the following pages.

If you can’t afford to make an offer to your non-priority creditors, see the information below.

1. Send holding letters to any non-priority creditors

A holding letter 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 is a good idea to send these letters to your non-priority creditors while you are trying to reach an agreement with your priority creditors. We have a sample holding letter that you can download.

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

Work out how much to offer each non-priority creditor in a fair way. For example, if you owe £1,000 to one creditor, you offer to pay them twice the amount you offer to a creditor that is owed £500. This is known as making pro rata payments.

This is how you would calculate a pro rata offer to your creditors:

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

This will give you either a weekly or monthly offer, depending on how you worked out your disposable income.

Organisations such as Advice NINational Debtline, PayPlan or StepChange Debt Charity can help you talk with creditors.

Below is an example of how pro rata payments would work.

Example of a pro rata payment

In total, Linda’s non-priority debts from credit cards and loans add up to £20,000. 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

We have a sample letter that you can download. 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 have suggested in your offer and don’t wait until they reply. Charities like StepChange Debt Charity and National Debtline will help you do this for free.

It may be that not all creditors will accept your offer. They may ask you for a greater payment. If this happens, write back to them. Explain that you are treating all non-priority creditors the same and can’t offer one more than the other. 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, 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 stop any further action on your account for 3 to 6 months. You can download a sample letter. You will also need to request that your creditors don’t add any further interest or charges to your account during this period.

We have more information about 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. It may be a good idea to suggest that they cancel (write off) the debt immediately, as the possibility of your future earnings may be limited. You can download a sample letter.

Your creditors may never formally agree to write off a debt, but they may decide to take no further action.

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

Next steps

  • Make a list of all your non-priority debts.
  • Send a holding letter to each creditor while you get advice.
  • Work out how much you can afford to offer each non-priority creditor and send a letter to each one.

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.

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.