On this page:
Step 1: Inform your creditor
It is always wise to inform your creditors of any financial difficulties you are facing. This may help protect your credit rating and ensure continued good relations with your creditors.
Even if you cannot repay any amount that will reduce the debt, you should notify the creditors of your circumstances and await their action.
You should inform the creditors of your income and expenses so they can confirm for themselves that you cannot pay the debt any longer.
Step 2: Seek financial counselling
Financial counsellors are trained to assist you with problems in money management. Financial counsellors may negotiate arrangements with the creditors on your behalf.
Details of financial counselling services.
Step 3: Negotiate a new repayment agreement
Work out a budget (how much you can afford to repay), before you contact your creditors with any offer of reduced payment. Inform the creditors of your income and expenses. They will work out if your offer is reasonable.
If your offer is less than the amount originally agreed, the amount must reduce the debt.
Interest is added to most debts, so your repayments should pay the interest amount and reduce the original debt. Try to negotiate a reduction of interest with your creditors.
The creditor will take the following action.