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Step 3 - Work out what you can afford to pay

This advice applies to England

Before you offer an amount to your creditors, you need to know how much money you can afford to pay them. 

You can use our budgeting tool to work this out. It’s separate from these debt steps and it usually takes 30-45 minutes to complete.

It’s important you leave enough money to pay your essential bills and living costs.

If you have very little or no money spare, you need to get help from a free debt specialist. They will explain your options and help you find a debt solution - no debt problem is unsolvable.

Keep a copy of your results and then come back to step 3. The results can help when you negotiate payments with creditors. They might also show you where you can make savings - even if it’s only a few pence here and there.

You can continue through these debt steps without using the budgeting tool, but it’s important to be as accurate as you can about what money you have available to pay off debts.

It’s better to be realistic with your creditors and offer a small amount of money, rather than offering too much and struggling with your living costs.

Decide how much to offer your creditors

If your only income is from benefits you should talk to a specialist debt adviser. They’ll help you offer the right amount to your creditors.

If you only have priority debts

You can try offering a bigger share of the money you’ve got available to the creditor you owe the most. Remember to make sure you’ve still got enough money to pay your essential bills and living costs.

You might have to take into account how urgent each debt is. For example, if you think one of your creditors is about to take you to court, it could be a good idea to offer them more money.

You’ll probably have to answer questions about other debts you have, so be prepared to explain why you’re offering more money to one than the other.

If your creditors won't accept your offer, get help from a specialist debt adviser. They might be able to negotiate with your creditors on your behalf, or help you find other debt solutions.

Example

You’ve got 2 priority debts to pay off - Council Tax and rent arrears. Because you owe more money on your Council Tax bill, you might want to offer more to your council than to your landlord.

Money available to pay off debts: £90 a month  

CreditorType of debtTotal debtWhat you could offer
Leeds City Council Council Tax £200 £60 a month
Private landlord Rent £100  £30 a month

If you have a mix of non-priority and priority debts

It’s a good idea to talk to a specialist debt adviser if you have a mix of priority and non-priority debts. It can be hard to negotiate with several creditors at once.

You’ll need to offer most of the money you’ve got available to your priority creditors. Remember to make sure you’ve still got enough money to pay your essential bills and living costs.

You might have to take into account how urgent each debt is. For example, if you think one of your creditors is about to take you to court, it could be a good idea to offer them more money.

You’ll probably have to answer questions about other debts you have, so be prepared to explain why you’re offering one more money than the other.

If you're not sure how much to offer, get help from a specialist debt adviser. They might be able to negotiate with your creditors on your behalf, or help you find other debt solutions.

Example

You’ve got 2 priority debts to pay off - Council Tax and rent arrears. Because you owe more money on your Council Tax bill, you might want to offer more to your council than to your landlord.

Money available to pay off debts: £90 a month  

CreditorType of debtTotal debtWhat you could offer
Leeds City Council Council Tax £200 £60 a month
Private landlord Rent £100  £30 a month

Try to set aside a little bit of money to pay non-priority debts like credit cards - even if it’s only a few pounds.

You can ask your non-priority creditors to freeze any interest and charges for 30 days while you deal with your priority debts, but they’ll normally expect you to offer some money after that.

Use our non-priority debt repayment calculator to quickly work out what you can afford to offer to your non-priority creditors. This only takes a couple of minutes.

If you only have non-priority debts

Any money you have available needs to be shared fairly across your non-priority creditors. Their share depends on how much you owe each of them, so you should offer more money to the creditor you owe the most. This is known as a 'pro rata' offer.

Remember to make sure you’ve still got enough money to pay your essential bills and living costs.

Example

You’ve got 2 debts - a credit card and a store card.

You owe twice as much on the credit card as you do on the store card, so you should offer the credit card company twice as much money.

Money available to pay off debts: £90 a month  

CreditorType of debtTotal debtWhat you could offer
Barclaycard Credit card £2,000 £60 a month
Next Store card £1,000 £30 a month

Use our non-priority debt repayment calculator to quickly work out what you can afford to offer to your non-priority creditors. This only takes a couple of minutes.

Next steps

You should follow the advice in steps 4 and 5 about contacting your creditors.

Go to Step 4 if you have priority debts.

Go to Step 5 if you only have non-priority debts.

Step 4 - Negotiate with your priority creditors

Step 5 - Negotiate with your non-priority creditors

Start again

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