Part Two: Making the offer

Once you have established how much you are going to offer your creditors your next step is actually making the offer to them. This is by the far the hardest part of making any settlement offer and requires determination and perseverance.

What is your overall goal?

Most properly you want to clear all off your debts. However, you need to be realistic. If you are initially only able to offer 50 cent in the dollar to all of your creditors it is unlikely you will be able to clear all of them. If this is the case you may wish to consider paying off the creditors whom you pay the most interest to off first and save money in the long run. If you have over 50% of the overall debt to offer you may well be able to clear everything.

Using my example in the previous post I am going to make an offer to my creditors. Each of my creditors will receive the following:

A cover letter explaining my circumstances

A breakdown of all my creditors and the offers being made to them (do not show the account numbers of the other creditors only the one you are writing to)

Below is a simple letter template to send to creditors (remember to add your address and date etc…)

Dear Sir/Madam,

Ref: (enter account number here)

I am writing to you in relation to the above account and the possibility of offering a full and final settlement.

In total I have raised the sum of (enter amount here) and have offered my creditors a pro rata payment of (enter pro rata amount). As you can see all creditors have been offered and equal amount and no favour or preference has been shown in making these offers. These offers are made on strictly first come first served basis

These offers are made on strictly first come first served basis and can be paid immediately upon acceptance.

Your sincerely,

Under no circumstances leave your phone number. If you are in arrears you find that by leaving your phone number you will be open to calls chasing you for money and the like!

Once you have sent your letters you can expect to wait between three to four weeks for a reply. If your offers are accepted it is likely you will be given a two week period in which to pay the amount. If you send a cheque make sure that it is sent recorded and that you have details of when it was received in case there is any argument that your payment did not reach the creditor on time. Don’t leave making the payment until the last minute, if you miss the payment date set by the creditor you may have to renegotiate the settlement again.

Make sure that if a creditor agrees to your settlement ask for confirmation in writing. If the creditor refuses to do this make sure you get the name of the person you are talking to and what time you spoke to them to ensure there can be no come back for you in the future.

What if my offers are not accepted?

It may be that not all of your creditors accept the offers that you have made. If this happens if may be wise sitting down again and working out how much interest you are paying on the accounts and which creditors it would be more prudent to pay off first. In the first instance however it is wise not to make any rash positions. Here are some could tips that may help you get an acceptance:

1, Explain that if you go back to paying the debt monthly you may be doing so for some time and given the financial situation at present this may a bad long term move for them.

2 If you have to pay back the money you have raised in either a mortgage or loan you may find that you will have even less to pay the creditors on a monthly basis and therefore accepting your offer now is the most prudent thing to do.

3, All creditors think there debt is the most important and want to be paid first and the most. Don’t fall for it. Treat each creditors equally and you will make life a lot easier on yourself.

4, Be strong! Don’t crumble in the face of creditor pressure. If you offer is rejected simply but that creditor to the back of the queue and concentrate on other creditors before going back to them.

Once you have sent your payments off make sure your creditors credited your payment against the account and that is has no been closed. Sometimes creditors can be a bit slow in doing this. If your are chased for payment when you have sent the payment simply explain who you have spoken to and advise them that a payment is on the way or indeed is being credited against the account.

For more information or advice please leave a comment below or proceed to www.ausdebtsolutions.net and one of our advisors will call you back.