Last updated: 4 November 2026. General information, not regulated debt advice.
You signed up to pay a certain amount each month, and now you simply can’t. Maybe your hours were cut, your rent went up or a relationship ended. The letters keep coming and you’re not sure what to say, so you’ve been putting it off.
Here’s the reassuring part: creditors agree reduced payment plans all the time. They would usually rather get a smaller, steady payment than nothing at all. This guide shows you how to work out a fair offer, what to say, gives you a letter template, and explains what can happen if you ignore a debt instead.
It’s part of my debt and credit UK guide.
Before you contact anyone: 3 quick steps
1. Protect your priority bills
Make sure your rent or mortgage, council tax, energy and other priority debts are covered first. If you’re behind on these, deal with them before your credit cards and loans. See priority vs non-priority debts.
2. Make a simple budget
List your monthly income, then your essential spending: housing, council tax, energy, water, food, transport, childcare, phone, insurance. Be realistic: don’t leave out food or school costs to make the offer look bigger. An offer you can’t keep up only causes problems later.
Many advisers use a Standard Financial Statement format, which creditors recognise. Free debt advice services can help you fill one in.
3. Work out a fair offer
Whatever is left after essentials is what you can afford for non-priority debts. If you owe more than one creditor, share it pro rata: each gets a share based on how much you owe them.
Example (illustrative figures):
| Creditor | Balance | Share of total | Monthly offer from £120 spare |
|---|---|---|---|
| Credit card | £3,000 | 50% | £60 |
| Personal loan | £2,000 | 33% | £40 |
| Catalogue | £1,000 | 17% | £20 |
| Total | £6,000 | 100% | £120 |
If you have no spare money at all, you can offer a token payment (for example £1 a month) while you get advice, or ask for a short payment break.
How to contact your creditor
You can call, but putting your offer in writing gives you a record. Email is fine.
What to ask for
- A reduced monthly payment you can afford
- Interest and charges to be frozen
- A short payment break if your situation is temporary
- Collection action to be put on hold while you sort things out
What to say on the phone
“Hi, I’m calling about account [number]. My circumstances have changed and I can’t afford my current payments. I’ve done a budget and I can afford £[amount] a month from [date]. Can you accept that, and freeze interest and charges? I’ll send my budget in writing.”
Free letter template
[Your name] [Your address] [Date]
Account number: [number]
Dear Sir or Madam,
I’m writing because I can no longer afford my agreed repayments. [One or two sentences on what has changed, e.g. “My working hours were reduced in September.”]
I’ve prepared a budget, which I’ve attached. After paying my essential living costs and priority bills, I can afford to pay £[amount] a month towards this debt, starting on [date].
Please could you: – accept this reduced payment, – freeze interest and charges on the account, and – put any collection action on hold.
I’ll review my situation in [three/six] months and let you know if anything changes.
Please confirm your agreement in writing.
Yours faithfully, [Your name]
Keep a copy, and note the date you sent it.
What if they say no?
- Keep paying your offer anyway, so you can show you’re making an effort.
- Ask why and what they would accept, and send your budget again if needed.
- Ask to speak to their financial support or hardship team.
- Get free debt advice. An adviser can negotiate for you and may suggest a free debt management plan or Breathing Space. See free debt advice UK.
- Complain if you feel you’ve been treated unfairly, and then to the Financial Ombudsman Service if you’re not happy with the response.
After they agree
- Get it in writing.
- Set up a standing order so you never miss a payment.
- Check your statements to make sure interest has been frozen if they agreed to that.
- Review it every few months, and contact them if things change, for better or worse.
Good to know: a reduced payment plan may be recorded on your credit file as an “arrangement to pay”, and the account could still default. That’s usually better than missed payments building up. My guide to what a default is explains more.
What happens if you ignore a debt?
It’s very human to put letters in a drawer. But ignoring debt usually makes things harder and more expensive. Here’s how it typically escalates for a credit card or loan:
- Reminders, late fees and calls
- Missed payments recorded on your credit file
- A default notice, then a default on your file
- The debt passed or sold to a collection agency. See dealing with debt collectors
- Court papers, and if you don’t respond, a County Court Judgment
- Enforcement, such as bailiffs or deductions from your wages
Priority debts escalate faster. For council tax in England, GOV.UK says that if you don’t pay within 7 days of a reminder, you can lose the right to pay in instalments and the whole year’s bill becomes due.
The good news: you can step in at any point. Contacting creditors, offering what you can afford and getting free advice can stop things escalating, even if you’ve been avoiding it for a while.
Payment plans: people also ask
Do creditors have to accept a payment plan?
No, but they’re expected to treat customers in financial difficulty fairly and consider reasonable offers. Most accept a realistic offer backed by a budget. If one refuses, keep paying what you can and get free debt advice.
How much should I offer a creditor?
Only what you can afford after your essential spending and priority bills. If you have several creditors, share your spare money between them based on how much you owe each.
Will a payment plan affect my credit score?
It may be recorded as an arrangement to pay, and the account could default. That affects your score, but usually less than missed payments and court action would.
Can I ask a creditor to freeze interest?
Yes. Ask when you make your offer. Many creditors will freeze or reduce interest for customers in financial difficulty.
What happens if I ignore a debt for years?
The creditor may default the account, sell it to a debt collector and take you to court. In England and Wales, if there’s been no payment or written acknowledgement for six years and no court action, most unsecured debts can’t be enforced through court. Get advice before paying anything on a very old debt.
Can I go to prison for not paying debt?
Not for ordinary debts like credit cards or loans. In rare cases, refusing to pay council tax or court fines when you can afford to can lead to prison. This is why priority debts need dealing with first.
Summary
- Cover priority bills, make a budget, work out a fair offer.
- Contact the creditor, ideally in writing, and ask for frozen interest.
- Keep paying your offer and get free advice if they say no.
- Don’t ignore debt: it escalates, but you can step in at any time.
Next step: see where to get free debt advice, or go back to the debt and credit UK guide.
General information only. I’m not a debt adviser. If you’re struggling, please contact a free, confidential debt advice service.
Sources (checked 4 November 2026): MoneyHelper: dealing with debt · MoneyHelper: how to prioritise your debts · GOV.UK: council tax arrears · GOV.UK: respond to a money claim