Creditors cannot help you (or at the very least understand your circumstances) unless they are aware of your difficulties. To begin with it is advised you clarify the amount owing, actual arrears, penalty charges etc. The following is a typical sample letter:

Dear Sirs

Account/Agreement Number

I am currently experiencing financial difficulties due to................ and I am therefore unable to maintain the full payment on my account. I am trying to resolve my situation and will send you a financial statement as soon as possible with the best payment offer I can manage.

Please let me have the following information so that I can draw up a schedule of all my debts and make appropriate offers to my creditors:

• Type of agreement (secured/unsecured)
• Balance owing
• Terms of repayment and interest/penalties accruing
• Arrears
• Any insurance policy attached to the agreement

I will write to you again as soon as I have received replies from all my creditors.

 Yours faithfully

When all the replies have been received draw up a schedule of your debts and divide them between priority and secondary creditors (see STEP 2 for further information). It is important that you mark any debts where County Court Judgments/ CCJs have been made or a claim form received and seek specialist help as these debts need prioritisation and  immediate attention.

Keep copies of all correspondence and if any agreements are subsequently made by telephone get the name of the person you spoke to and make sure the agreement is confirmed in writing.

 It is important to check that you are actually responsible for all your debts. A husband and wife are only responsible for each other’s debts if they have both signed the agreement (except for Council Tax), and you cannot inherit a dead person's debts.

You should also check the amount being claimed to ensure all the payments you have made have been deducted. You should also challenge any excessive interest or penalty charges that have been added to your debts.

For free advice call the Consumer Credit Counselling Service on 0800 1381111 or contact Credit Action (www.creditaction.org.uk). This guide does not constitute financial advice.