Stage 6: Credit Debts - Paying your Non-Priority Debts
After paying your Expenses and making provision for your Priority
Debts, you may have little or nothing left.
If you have no Money for Credit Debts left, go to Stage 7.
If you do have Money for Credit Debts, you have to divide it fairly
between them so that the creditor you owe
the most to receives the biggest share of the money, i.e. a pro rata offer.
You need to know the exact amount of money you owe to each of your creditors.
If you do not have this
information, write and ask them for it.
Add up all of the owed amounts to get a figure for your Total Credit Debts.
For each of your creditors work
out the offer in the same way so that it is fair and equitable. Using a
calculator, divide the amount owed to
each creditor by the Total Credit Debts and multiply by the Money for Credit
Debts figure.
EXAMPLE HOUSEHOLD
Ian and Jane Brown have the following credit debts:
|
Newhouse Catalogue |
£168.00 |
|
Eastern Trust Bank Ltd |
£460.00 |
|
Flexible Card |
£325.00 |
|
Easicheck Financial Ltd |
£153.00 |
|
TOTAL CREDIT DEBTS |
£1106.00 |
They have £5.00 per week of Money for Credit Debts.
For each creditor, they do the following calculation (using a calculator):
- Take the amount owed to the creditor
- Divide it by the Total Credit Debts figure
- Multiply the result by the Money for
Credit Debts figure
Their calculations look like this:
Newhouse Catalogue: (168 divided by 1106) multiplied by 5 = £0.76
Eastern TB Ltd: (460 divided by 1106) multiplied by 5 = £2.08
Flexible Card: (325 divided by 1106) multiplied by 5 = £1.47
Easicheck: (153 divided by 1106) multiplied by 5 = £0.69
HOW TO PAY
If you have done all of your calculations on a weekly basis, you may find it
inconvenient to make small
weekly payments. Ask your creditor if you can make an arrangement that suits you
better, for example:
- 4 weekly – pay four times the weekly
amount every four weeks
- Monthly – multiply the weekly amount by 52
to get a yearly total and then divide it by 12.
COMPLETE YOUR PERSONAL BUDGET
- Now that you have completed stages 1 to 6,
transfer all of the figures onto the loose copy of the blank
Personal Budget sheet you will find inside this booklet.
- You will need a copy of your Personal
Budget for each of your creditors and don’t forget to keep a copy
for yourself.