Dealing with your non-priority debts

​What are the options for dealing with your non-priority debts?

 

10 ways to clear your debt

In the Debt topics area of our website, we have a section that sets out 10 ways to clear your debt.  You can compare:

  • how big or small your debts must be to use each of these options;
  • what type of debt you can repay using each option; and
  • how long each option might last before you are debt-free.

There are different options for dealing with your non-priority debts depending on your circumstances. We have outlined some of the main options below.

Which option is right for you will depend on things such as your income, how much debt you have, your assets and whether you own your home. Your credit rating will normally be affected whatever option you decide to take. This means it may be difficult for you to get credit in the future.

Can I get credit again?

What if I have some money left to pay my creditors?

Pro-rata offers of payment

Pro-rata calculation

  • Step 1 – make a list of all your non-priority creditors and how much you owe each of them.
  • Step 2 – add up the total amount that you owe to your non-priority creditors.

You will then need to follow steps 3 and 4 for each non-priority debt.

  • Step 3 – multiply the amount you can afford to pay your non-priority creditors by the amount of debt that you owe an individual creditor.
  • Step 4 – then divide the figure worked out in ‘step 3’ by the total amount that you owe to all your non-priority creditors.

You can work out offers of payment based on a 'pro-rata distribution' of your available income. This means you offer all your creditors a fair share of what you can afford to pay. You also need to ask that any interest and charges are frozen. Our budget tool, Your budget, will work out pro-rata offers of payment to your creditors for you. The calculation is also shown here. Alternatively, contact us for advice.

You can write to your creditors, sending them a copy of your budget summary and ask them to agree to your offers of payment.

 

Pro-rata offers sample letter

Example  pro-rata calculation

Pat and Eva have worked out that they can afford to pay their non-priority creditors £107 every month.  This is their surplus for non-priority creditors. 
 
Non-priority creditors​ ​Amount owed ​Monthly pro-rata offer ​Pro-rata calculation
​Newhome catalogue ​£918 ​£14
£107 x £918 ÷ £7,227 = 13.59 (rounded up to £14)
​Alphabet bank loan ​£2,842 ​£42 ​£107 x £2,842 ÷ £7,227 = £42.08 (rounded down to £42)
​Unicorn credit card ​£3,467 ​£51
​£107 x £3,467 ÷ £7,227 = £51.33 (rounded down to £51)
 
​Total owed to non-priority creditors = £7,227
Total amount for non-priority creditors = £107
 

Free debt-management plan (DMP)

See our fact sheet:

 

Debt-management plans (DMPs).

This means you make one payment every month to cover all your non-priority debts. This will be divided up and sent to your creditors for you. You will not have to negotiate directly with your creditors to accept your offers and freeze the interest. Contact us for advice.

We may be able to help you set up a free DMP if:

  • you can afford to pay at least £5 to each of your debts; and
  • you can repay your debts within 10 years.