Once you have worked out your budget (which should include what priority debts you are repaying) you can use any money left over towards paying off non-priority debts.
If you have no money to offer your non-priority creditors
If you do not have any or very little money left over, you can ask your non-priority creditors if you can stop paying them until your situation improves. Your creditors are unlikely to agree to do this for more than a few months (if at all), so you may need to look at your budget again to see whether you can cut down on your spending in other areas. You can find an example of ‘no funds’ letter here (pdf 21 kB).
If you find you have more money going out than you have coming in, you may wish to offer non-priority creditors a very small amount (called a ‘token offer’) such as £1 or £2 every month to each creditor. They are more likely to accept this small offer rather than no payments at all. You can find an example of a token offer letter here (pdf 21 kB).
Warning for homeowners
If you own your home, please get advice from Citizens Advice straight away if you are unable to offer your non-priority creditors any money.
Non-priority creditors may want to secure their debt to your home (apply to the court for an order that means that if you don’t pay them what you owe they may be able to force you to sell your home).
If your home is at risk of being repossessed by your mortgage lenders, you should seek immediate advice from Solihull Home Options on your situation, who may refer you to the Money Advice Team for help with dealing your mortgage lenders and their solicitors
Work out how much to offer
Subtract the total amount of money going out each week or month from your total income. Whatever you have left (if anything) is known as your ‘available income’.
If you have any available income, you can work out how much to pay each non-priority creditor. This is known as a ‘pro-rata’ offer of payment. To work out how much to offer each creditor, do the following.
1 Find out how much you owe each non-priority creditor .
2 Add all of your non-priority debts up to give you a total amount.
3 Divide each individual debt by the total amount of non-priority debts.
4 Multiply this figure by the amount of available income you have.
Here is an example of how to work out a pro-rata offer (pdf 19 kB).