DIY debt management is pretty straight forward once you know what to do.
One of the main issues that people have is trying to work out how they share their money to each creditor fairly. It really is quite simple!
How to work out monthly repayments to your creditors
Lets say you have three creditors (people/companies you owe money to) The total outstanding debt for ALL three creditors is £10,000. This total is made up of individual amounts as:
Creditor 1: £5,000, Creditor 2: £3,000 and Creditor 3: £2,000.
(Total £10,000)
Now lets say the total amount of money you have left from income and expenditure to share with your creditors is £100.
Use this formula:
Individual Creditor balance x money available to share with creditors divided by the TOTAL owed to all creditors….
Lets work out the monthly repayment for Creditor 1.:
£5,000 x £100 divided by £10,000 = £50
£50 is your repayment amount to Creditor 1.
Creditor 2:
£3,000 x £100 divided by £10,000 = £30
£30 is your repayment to Creditor 2.
Creditor 3:
£2,000 x £100 divided by £10,000 = £20
£20 is your payment to Creditor 3
To confirm payments add up correctly:
£50 + £30 + £20 = £100
You may need to adjust each creditor total by a few pence/cents to divide equally into the amount available to share with your creditors.
Use this method to avoid using fee charging Debt Management companies.
Phil Lees
Your Debt Management Friend
‘Helping People Help Themselves’