Keeping track of your finances after an arrangement is in place

You may have been following the 5-step plan for tackling debt. If so, you probably have a money management plan and a payment system set up.  

Hopefully, you will also have agreed on repayments with your creditors. This page tells you more about what to look out for to stay on the right track. 

Keeping track of your finances 

It can take a lot of time and effort to negotiate voluntary arrangements with creditors. Congratulate yourself for reaching this step in the journey and for taking control of your finances. This is not the end though, and a little more effort will pay off in the long term and help you to keep that financial control you worked so hard to achieve. 

If you have followed the insolvency path, you may be adjusting to living on a lower income. It is important to draw up a money management plan and payment system to make sure all goes smoothly. 

Reviewing your money management plan  

A money management plan will only work if you put it into practice and keep an eye on it. Try to review every week or month in the beginning.  

Compare planned spending with what you spent and see how it has worked out. When you see the results of this comparison, it should show you what you need to do to make your budget work for you.

Check your payments 

Mistakes do happen. Perhaps that standing order you set up didn’t go through, or maybe there was a delay in setting up a direct debit that has left you in arrears.  

It is important to make sure the payments you make: 

• Go to the correct account 
• Are on time  
• Are for the correct amount 

You need to sort out mistakes quickly. Check your current account and your debt account statements to review your payments.  

Each debt should be going down. If it is not, go back to your creditor and try to get the interest or any penalty charges stopped or at least reduced. 

Keep receipts and records of your payments. Here is a sample of a completed log for the first 6 months of the year. 

Common issues you may face 

If bills work out higher than expected 

Sometimes, no matter how hard you try, your budget can be thrown off by an unexpected bill. This is why you should build a savings fund.  

If you do not have any money saved, you may have to: 

• Make cutbacks in other areas  
• Negotiate an arrangement to spread the cost with your creditor or supplier 

When you cannot meet payments one month 

If you know in advance that you are likely to miss a payment, you can tell your creditor and explain why. If you miss a payment: 

• Contact your creditor immediately 
• Tell them why you missed the payment  
• Let them know if and when you can make up the missed payment 

If you cannot make up the missed payment, ask if you can spread the shortfall over a few payments. If your circumstances don’t improve, you may need to do a review. 

Money management can be a bit like dieting or exercising; some days can be better than others. If you feel you have slipped from the plan you set yourself, just learn from the experience and start again. Remind yourself of your goals or set some if you haven’t already.  You can use a goals worksheet.  

Set yourself even 10 minutes a day to keep on top of your plans. Read more about managing money. 

What to do if your circumstances change 

If your situation changes and you cannot keep to the agreed repayment plan, contact your creditors immediately, preferably by letter or email. Tell them: 

• About your new situation 
• How long it is likely to last – if you know 
• Your revised offer 

If you need to change permanently to this new payment plan, you will need to fill in a new financial statement and give evidence to show your changed circumstances. Ask for this new offer to be accepted for a set period, like 3 or 6 months.  

If you have been paying by direct debit or standing order, be sure to cancel it or change it to match your new offer. If you don’t have online banking, you can use sample letter E. 

If your circumstances have improved and you can pay more, contact your creditors with the improved offer. Set it out in a revised financial statement and show evidence that you will be able to stick to this new plan. 

Amend any direct debits and start making the increased offer immediately. You can use standard letter G. 

If you now find yourself unable to repay any money, you will need to revise your financial statement and prove your new situation. You can use: 

• Standard letter G
• But also look at insolvency options

Reviewing your repayment arrangement 

A review is simply when you look again at your: 

• Income 
• Spending  
• Repayment offers 

This allows you to make sure your money management plan and debt repayments are realistic and affordable.  

After you do this review, then you need to contact your creditors.  

When to do a review 

You usually need to do a review at least every 6 months or sooner by agreement with your creditors. Sometimes, at the start of a new repayment plan, you need to do a review every 3 months.  

If your circumstances change for the better or worse, you can carry out a review at any time. 

How to do a review 

To review your debt repayments, get up-to-date statements and check if: 

• Payments have been received 
• Interest and other charges have been stopped or reduced 

You should also check if the account has been passed on to a collection agent or solicitor to make sure you are writing to the correct address.  

We recommend writing to or emailing your creditors so there is a record on file. You can use our: 

• Sample letter F for no change  
• Sample letter G for changes for better or worse 

You can adapt these samples to your situation.  

Contact MABS if you would like some support with this. Depending on your creditor’s responses, you may find our negotiation tips helpful.