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A Letter Proposing Payments in Instalments is an offer by a debtor (ie a party that owes another party money) to repay a debt in instalments. Letters Proposing Payments in Instalments are repayment plan offers that can form the bases of legally binding agreements between creditors (ie parties who are owed money by other parties) and debtors.
Use this Letter Proposing Payments in Instalments when:
you (or your organisation) owe another person or organisation money
payment of the whole debt cannot immediately be made
you want to propose a repayment plan in instalments
you want to stop the creditor from taking further action against you
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Dear ,
Re:
writing to you about the outstanding amount of £ as specified in. This amount was due for payment on . Recently have come into financial hardship due to and so wish to pay off the debt in instalments. contacting you in good faith so as to demonstrate intention of paying this debt and hope that both of us can reach an agreement.
propose to make payments of £ each on
Thank you for your understanding and taking the time to consider the above proposal. look forward to keeping an open line of communication until the outstanding debt is settled in full.
Yours ,
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This Letter Proposing Payments in Instalments template:
covers your offer to repay a debt in regular, fixed instalments
requests that a creditor considers accepting the debtor’s proposed repayment plan
forms the starting point for a binding agreement between the creditor and the debtor
A Letter Proposing Payments in Instalments is a formal request for a creditor to allow you to repay a debt in manageable instalments. Making such a proposal helps set out your financial ability to repay a debt and can help avoid going to court. By proposing an instalment plan, you communicate your willingness to repay the debt on a basis that works for you. This is advantageous for you, as it prevents you from becoming a ‘bad debtor’ and allows you to repay the debt in instalments that you can manage. It is also advantageous for your creditor, as it allows them to recover the money you owe them without having to go to court.
For more information, read Repayment agreements.
If you accept that you owe money to a creditor but you currently don't have the financial resources to pay the outstanding debt immediately, you may offer to pay in instalments. Making a repayment proposal shows your good intentions and willingness to pay off the debt. This can stop a creditor from taking further action (ie taking you to court). It can also help with your cash flow, especially if you're a business.
This Letter Proposing Payments in Instalments is merely an offer and does not constitute a legal agreement. If the creditor accepts your offer using a Letter accepting payment in instalments, then that agreement will be a formal, legally binding agreement (provided you both agree to all of that letter’s terms and sign the letter accepting payment in instalments).
How often you will make repayments is a decision for you to make based on your financial situation. Using this Letter Proposing Payments in Instalments, you can choose to make payments in either weekly or monthly instalments.
You can choose to make a request to the creditor to freeze any interest charged. However, bear in mind that the creditor does not have to accept such a request. Whether or not they accept the request may depend on your relationship with the creditor and the strength of your bargaining position.
You can choose to make a request for the creditor to consider any good credit history that you have. This will help assure the creditor of your ability to meet the repayment instalment requirements on time and can give you a stronger position when proposing payments in instalments.
If the creditor isn’t satisfied with the terms of the proposal, they may reject your Letter Proposing Payments in Instalments. If this is the case, you should consider negotiating with the creditor and trying to come to an arrangement that works for both parties. Note that no proposition for a payment plan will be legally binding until both the debtor and the creditor agree on all of its terms.
If you think you're going to struggle to pay off a debt through an instalment plan, consider contacting the National Debtline. This is a free and impartial service that helps those who are struggling with debt and finances.
Making a Letter Proposing Payments in Instalments online is simple. Just answer a few questions and Rocket Lawyer will build your document for you. When you have all of the details prepared in advance, making your document is a quick and easy process.
To make your Letter Proposing Payments in Instalments you will need the following information:
Party details
What are the debtor’s details (eg legal structure and name)?
If the debtor is a company, LLP or partnership, who will sign the Letter on the debtor’s behalf?
Will the Letter be printed on headed paper including the debtor’s name and address?
If not, what is the debtor’s address?
What are the creditor’s details (ie legal structure, name and address)?
Letters
On what date will this Letter be sent to the creditor?
Who is this Letter being addressed to and what are their details?
What is the salutation?
Debt
Is the debt related to invoices?
If so, what are the numbers of the outstanding invoices?
If not, what document does the debt relate to?
What amount is outstanding (ie the debt)?
What is the due date for the outstanding amount?
Why have you been unable to pay the outstanding amount?
Will you include documentation with this Letter supporting the reasons for the non-payment of the outstanding amount?
If so, what documentation will be attached?
Repayment
What instalment amounts are you proposing?
What is the proposed first instalment date?
Do you propose making instalments:
Weekly? If so, what is the payment day each week?
Monthly? If so, what is the payment date each month?
Do you want to request a freeze on interest and any other charges imposed on the outstanding amount?
Do you want to request that the creditor considers your previous good credit history?
Letters Proposing Payments in Instalments are used by debtors to request repayment plans for debts. As a result, this Letter Proposing Payments in Instalments template covers:
Sender and recipient details
The start of the Letter Proposing Payments in Instalments sets out the details (ie name and address) of the recipient (ie the creditor) and sender (ie the debtor).
The Letter itself
The body of the Letter Proposing Payments in Instalments sets out the debtor’s request for payments in instalments. It explains that the debtor has recently experienced financial hardship (including details of what this entails) and, therefore, requires more time to pay the money owed.
The Letter includes the detailed repayment plan and, where relevant, includes a request for the creditor to freeze interest and other charges to reduce the overall debt. Where relevant, it also includes a request for the creditor to consider the debtor’s good credit history.
If you want your Letter Proposing Payments in Instalments to include further or more detailed provisions, you can edit your document. However, if you do this, you may want a lawyer to review or change the Letter Proposing Payments in Instalments for you, to make sure it complies with all relevant laws and meets your specific needs. Ask a lawyer for assistance.
Be familiar with your situation
If you cannot make immediate payment of money owed, you should propose a payment plan that works for you and your creditor. Before making your Letter Proposing Payments in Instalments consider:
the total amount owed - making sure that your proposal covers the full amount owed to the creditor
the applicable interest rates - knowing the interest rates that are applied to your debt is crucial, as this increases the amount you owe. Consider asking your creditor to suspend interest and other charges to reduce the debt and make repayment easier for you
Consider how you can make your proposal work for you and your creditor
When making your Letter Proposing Payments in Instalments, you need to consider the logistics of repaying the debt. This will involve considering how much you can reasonably pay towards the debt and how often. You will need to find a balance between what works best for you and for your creditor. This will involve:
considering your available funds (eg income) and other expenses - by having a good understanding of your incomings and outgoings you can determine how much you can realistically afford to pay towards your debt
setting a realistic repayment goal - based on your funds, this should be the timeline for your repayment plan
being open to negotiations - your repayment plan will only work if your creditor accepts your proposal. By remaining open to negotiating the repayment plan with your creditor, you are more likely to reach an agreement without being taken to court
Understand when to seek advice from a lawyer
Ask a lawyer for advice:
if the amount of a debt claimed against you is incorrect
if there are disputes about whether you owe the debt
on defending debt proceedings
on your legal rights under a contract
This Letter Proposing Payments in Instalments is governed by the law of England and Wales or of Scotland.
