A payment plan letter is a written request to re-negotiate a payment structure that is well suited to your budget. If you find yourself in a situation wherein you cannot afford to pay the required instalment or the full amount owing, contact your creditor immediately to make a payment offer that is affordable to you. It is a good idea to write a letter as soon as you’ve realised that you cannot pay instead of waiting for them to contact you. Most registered credit providers are happy to work with debtors proposing a payment plan as opposed to not receiving a payment at all. You can also use this application for reduced instalment payments to try and stop your creditors from taking legal action against you. This letter should be concise but outline the details of your proposal to pay in instalments so that creditors are confident in your ability to repay your debt.

A letter or payment proposal in instalments is an offer by yourself to pay off an outstanding debt by regular fixed and or reduced amounts over a period of time.

• As soon as you realise that you cannot afford to pay the debt
• When you want to stop the creditor from taking legal action against you
• When you realise that you are over indebted and do not have sufficient money for your living expenses

• The offer to pay off a debt regularly in reduced amounts  

• This will help to set out your financial ability to pay off a debt and avoid any legal action being taken against
• Will allow you access to more disposable income for your living expenses

On accepting that you owe the money but cannot afford to pay the debt immediately, then you may offer to pay in smaller instalments. This shows good intention and your willingness to pay off the debt thereby also resulting in no legal action against you. It further increases your cash flow.

No, it is not. This is merely a letter proposing a payment plan that is affordable to you and therefore does not constitute a legal agreement. If and when the creditor accepts the offer through a letter accepting the payment in instalments, then that agreement becomes formal and legal.

Repayments can be made either weekly or monthly. This depends entirely on your financial situation. Payments do however have to be made regularly as promised in your offer to pay.

In this instance it could only mean that the creditor is not happy with the proposed amounts, one should then consider re negotiating with the creditor and try entering into an agreement that is beneficial to both parties. Alternatively seek advice from the NCR (National Credit Regulator).  

Offer an amount that is affordable and not unrealistic to your budget.