First, make a list of your creditors (NOTE: you should only attempt to re-negotiate payments on your UNSECURED debts if you wish to avoid the risk that an item upon which a debt is secured could be re-possessed)

Add to this list the outstanding balance owed to each creditor. It is essential that you are accurate with this balance. You should find the balance on the most recent statement from each creditor on your list. If you cannot find a balance figure, call the creditor or write and ask for a current outstanding balance. Only when you have an accurate outstanding balance for each creditor on your list can you proceed to the next step.

From your financial statement (prepared in the last of this series), subtract the total of your outgoings from the total of your income. The resulting figure is your disposable income.

You need to divide the disposable income figure amongst your list of creditors in proportion to the outstanding balance owed to each. This is why you need an accurate balance before you start. Otherwise, your creditors will not accept your proposal.

When you have done this, write a letter to each creditor quoting your name, address and account number, offering to pay the amount you have calculated for that creditor.

You will need to include a copy of your financial statement with each letter, and you will need a valid explanation for your hardship, which now prevents you from paying the full amount agreed initially.

It is not difficult to see that the success of your proposal will depend on how well you have put together your financial statement. The amounts you have claimed for each item of expenditure will need to be acceptable to your creditors. Unfortunately, there is no hard and fast rule I can give you for this. it is entirely dependent on the combination of your circumstances, which is unique for everybody.

If one or more of your creditors rejects your proposal, they will probably indicate why. It will then be necessary to re-jig your financial statement and re-send it to all creditors with a new letter. Certainly this can be time-consuming and tedious but there is no easy answer to this.

Rob Hawkins is the owner of Debt Consolidation UK. His company Chiltern Debt Management UK has helped more than 50,000 people to get rid of debt problems, and won the coveted 'Debt Counsellor of the Year 2004' award.