If you have an agreement to make monthly payments to repay a creditor or company, but your financial situation has changed, use this letter to suspend payments for six months or accept a token £1 payment each month.

You may have lost your job or had your hours cut, but it is important to communicate the situation with your creditors. You might need them to be flexible and give you some breathing space. This token payment or repayment holiday letter template will help make your case. 

Download it for free now and simply add some account information. Including a monthly budget will strengthen your argument. 

Letter Template

To Whom It May Concern

Regarding Case #: [your case number]* (required)

Since making the above agreement with you, my circumstances have changed. I cannot now afford to make the agreed monthly payments for the following reasons.

[include a paragraph outlining the special circumstances you have that you want the creditor to take into account.]* (required)

I enclose a budget summary which shows my total income, and my total outgoings. As you can see, I have no money left to make offers of payment to my creditors.

Because of my circumstances, please agree to [suspend payments for six months/accept a token offer of £1 a month for the next six months.]* (required)

If you are adding interest or other charges to the account, I would be grateful if you freeze these so that the debt does not increase.

If my circumstances improve, I will contact you again.

Please send a [paying-in book/standing order form]* (required) to make it easier to pay you.

I look forward to hearing from you as soon as possible..

I look forward to hearing from you.

Yours sincerely

Downloadable Resource

The download links below take you to a Google document template where you can make a copy or save in any document format you like. Note, you may have to login to your Google account.

Download – Single (for one person)
Download – Joint (for couples)

What is a Token Payment Plan?

A Token Payment Plan is a repayment plan for people with extreme financial difficulty. If you are not able to make any significant repayments on your debt each month, a TTP is a way to pay £1 each month until your financial situation improves and you can begin making more substantial payments. 

A TTP is not a long-term solution and is usually only provided for around six months. The creditor will expect you to be able to make bigger payments afterwards.

Can creditors reject a Token Payment Plan?

Creditors can reject a TTP if they want, but when this happens, debt charities will urge you to make the TTP to them anyway. This will stop your account from falling too far behind and could be used as evidence to show you have done your best in difficult circumstances. 

If the alternative is a no offer of any payment, creditors may be more inclined to agree to the TPP.

How do I get a TTP?

You can get a TTP by asking for it yourself using our free letter template. Alternatively, you can ask a debt charity to ask for you. You might consider using a commercial debt management company to negotiate one for you, but these businesses may charge you one-off and ongoing fees, meaning you end up paying more. 

Should I take out more credit to pay my debts?

Most of the time, taking out more credit to pay off your debts is a bad idea and will lead to bigger debts. There are some situations when it can be an effective tactic to get out of debt, such as using a balance transfer card to reduce credit card debts. If you are considering doing this, always speak to a debt charity first. They will be able to advise if it is a good idea for you. 

Do creditors have to freeze interest? 

You will notice that in our letter template we also request your creditor freeze any interest on the debt. This is so your debts do not grow bigger even if the company agrees to give you some breathing space or accept the £1 per month token payment. 

Creditors do not have to agree to freeze the interest on your debt, but many of them will agree. Sometimes they will agree to this part of your request even if they do not agree to a £1 token payment, which will go towards improving your situation. 

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more