If you cannot afford to repay a debt at the agreed rate, negotiating with your creditor is often possible — and FCA-regulated lenders are required to treat customers in genuine financial difficulty with forbearance. This guide explains what that means in practice and how to approach the conversation.
What FCA rules require lenders to do
FCA-regulated lenders — which includes most credit card companies, personal loan providers, banks and authorised debt collectors — are required to treat customers experiencing financial difficulty with appropriate consideration and flexibility. This means they should: consider offering a payment arrangement you can afford, temporarily reduce or freeze interest and charges in some circumstances, not pursue enforcement action without first considering realistic alternatives, and give you time to seek advice before taking further action.
How to approach the negotiation
Contact the lender or creditor in writing (email or letter creates a record) rather than by phone where possible. Explain your situation clearly and honestly: what has changed, why you cannot meet the current payments, and what you can afford. Provide a simple budget showing your income and essential outgoings to demonstrate what is genuinely available for debt repayment.
Propose a specific affordable payment amount rather than simply saying you cannot pay. Creditors respond better to a concrete proposal than to a general request for help. Ask them to confirm any agreement in writing before you make any payment.
What to negotiate for
- A reduced monthly payment that reflects what you can actually afford
- A temporary payment holiday if your difficulty is short-term (illness, job loss, family crisis)
- Freezing of interest and charges for a defined period
- Removal of penalty charges added while you were in difficulty
- A full and final settlement if you have a lump sum available (creditors sometimes accept less than the full balance)
What happens if negotiation fails
If a creditor refuses to negotiate reasonably and you are in genuine financial difficulty, you can escalate to the Financial Ombudsman Service (FOS), which is free to use. The FOS can rule on whether the lender has treated you fairly. A formal complaint to the FCA is also an option for regulatory breaches.
General guidance only — not regulated financial advice.