How to Make a Payment Plan

With so many people in debt, payment plans have become common alternatives to re-establishing credit and preventing interest rate increases and additional late fees.

Review Personal Accounts

Step 1

Review your income, bank accounts and expenses to see how much money (or assets) you have to pay off an outstanding debt.

Step 2

Calculate the interest rates, late fees and divide it by the total balance to see how much of the debt is possible "junk fees" for late or nonpayment of the account.

Step 3

Call your lender or collection agency to discuss repayment options available with their company. Record the call with the voice recorder for future reference.

Establish a Payment Plan

Step 1

Tell the lender how much you are willing or able to pay each month. Negotiate interest rate reductions, payment amounts, fees, forbearance options and the credit reporting process (to ensure your report is updated with the payment plan information).

Step 2

Offer to set up automatic payments from a designated account. Automatic payments provide documentation regarding your repayment based on the agreement with the company.

Step 3

Offer to overpay when you have extra money. This shows your good faith to stick with the repayment process.

Step 4

Create a separate bank account to allocate funds through a 28-day period to ensure payment on the appropriate dates. This keeps bills and spending income in two different locations and creates self-discipline.

Document All Correspondence

Step 1

Keep copies of every correspondence with the company in a date book that also analyzes the payment plan agreement. Record the date, time and discussion.

Step 2

Ask for verification by mail or email of the agreements made for your payments.

Step 3

Ask the company to send regular statements showing the remaining balance. Compile these into a file. Keep track of all agreements the company makes with you.

Step 4

Inform the company of each step you are taking to follow through on your part of the agreement.


Get a part-time job or start a part-time business to bring in extra income to pay off debt. Sell household items on E-Bay or in yard sales.

Things You'll Need

  • Bank statements

  • Loan or bill statements

  • Calculator

  • Lender/provider contact number

  • Voice recorder


A defaulted payment plan is worse than nonpayment because then creditors have proof that you contacted them for negotiations and did not complete the transactions.