The phone rings. You see the number and your stomach drops. Another creditor. Another conversation you don't know how to have. Another round of shame, apology, and the desperate hope that they won't shout at you.
Most founders in financial crisis would rather do almost anything than talk to their creditors. The calls go to voicemail. The emails sit unopened. The letters pile up. And with every day of avoidance, the situation gets worse — not better — because silence communicates one thing to a creditor: this person doesn't care and isn't going to pay.
Here's the thing: avoidance is the single most damaging behaviour in a debt crisis. Not the debt itself — the avoidance. Because creditors who are being communicated with are dramatically less likely to take aggressive action than creditors who are being ignored.
This guide is about how to have these conversations — practically, with actual scripts, and with the knowledge that the anticipation is almost always worse than the reality.
Why avoidance makes everything worse
Understanding why avoidance is so destructive might help you override the instinct.
Legal escalation. Creditors have a process: invoice → reminder → warning → legal action. Every stage of escalation is triggered by non-response. If you're communicating and negotiating, most creditors will pause the escalation process. If you're silent, they assume the worst and move to the next stage.
Loss of goodwill. The person at the other end of the phone is usually not a monster. They're someone doing a job, often with their own targets and pressures. When you communicate, they can work with you. When you disappear, they have no choice but to follow the enforcement process — even if they personally sympathise with your situation.
Compounding costs. Interest, penalties, late fees, legal fees — these accrue while you're avoiding the conversation. A £10,000 debt that could have been negotiated into a manageable payment plan becomes a £15,000 debt with added legal costs because you didn't pick up the phone for three months.
Mental health. The weight of unopened post and unanswered calls is psychologically crushing. Each avoided conversation adds to the pile of dread. Paradoxically, having the conversation — even a bad one — typically reduces anxiety because you've moved from imagined catastrophe to known reality.
Before you make any calls: preparation
Don't pick up the phone unprepared. Fifteen minutes of preparation transforms a panicked, reactive conversation into a managed one.
Know your numbers
For each creditor you need to contact, know: how much you owe them (exactly, not roughly), what the payment terms are, how overdue the payment is, whether you've signed any personal guarantees related to this debt, and what, if anything, you can realistically offer.
Know your position
Are you calling as a company director about a business debt? Or are you dealing with a personal guarantee where you're individually liable? The distinction matters because it changes what you can offer and what the creditor can demand.
If the company is insolvent, you should not be making preferential payments to specific creditors — that's a legal issue. An insolvency practitioner or the administrator will handle distribution to creditors. What you can do is communicate, explain the situation, and provide information about what's happening with the company.
If you're personally liable (through a guarantee), the conversation is different — it's about your personal ability to pay, and the options are negotiation, payment plans, or formal debt solutions.
Know your rights
Creditors have rights, but so do you. Creditors cannot harass you. Under the Financial Conduct Authority guidelines, creditors must treat you fairly, consider your circumstances, and give you reasonable time to pay. They can't contact you at unreasonable hours, use threatening language, or misrepresent their powers. If a creditor is behaving aggressively, you can complain to the Financial Ombudsman Service.
You have the right to communicate in writing rather than by phone. You have the right to ask for time to seek advice. You have the right to propose a payment arrangement rather than accepting whatever the creditor demands.
The call: practical scripts
Here's what to actually say. Adapt these to your situation, but the structure works across most creditor conversations.
Opening the conversation
"Hello, my name is [name] and I'm calling about account [number]. I want to be upfront with you: I'm unable to make the payment that's due, and I want to discuss how we can resolve this."
This opening does several important things. It's proactive (you called them). It's honest (you can't pay). And it's constructive (you want to resolve it). Most creditor conversations go badly because they start with avoidance, denial, or defensiveness. Starting with honesty and a clear desire to resolve sets a completely different tone.
Explaining the situation
"My business is [in financial difficulty / going through insolvency / closing]. This has affected my ability to meet this payment. I'm working with [an insolvency practitioner / a debt adviser / my accountant] to manage the situation responsibly."
Keep it brief and factual. The creditor doesn't need your life story. They need to understand why you can't pay and that you're taking the situation seriously.
If you can offer something
"I'm not able to pay the full amount right now, but I can offer [specific amount] per month over [specific period]. Would you be willing to accept a payment arrangement?"
Always offer something specific. "I'll pay what I can when I can" is too vague and gives the creditor nothing to work with. Even a small specific amount demonstrates good faith and gives the creditor something to take to their manager.
If you genuinely can't offer anything
"I'm not in a position to make any payment at the moment. My circumstances are [briefly explain]. I'm getting professional debt advice and I'll be in a better position to propose a plan within [realistic timeframe — usually 2-4 weeks]."
This buys you time legitimately. You're not refusing to pay — you're asking for time to establish what you can afford. Most creditors will grant this, especially if you follow up within the promised timeframe.
If the creditor is aggressive
"I understand you need this resolved, and I want to resolve it too. But I need you to engage with me constructively. I've called proactively to discuss this, and I'm willing to work toward a solution. Can we discuss this calmly?"
If they continue to be aggressive: "I've explained my situation and offered to work with you on a solution. If we can't have a constructive conversation today, I'd prefer to continue this in writing. My address/email is [details]."
You do not have to tolerate abuse. Hang up if necessary. Note the date, time, and content of the call. Consider making a formal complaint if the behaviour continues.
Ending the call
"Thank you for your time. To confirm, we've agreed [summarise whatever was agreed]. I'll follow up in writing to confirm this. Is there a reference number for this conversation?"
Always get a reference number or the name of the person you spoke to. Always follow up in writing — email is fine — confirming what was discussed and agreed. This protects you if the creditor later claims no contact was made.
Specific creditor types
HMRC
HMRC are often the creditor founders fear most, but they're usually more reasonable than expected if you engage proactively. Their Time to Pay service (0300 200 3835) allows businesses and individuals to spread tax payments over up to twelve months.
When calling HMRC: have your tax reference number ready, know exactly what you owe and for which tax periods, have a clear proposal for how you'll pay, and be honest about your circumstances. HMRC will ask about your income, expenditure, and assets. Answer honestly — they'll verify against their records, and inconsistencies damage trust.
Banks
If you owe money to a bank (business loan, overdraft, or through a personal guarantee), contact the business banking team directly. Most major banks have specialist teams for customers in financial difficulty. They may offer: temporary payment holidays, restructured loan terms, reduced interest, or settlement at a discount on the full amount.
Landlords
Commercial landlords vary enormously. Some are sympathetic and flexible. Others will pursue enforcement aggressively. If you can't pay rent, contact the landlord directly and propose a plan: reduced rent for a period, a payment plan for arrears, or an early surrender of the lease (you give up the premises in exchange for being released from the remaining lease obligation).
If you've personally guaranteed the lease — common for small business premises — your personal exposure could be the remaining rent for the full lease term. This can be enormous. Get specific advice on this, and read: Personal guarantees: what happens when your company can't pay.
Suppliers and contractors
These conversations are often the most human. Suppliers and contractors are typically small businesses themselves. They understand cash flow problems. Call them, explain the situation honestly, and propose what you can. Many will accept partial payment or extended terms rather than risk getting nothing.
The emotional toll of creditor conversations
Let's be honest: these calls are horrible. Each one triggers the shame response. Each one requires you to say, out loud, "I can't pay what I owe you." Each one is a confrontation with the reality of the situation.
Some practical coping strategies: batch the calls. Do them all in one session rather than spreading them across the week — ripping off the plaster is better than slow peeling. Have someone with you, if possible — a friend, your partner, an adviser. Even just having another human in the room makes the calls less isolating. Take breaks between calls. Walk around. Get some air. Give your nervous system a few minutes to recover.
And remember: each call you make is one fewer call hanging over you. Each conversation completed is one less piece of dread in the pile. The calls are awful, but the avoidance is worse.
When to get professional help
If your debt situation is complex — multiple creditors, personal guarantees, HMRC liabilities, potential legal action — consider getting professional support before you start making calls.
Business Debtline (0800 197 6026) — free, confidential advice for self-employed people and business owners. They can help you prepare for creditor conversations and negotiate on your behalf.
Citizens Advice — free advice on debt, including help with priority debts and budgeting.
An insolvency practitioner — if the company is insolvent or heading that way, an IP can advise on formal options and often takes over creditor communication as part of the insolvency process.
Having a professional involved doesn't mean you're in more trouble than you thought. It means you're treating the situation with the seriousness it deserves.
One call at a time
You don't have to fix everything today. You don't have to call every creditor this afternoon. Start with the most urgent one. Have the conversation. Survive it. Then do the next one tomorrow.
Each conversation gets slightly easier. Not because the situation improves — but because you get better at having the conversations, and because each one removes a small piece of the dread that's been paralysing you.
Pick up the phone. The anticipation is worse than the call. It always is.
Following up in writing
After every creditor conversation, send a written confirmation. This serves two purposes: it creates a paper trail that protects you, and it ensures both sides have the same understanding of what was agreed.
A simple email template:
Dear [name/team], Following our conversation on [date] (reference [number]), I'm writing to confirm the following: [summarise what was discussed and agreed]. I will [state your commitment — e.g., make a payment of £X on [date], provide further information by [date], etc.]. If this doesn't accurately reflect our conversation, please let me know within 7 days. Kind regards, [your name]
Keep copies of everything. Every email, every letter, every note from a phone call. If the situation escalates to legal proceedings or formal insolvency, having a clear record of your proactive communication is powerful evidence that you acted responsibly.
A word on personal guarantees and creditor calls
If you've personally guaranteed a business debt and the creditor is now pursuing you personally, the dynamic changes significantly. You're no longer negotiating as a company director — you're negotiating as an individual who owes money.
In this situation, you have the same rights as any consumer debtor. The creditor must treat you fairly, consider your circumstances, and engage constructively. You can propose payment plans based on what you can genuinely afford, taking into account your essential living expenses.
If the amount is large and you genuinely cannot pay, formal debt solutions — an Individual Voluntary Arrangement (IVA), a Debt Relief Order, or bankruptcy — may be appropriate. These aren't failures; they're legal mechanisms designed for exactly this situation. Talk to a debt adviser before making any decisions.
For more on this, read: Rebuilding your personal finances after business failure.