A token payment plan (TPP) is a short-term way to deal with the people you owe when you do not have much money at the moment but expect your situation to get better soon. You pay as little as £1 to each debt each month for up to a year.
Offering token payments is a simple way to allocate any money you have fairly amongst your creditors, however your creditors might not accept the lower payment offer, but they cannot refuse any payment you make. Your creditors do not have to stop interest and charges, so the amount you owe may keep rising, but you don’t have to pay any more than you can afford
Your credit file will be affected and creditors can still take further action against you to recover the debt. You are not protected from court action, like County Court Judgments (CCJs). You can download a sample token payment letter, remember you must include a personal budget sheet and make similar offers to all of your creditors. Token payments only work with consumer debts such as loans, credit cards and catalogues. Priority debts such as rent, mortgage, council tax, energy bills and car finance have to be treated differently.