Being a Good Debtor

debt burdenPart of being in business is that clients owe me money. And part of being an accountant is acting for clients when they owe money.  So I regularly get to play on both sides of the debt equation: being both Creditor (they owe me) and Debtor (I owe them).  This piece is about how to manage  things well as a debtor – how to be a Good Debtor.

For most people being in debt is incredibly stressful. Our culture sees debt as bad: we talk about the ‘debt burden’, and the ‘debt trap’. Having a mortgage is seen as a kind of moral negation: signing the mortgage is to “sign one’s life away”.  Understandably in this cultural context, not being able to pay your bills brings up feelings of shame, anxiety, embarrassment and fear.  These emotions can make it really hard to act simply with self-compassion and clear communication.

Understanding Power

There’s several things, though, that can really help.  First is understanding power.  When you “go delinquent” on a debt, i.e. you don’t pay when you should, suddenly you have a lot of power.  In effect you hold someone else’s money, and you are saying you won’t give it to them.  You are, at one level, unilaterally tearing up the implicit contract you and your creditor agreed to initially when they agreed to supply you and you agreed to pay.

If your creditor is a corporation, then there’s not much emotional charge involved. But debt collecting for corporations is costly – staff, lawyers, communications resources, collection agency fees etc etc.  They’d rather not be doing it. Your power in the situation is forcing them to spend money on something that’s not actually their core business.

If your creditor is HMRC or any tax authority, the situation is slightly different. You have the added power of being able, potentially, to draw public scrutiny if you are creative and energetic enough.  HMRC is constantly (and quite rightly) under scrutiny, and is sensitive to this as an organisation.  It has a whole set of standards it is obliged to stick to in dealings with taxpayers – and you can at any moment publicly claim it is not doing so.

If your creditor is a small business, then your power is much more significant.  Your creditor may be sole operator – in which case it can easily seem personal to them.  They fear that you’ve just pulled a power move by saying you’re not going to give them the money which is rightfully theirs.  This power aspect is a huge contribution to the difficulty and very high charge around debt collection particularly for small creditors.


So far and away the most important thing you can do to be a good debtor is to clearly acknowledge the debt.

Because of the shame and fear which often comes up when you can’t pay your bills, it’s incredibly tempting to project your own emotions back on to your creditor by blaming your creditor in some way: their service wasn’t very good, or their invoice is wrong, or late. Or they didn’t give what you specified. It goes on and on.

If any of those things actually are true, then they need to be addressed as issues in their own right.  And they are not the same as the issue of acknowledging the debt.

Clearly acknowledging the debt makes it clear to the creditor that you are NOT unilaterally throwing out your mutual contract. Rather, you wish to honour the contract, and there is a much more specific and much smaller issue, which is that you just can’t pay at the moment.

By far the best way to acknowledge the debt in practice is to be proactive in your communication. Don’t wait for your creditor to chase you.  As soon as you know you can’t pay on time, get on the phone to them, email them, text them – whatever.  This indicates more strongly than anything else that you care about them, that you are aware of your debt and you want to clear it.

This works even with large corporations and government bodies.  Even though you’d only be dealing with a functionary with, in theory, no emotional investment in what you do, that person will be making notes on your file, which all build up a picture of you as a good debtor – someone they don’t have to worry about.

Even if your situation is dire, e.g. you’re not going to be able to pay for maybe a year or more, large organisations would rather put your file in a holding tank for a long time than take legal action against you – because legal action is costly, with an almost guaranteed eventual failure if you have no money. So why would they throw good money after bad.

The same is true of the small operator too:  their best bet is to try to accommodate you and support you to improve your situation.  But small operators get much more antsy, because they are much more vulnerable to your power.  If you and they have no personal connection or are not connected via community, then they have no information about your integrity.  There is the constant doubt in their mind that maybe you’re just having them on, or that you are not reliable.  So small operators need more frequent reassurance that you care about your debt to them.

What is incredibly reassuring here is that you do what you say you will do.  It doesn’t matter how bad your situation is, or how long you will take to pay.  If you say you will do something then do it.  This says “integrity” more strongly than anything else.  That’s why it is much much better to be realistic in assessing what is actually likely in the near future for you with money, and much better to be honest with your creditor about what you can and can’t do.


Being in debt is not a bad thing in itself.  At one level, when dealing with other small businesses, it is an opportunity to use your potential power as a debtor to strengthen community by drawing on the support of others. And, as in any power play, doing this takes attention and care and respect.

Being unable to pay your bills does not need to be emotionally dramatic. It can simply a situation to encounter – and it can be encountered with competence and ease with these basic steps:

  • Clearly acknowledge the debt.
  • Be proactive in your communication.
  • Be realistic about what and when you can pay.
  • Do what you say you will do.

Getting Help

For most people, dealing well with debt is a new set of skills.  So it’s great to get help while you’re learning.

You can talk with me about your feelings and attitudes, and we can develop possibilities and build concrete strategies.  And I can negotiate on your behalf in certain conditions.

And there’s loads of free help. Here’s four excellent starting points.


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