Should You Accept a Payment Plan from a Tenant? Guide
When to accept a tenant's payment plan offer vs pursuing court action. Pros, cons, and what makes a payment plan worth accepting. Get the UK steps and choose...
Read this first
This guide explains the problem in plain English first, then shows you the next practical step when you are ready.
Your tenant owes you money and you need to know the fastest lawful way to chase it. This guide explains the route, the paperwork, and the mistakes that can slow you down.
Understanding Payment Plan Offers
A payment plan is an agreement where the tenant pays off their debt in instalments rather than one lump sum. The Pre-Action Protocol expects you to consider reasonable offers before going to court.
Unpaid rent
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If the arrears keep growing, move from reading to action with the documents you need for the claim.
- Set out what is owed clearly before the numbers get harder to untangle.
- Build the claim in plain English.
- Get the court paperwork ready for the next step.
Protocol requirement: If you reject a reasonable payment plan and later go to court, the judge may penalise you on costs—even if you win the case.
When to Accept a Payment Plan
Consider accepting when:
- The offer is realistic - Debt cleared in 1-3 years
- Financial statement supports it - Their income/expenses show they can afford it
- They have no assets - Even with a CCJ, you couldn't enforce quickly
- Regular payments are better than nothing - Some money vs legal costs
- The amount is relatively small - Court fees might exceed the debt
Example: Reasonable Offer
Debt: £2,000
Offer: £150/month
Cleared in: 13-14 months
Verdict: Consider accepting - reasonable timeframe
When to Reject a Payment Plan
Consider rejecting when:
- The offer is derisory - £10/month for a £5,000 debt
- It would take too long - 5+ years to clear
- They have ability to pay more - You know their financial position
- They've broken promises before - Previous failed payment plans
- The financial statement is incomplete - They're hiding something
Example: Unreasonable Offer
Debt: £4,000
Offer: £25/month
Cleared in: 13+ years
Verdict: Reject - unreasonable timeframe
Protecting Yourself with Payment Plans
If you accept a payment plan:
- Get it in writing - Email confirmation at minimum
- Set clear terms - Amount, frequency, start date
- Include a default clause - What happens if they miss payments
- Keep records - Track every payment received
- Don't wait too long - If they miss payments, act quickly
Sample Payment Plan Terms
"I agree to pay £[amount] on the [date] of each month starting [date], until the total debt of £[total] plus interest is cleared. If I miss any payment, the full balance becomes due immediately and you may proceed with court action without further notice."
What If They Stop Paying?
If the tenant defaults on the payment plan:
- Send a reminder giving 7 days to catch up
- If no response, treat the agreement as broken
- You can then proceed with court action for the remaining balance
- The fact they broke a voluntary agreement strengthens your case
You don't need to send another full Letter Before Action—you can proceed straight to court if they've already acknowledged the debt and then defaulted.
Payment Plan Failed?
If the tenant has stopped paying, our money claim for unpaid rent Pack helps you take the next step.
Start Court Claim - £29.99FAQs for landlords
Can I still get a CCJ while they're paying?
Not usually. If you've agreed a payment plan, you should honour it while they're paying. You can pursue a CCJ if they default on the plan.
Should I charge interest on the payment plan?
You can include accrued interest in the total owed. Whether to add ongoing interest is up to you—it may complicate the arrangement but compensates for delayed payment.
What if they offer a partial settlement?
A lump sum for less than owed? Consider the alternative—court costs, enforcement costs, and risk of recovering nothing. Sometimes 70% now beats 100% never.
What to do next
Core eviction guides to keep your case moving
Keep your case connected with the core possession guides most landlords need during arrears and notice problems.
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