Debt Problems

If you have problems with debt then it can be hard to know what to do to improve your financial situation. Without some form of action your debts will simply carry on getting worse so it is important to try to sort out the situation once and for all. So, you can make coping with debt a lot easier if you follow these steps:

1. Work out how much you owe - this may involve credit cards, bill and/or payment arrears, overdrafts and any other debts you have. You need to total everything up here.

2. Work out which debts are most important - some debts (often called priority debts) are more important than others. These debts may be smaller than your other debts but they are more likely to lead to legal action than other debts so you need to sort things out here first. Priority debts include your mortgage or rent and official payments such as taxes and council tax. If you don’t have problems with these kinds of payments then work out which are your most expensive debts (such as credit cards) and work to pay these off first.

3. Work out your monthly budget - you need to work out how much you have coming in and how much you need to spend each month on essential items. The money you have left over can be used to pay off your debts.

4. Contact the people you owe money to - the people you owe money to can only help you if you get in touch to tell them that you are having difficulties paying back what you owe. Many creditors will accept lower repayments if you offer them so this could be worth doing.

Think about impartial advice - if you are not comfortable talking to creditors or find it hard to work out a budget then you can talk to specialists at various places including the Citizen’s Advice Bureau, the National Debtline and the Consumer Credit Counselling Service. All of these services are free - don’t go to other organisations that charge fees to help you sort out your debts without talking to one of these institutions first.