Dealing with Debt Problems
If you're in debt and finding it hard to cope, it's important to deal with the problem straight away - the longer you ignore your debts, the worse the situation becomes. Find out what you can do about your debt problem and where to get free help and advice.
Please contact us as soon as possible to discuss your circumstances. We have specially trained customer advisors who can help. You can call them directly on 01472 503180.
Basic steps to help you deal with a debt
The basic steps to help you deal with a debt problem are shown below. However, you should get independent advice to help you find the best way to deal with your debt problem. You can get free and independent advice from organisations like Citizens Advice and the National Debtline.
Step one - make a list of everything you owe
You should sort out exactly what you owe and who you owe it to. The people you owe money to are known as your creditors. If you owe money, you are known as a debtor.
Step two - put your debts in order of importance
The most important debts are known as Ďpriority debtsí and they aren't always the biggest ones. Priority debts are ones where serious action can be taken against you if you don't pay what you owe. For example, you could lose your home, be disconnected from a service or even go to prison.
Priority debts usually include things like:
- Mortgage repayments
- Secured loans (Including Hire Purchase)
- Council Tax
- Utility bills
- Court fines
You need to sort out payments on your priority debts first. Non-priority debts include things like:
- Credit card and store card payments
- Bank loans
- Home-collected credit (where the agent collects payments weekly)
- Catalogue repayments
- Money you've borrowed from family or friends
You can't ignore these, but you don't need to deal with them as a first priority.
You can get help sorting out your priority and non-priority debts for free from organisations like Citizens Advice and The Money Advice Service (www.moneyadviceservice.org.uk)
Step three - work out a personal budget
Work out a weekly or monthly budget to see what your income and expenses are, it can also show you where you can save money. A budget will help you decide what you can reasonably afford to repay your creditors, so itís important to be realistic.
You can get free and independent help working out your personal budget from organisations like Citizens Advice and the National Debtline. There are also self-help packs and online tools you can use to help you.
Step four - get advice on the different ways to deal with your debts
There are lots of options for dealing with debts. For example, arrangements you can make with your creditors or more formal ones that debt specialists can organise for you. There are sometimes extra costs involved and conditions you have to agree to.
Itís important you get independent advice to help you find the best way to deal with your debts. Free and independent advice is available face to face or over the telephone from organisations like Citizens Advice and the National Debtline.
Make sure you deal with your priority creditors first
Step five - talk to your creditors
Once you know what you can afford to repay, talk to your creditors about your situation and what you're going to do about it. A debt adviser can do this for you, and some will do this for free.
Be realistic about what you can afford to repay and donít assume youíll be able to pay back more in the future. It's important to follow up a phone call with a letter confirming what has been agreed.
Click here for details of other free sources of help and support.