Debt Advice

There are many reasons why you might find yourself in debt. Maybe you have recently become unemployed or you incurred some unexpected costs which spiralled out of control. Whatever the reason, being in debt can be a stressful time. Luckily, there are ways that you can take stock of the situation and things may not be as bad as they seem. The important thing is to stay calm and keep things in perspective. Do not ignore your debts as the problem will only get worse. You need to be proactive and not hope that the problem will go away as it will not.

Working out your exact debt

The easiest way to work out your exact position is to make a list of the debts that you have. Make a list of all of your creditors including the amount you owe them. This will enable you to see at a glance exactly what you owe. It is important that you do this so you can see exactly where you stand. Once you have done this you need to work out which debts are the most important. Mortgage and rent arrears need to be at the top of this list, if you fail to keep up with these payments you may find yourself homeless. Likewise, any money owed to utility companies or for council tax need to be on this list. Failure to pay fuel bills may result in your utilities being cut off and council tax arrears could end up with bailiffs knocking at the door. If your debts are over £12,500 you may want to consider an Individual Voluntary Agreement.

Working out your income

Once you have a list of your debts you then need to make a list of all of your income. Make sure to put all of your income on this list after any deductions such as tax or national insurance. If you have the opportunity to earn any other income then you should do your best to do so. Every little helps when you are in debt. If your wages vary slightly from month to month you should take an average over the last 6 months.

Working out your expenses

The next step is to make a list of your monthly expenses. You need to list everything such as mortgage or rent payments, fuel bills and other things that have to be paid. You should also do your best to try and minimise your outgoings so that you can put as much of your income towards your debts as possible.

Once you have a list of your income and outgoings you can see how much you are left with each month. This will enable you to see how much you can pay off of your debts each month.

Contacting your creditors

The final step is to contact your creditors and come to an agreement over how much you can pay each month. You will find that the majority of lenders are happy to come to an agreement as they would rather have something than nothing. If they press you too hard on the matter then you may end up going bankrupt which would leave them with nothing. The main point is that you actually contact your lender and do not ignore them, failure to contact creditors and discuss the matter will lead to the problem escalating.

Above all, do not underestimate how quickly things can escalate and end up with bailiffs knocking at your door. Always contact your lenders and discuss the matter with them, never bury your head in the sand and hope that the problem will go away.