Dealing with your own debts
Being in debt can be stressful. It is important to act promptly but not to panic. To be able to deal with debts you need to follow a systematic approach, and to help we have prepared a step-by-step approach for you to follow.
Deal with any emergencies.
WARNING!!: If you have an emergency, seek immediate advice!!!
Prioritise your debts
Not paying certain debts may have bigger consequences and therefore you need to prioritise all of your debts.
Write to your Creditors
Download a Draft Holding Letter template.
You can also download a copy of the British Banking Code.
You should write to your creditors to inform them of your circumstances.
Be aware of the limitation of action
If, in the last 6 years, you have not acknowledged a debt in writing or made any payments to them. Seek advice. See Limitation
Maximise your income or raise a lumpsum
Check if you are getting all your benefit entitlements. You can either get an estimated calculation on-line or contact your local CAB, who will do a calculation for you.
Also, consider selling any unwanted goods - if you do not use it, sell it!!!
Prepare a personal budget sheet
You can download Personal budget sheet template to use.
At this point you should be preparing a financial statement. This will help you understand where your money is going, what expenditure can be reduced and what money available for repayments.
Look at the strategies available for you
This will depend on whether you have money available or not - see the following links;
- Debt Management Plan
- Individual Voluntary Arrangements
- Charging Orders
- Administration Orders
- Bankruptcy