How to deal with debt

Don’t panic! And don’t ignore the problem, it won’t go away.

1. Talk to your creditors and let them know you are having problems.
2. Don’t take out additional credit or add to existing credit, like your credit cards - you’ll only get yourself in worse trouble.
3. Don’t pay off the person who is shouting the loudest, but pay the most important ones – for example, loans secured against an asset (e.g. your mortgage or a car bought on hire purchase or conditional sale) rent, council tax and gas and electricity. Otherwise you will be in danger of losing your home or car, having your gas and electricity cut off, or ending up in court and possibly prison.
4. Don’t ignore court papers.
5. Check your income and see if there is anything you are entitled to receive that you are not getting. For example, tax credits can be quite generous.
6. Look carefully at your spending and see if there is anything you are able to cut down on, but don’t be over ambitious or you will not stick to it.
7. Work out how much you can realistically afford to pay.
8. You should consider carefully before taking out a loan to pay off all your debts. You may end up paying back a lot more than you borrowed; you may not be able to afford the repayments; and the loan may be secured against your home which you could then lose.
9. Don’t pay for advice. The Citizens Advice Bureaux gives free, independent and confidential advice. They will help you work out repayments and negotiate with your creditors, and also help you keep out of debt in the future.

Where can I go for help?

Although your lender will try to provide you with any further help that you need, there are other organisations you can contact. You do not need to pay for debt advice. Any of the organisations below will be happy to help you.

• Your local Citizens Advice Bureau will give free, independent and confidential advice. They can help you work out repayments and negotiate with your creditors. For details of your local CAB, including those that give advice by email, go to www.citizensadvice.org.uk

•  National Debtline is a national phone helpline for people with debt problems in England, Wales and Scotland. Their service is free, confidential and independent. Their freephone number is: 0808 8084000. Website: www.nationaldebtline.org
   
• StepChange is a registered charity which provides independent and confidential counselling on personal budgeting, advice on using credit wisely and, where appropriate, achievable plans to repay debts. If you would like to talk to a StepChange counsellor, call 0800 138 1111. Website: www.stepchange.org

For general information about debt, bankruptcy and other issues go to www.adviceguide.org.uk