It can be difficult to know what to do and where to turn if you are in debt and struggling financially, but it’s important not to ignore the problem, even if you’ve only missed one or two payments.
Debt can quickly spiral out of control, so it’s advisable to get in touch with your creditors as soon as you’re aware there’s a problem, so you can reach an agreement with them regarding payments.
When it comes to making repayments, it’s important to focus on settling your priority debts first. These are bills that could leave you facing particular serious consequences if you fail to take action, so the first step is to work out which debts are considered a priority so you can deal with them first.
Priority debts include the likes of rent arrears, mortgage or secured loan arrears, gas and electricity bills, phone and internet bills, council tax arrears, TV licence, court fines, unpaid income tax, VAT and National Insurance, unpaid child maintenance and any payments for hire purchase or conditional sale products.
Rent arrears, for example, are considered a priority because you may be evicted from your home if you’re unable to make repayments. Similarly, you may be evicted by your bank or building society if you fall into mortgage arrears.
Once you’ve worked out what your priority debts are and have taken steps to gain more control over them, you can start considering your other non-priority debts.
Such debts include the likes of credit card and store card debts, unsecured loans (like payday loans), unpaid parking tickets, unpaid water bills and any money owed to family or friends.
If you fail to pay these debts, you will likely be taken to court by your creditors  so they can recoup what is owed.
When making a list of your debts, both priority and non-priority, consider writing down the details of each, including the date of the first missed payment, who you owe money to, how much you owe, any account or reference numbers and what action has been taken thus far by the creditor to recoup their money.
It can be daunting to see all your debts written down in front of you, but being organised can prove very beneficial when it comes to freeing yourself from debt. You may also want to consider getting copies of your credit reports so you can check the details for all your debts to make sure they’re accurate.
Copie are available for free from Experian, Equifax and TransUnion and it may be advisable to get copies from each, as they may contain different information.
If you’re not sure how to cope with the debts you’ve included in your list, it may be useful to seek out debt management plan advice so you can find out what you can do to keep creditors at bay and get on top of your debts. If you’d like to find out more, get in touch with Fresh Start today.
Money Helper has replaced the Money Advice Service and brings together the support and services of three government-backed financial guidance providers: the Money Advice Service, the Pensions Advisory Service and Pension Wise.