Free Debt Advice - 10 Tips On How To Solve Your Debt Problems
Getting into debt is very easy in today’s world. Getting out of debt again is more difficult, especially if you don’t know where to start. Best10Tips.co.uk gives you some simple, easy to understand debt advice which will put you on the road to gettting out of debt forever.
- Facing up to your debt problems is the first and most difficult step to take when you are in financial trouble. It is hard to look at those demands for payment that keep coming in, but don’t ignore them. Take control again by making sure that you open every letter and demand and keeping all paperwork related to your debts together. Make a list of all of your creditors, account or reference numbers and the amount owed.
- Work out a monthly household budget that includes you and your partner’s income, benefits received, child maintenance payments or tax credits you get. Make another list that includes all money that goes out of your household budget including rent/mortgage, utility bills, taxes, food, credit card bills and other repayments . Using the totals of the two lists, work out how much money (if any) you have left over each month. If your answer is none or even a negative amount each month, try to identify places that you could make savings.
- Work out your Priority Debts. These debts include mortgage payments, utility bills, local taxes, court fines and child maintainence arrears. If you don’t pay these priority debts then you could lose your home, have your utilities cut off or even end up in court. Once you have worked out how much you need to pay your priority debts per month, you can see if any money is left in your budget to pay off non-priority debts. These include credit cards, overdrafts, loans, benefit overpayments and money borrowed from your friends and family.
- Using the money left for non-priority debts, work out an equal share for each of your non-priority creditors and contact them to negotiate the amount that you be able to pay each month. These creditors would rather you paid them something than nothing at all.
- You may want to look at debt management to help you negotiate with your creditors on your behalf. It can make things easier to deal with and pay one third party. The debt management company deals with all of your creditors on your behalf. The downside is that they will charge a fee for doing all this.
- If you have a lot of different debts, all with high interest charges, you may benefit from debt consolidation. This is where a debt consolidation company takes on all of your debts and you agree to pay them a single monthly amount. You will need to work out if, over the repayment period, you will be paying less in charges and interest than you are now. Independent advice from a debt counselling service can help you if you need it.
- If you are on a very low income, cannot work due to ill health or are elderly, you may be able to negotiate with your non-priority creditors to write your debt off completely. They may do this if they feel that you will never be able to repay them and your circumstances are unlikely to improve.
- You can get a legal agreement in which, if most of your creditors agree, you promise to repay all or part of your outstanding debt over a specified period. This is called an Individual Voluntary Agreement (IVA) and can satisfy your creditors that will be paying them back. IVA’s are written and checked up on regularly by insolvency practitioners and you will need to pay for professional help to set one up.
- If you have debts totalling less than £5,000 and have a County Court Judgment against you, you may be able to apply for an Composition Order. A County Court decides on part of your debt that you can pay off and sets an affordable amount for you to pay. Under this order, creditors cannot take any other action against you as long as you keep up with the repayments. There is no set up fee for this order but the court will take an adminsitration fee out of your monthy payments.
- Bankruptcy. This is the absolute last resort if you are in debt as , although it take the pressure from creditors away completely, there are many downsides to being declared bankrupt. Your house and many of your possessions will be taken and sold , you will be unable to have your own business and, even after your bankruptcy has cleared, restrictions on all kinds of things will come back to haunt you. On top of that, being declared bankrupt is not free. Professional advice is definitely needed before you decide to choose this option.
Useful Links:
- Solve My Debt
- Debt Managemment and IVA’s
- Managed Debt Solutions
- Write Off Up To 75% Of Your Debts
- Debt Advisory Line
- More Than £15,000 Debt? Debt Advice Online
Although this debt advice has been written based on information available the UK, many of the options are applicable to debt problems in all parts of the world. Best10Tips information is supplied by knowledgeable individuals and whilst every effort is made to ensure that our advice is correct, we do not accept responsibilty for any errors or ommisions within the articles. Always seek professional advice when dealing with debt problems and matters of your own finances.
