How to deal with debt

During our lives, unless we are exceptionally fortunate, we are all forced into a position of dealing with debt. It is how we deal with it that is important.

The temptation is to just put the task off until tomorrow but this is a bad choice to make, as the situation will grow much worse if just left. Your initial task is to try and sort out what exactly you owe and to whom you owe the money to.

You then need to place your debts in order of importance. Yes ,they are all incredibly important but you will probably discover that the most important debts are not necessarily the largest amounts of money owing.

Look at the repercussions of not paying the debt within the allocated timescale; your high priority debts will be mortgage repayments, taxes, rent and such payments that have been ordered through the courts. If you fail to pay these types of payments on time you could stand to lose your home or face a prison sentence.

The lower priority debts will probably be payments for credit cards, bank loans, money borrowed in good faith from family or friends and catalogue payments. Obviously these payments are not to be ignored but for the present time you need to deal with the higher priority payments initially.

Your next task is to work out a personal budget either on a weekly or a monthly basis. Calculate how much you require to live on. You need to be extremely honest with yourself. There is no point being lenient with the truth because the only person that will suffer is yourself, you will discover you have not left enough money for certain things.

Your personal budget will illustrate how much you can afford to pay off your debts; it might also highlights some of the areas that you can save money on.

Once you have established how much you can afford to pay your creditors, the people you owe money to, simply speak to them. Talk them through your intended plan offering to pay back what you definitely know you can afford. Do not attempt to pay off more than you can realistically afford as this will stand to make matters a whole lot worse with your creditors. Always put everything down in writing and keep a copy for yourself. This way both parties will always maintain a record of the agreement.

You will find that there are numerous organisations available to you offering free and independent advice on debt problems. Do not be tempted to use companies that charge you for their advice, as there is no need to pay for this service.

Your local Citizens Advice Bureau is a good place to begin as they not only offer advice on debt but will also help you through the minefield of legal jargon that most of us mere mortals find completely baffling!

The National Debt line is another organisation that offers free and confidential advice regarding debt problems, some local authorities will too.

It need not be a complete nightmare being in debt, you are not alone most of us have been there at one time or another. The sooner you your debt the better your situation will become.

If you find yourself in unmanageable debt and are considering bankruptcy but you are feeling confused and overwhelmed, Bankruptcy Resource Online will provide you with a step by step guide on the bankruptcy process in the United Kingdom