What is debt?

How did we get here?

Prevention

Facing Facts

F.A.Q.

Link to Us

Advice

Bills Due

Mortgages

Credit Cards

Bank Loans

Bank Accounts

Court Action

Debt Collectors

Bailiffs

IVAs (Individual Voluntary Arrangements)

Bankruptcy

Pensions

Benefits

Savings

Relatives

Treasures

Case Studies

What do I do?

Credit Status

Useful Links

Your action plan

Plan of Action

To get on top of debt problems you need to plan ahead and deal with matters in a systematic way.

We use the term DDD (Deal with Debt Daily) this means doing something positive EACH DAY to improve the situation, maybe there are no miracle cures or instant solutions saving winning the lottery or having a long lost relative leaves your £100,000 in their will (dream over!!)

First we need to take stock of where we are now, on a simple sheet of paper

List

YOUR ASSETS - what you are worth if you sold everything today

YOUR INCOME - from all sources - earnings, benefits, pensions, lodgers etc

YOUR DEBTS - what do you owe today - list not the monthly costs but the total debt due - check settlement figures for loans on cars as paying off early saves some interest - the amount you owe is NOT x payments at £xx a month

YOUR MONTHLY COSTS for bills and regular payments in total

BREAK INTO WEEKLY COSTS as some bills may be due in week 1 of a month, others at the end. It may help to split the month into 2, 3 or 4.

Look at the cash flow, it may be that all your money comes in at the end of the month when outgoings are earlier in the month, by asking for payments to be made to coincide with income may help avoid missed payments and associated bank charges.

Assess your research

You have collected information and maybe are in for a shock, so ask yourself these pointed questions

• Are your assets less than or more than your debts? (ideally debts 25% or so of your assets) owing more than you are worth relies heavily on income and once this reduces or stops you are "insolvent" and unable to pay your dues.

• What percentage of your total income are the monthly costs? - most of us live on a knife edge with costs bordering on income and little over, ideally 50%-75% costs against income. The higher this is the worse you are - you need to reduce costs and increase income.

What is in the pipeline?

• Have you ordered anything you can cancel without penalty?

• Is any income or monies due to you in the future that you are sure of? if so see if you can speed things up or get part due now.

• Are there any unusually big costs coming up ( a wedding, Christmas ) can you review the budget, cut out or cut down where you can.

List the priorities

Break down your debts

• Those that are in serious arrears and the creditor is being very aggressive and not helpful or sympathetic to your dilemma

• Those which are the most expensive in terms of interest rates and penalties for late payment - look at ways of paying them off totally or to a large degree.

• Those which MUST be paid such as gas, electricity, mortgage etc

• Those which you could cancel, or reduce such as a heavy paper bill.

Which Payments are overdue?

Get to grips with the most pressing, list the debts which are overdue

• By several months and serious action is pending

• By a month or more and letters/calls are very pressing

• Due soon but have no money to pay

Contact the creditors and explain the problem you have (out of work, ill etc) apologise and advise you need to discuss options. They may want you to complete a form called a "statement of means" which will list your income, outgoings and debts, then make an offer.

Chances are whatever you offer they will want more (as much as they can get) if this is unrealistic for you tell them this is "impossible" and you will only let them down, suggest a 6 month period at your level and review then. Be happy with the deal and ask THEM to confirm the deal. if you can make a payment by debit card by telephone, or send money as agreed.

Keep a record and start a small file for each creditor where you are agreeing a delayed payment program.

If you have access to a computer or can get a friend to draw up a list with totals of what you owe and to whom and review each month and in more detail every 3 months to assess progress.

Try and set targets - reduce debt, reduce outgoings, increase income or whatever to improve your overall debt position. It may take 12-24 months but a steady attack on your debt problem will show results - look at how some of our Members have already made headway case studies

Avoid

• Taking on new commitments you cannot afford, do without, buy second hand or rent rather than buy.

• Taking out new loans at high interest which offer a short term fix with long term implications and repayments. These include consolidation loans, remortgages and secured loans

A Summary

Here's a three-pronged action plan for getting back in control:

1. Negotiate. In most cases, where debtors show willing, creditors are willing to come to an agreement. If you contact your creditors to set up a repayment plan, it shows you are serious about tackling your problems. Negotiate with your creditors - most would prefer to receive small regular payments than nothing at all. But don't make promises you can't keep.
2. Cut back. The next step is to cut out all unnecessary expenditure. You may think you have already done so, but high interest payments on credit cards are something you may not have tackled. Many credit card providers will offer zero interest on transferred balances for up to six months - it is a way of deferring problems and getting some breathing space. Just don't forget what happens after six months when the rate goes up - and don't be tempted to add a bit to the debt by going shopping!
3. Budget. The third step is to work out income and outgoings carefully. If you can make changes to your way of life and save some money, do so. Use that money to pay back debts and in the meantime you should stop adding to your borrowing by surviving only on cash or debit cards and pay for everything as you go.