Dealing with debt action plan
Taking action
Once you've gone through the process of budgeting and you know what level
of debt you're dealing with and how much you can pay off each month, you'll
need to prioritise your debts. Here's how:
Pay yourself first - you need to eat, get to work etc, so
ensure you have allowed enough to do this - although if you can cut back, for
example, by making your own lunch, you should do this.
Work out which debts are a priority - if you don't pay
your rent or mortgage, you could lose your home, so these debts must come first.
Talk to the people you owe money to, be honest and explain
your situation. Most will be happy you have contacted them and will work with
you to create a repayment plan to suit you.
Don't ignore any of your debts, especially if you've missed
payment as this will affect your credit rating and incur additional charges.
Get help - there are lots of organisations who will be able
to offer you free advice to help you get back on track, see the links below for
useful contacts.
Priority debts
- Rent/mortgage - failure to pay could mean you lose your home.
- Council tax - as its a criminal offence not to pay.
- Utility bills - your gas/electric/water could be cut off.
- Secured loans or second mortgages - you could lose your home if you don't keep up repayments.
- Hire purchase agreements - for things like your car, as it could be repossessed.
Non-priority debts
These are still important, but you're unlikely to go to prison for not paying them.
But if you don't contact the companies you owe money to, they may decide to take you
to court. If you then fail to make payments that have been ordered by the court,
bailiffs can be instructed and may call and remove your belongings. Non-priority
debts include:
- Credit cards
- Store cards
- Overdrafts
- Catelogues
Further help
Take the 6 steps to MoneySense for practical support and tips on dealing with your debt.