Debt Help

Need Debt Help? Here’s a 7-step Action Plan

Did you know the average debt per UK household is £15,400?

That might come as a shock. But debt is a harsh reality for many people, especially those with priority debts that are actively chased by creditors.

But it’s not all doom and gloom, and if you’re here searching for help with debt – you’re in luck.

We specialise in providing quick, easy, and confidential debt advice. In fact, we love nothing more than supporting people like you, who need help with debt. We can assist in transforming your financial situation – no matter how bad things seem right now.  

But more on that later.

There’s lots of information out there, and we don’t want to overload you with financial jargon or leave you feeling more stressed out than when you started.

That’s why we developed this simple 7-step action plan for debt help:

1) Collect Information About Your Debts

To make effective decisions, you first need to know exactly what you’re dealing with – so make a comprehensive list of all your debts.

We know it sometimes feels easier to avoid difficult issues instead of confronting them. It’s a natural human tendency and one that’s especially true when it comes to debt. But thanks to interest rates and late payment charges, this will only make things worse in the long-term.

So trust us, this process will help, no matter how worrying it may initially feel when you see all of your debts together.

Examples of debts you may have include:

  • property rental arrears
  • credit card debts
  • council tax arrears
  • utility bills
  • loans from friends or family

Now go through your debts in turn and add specific details to each. Here’s what to include:

  • the person or company you owe the money too (known as a creditor)
  • how much you currently owe
  • the amount of time the payment has been overdue
  • the interest or charge rate on this debt
  • the collection action taken so far (e.g. have you received letters, gone to court, or been visited by bailiffs?)

2) Check You Have to Pay The Debt (Contact Your Creditors)

In most cases, you will be liable for the debts that you’ve listed. That means you’re legally obliged to pay them.

But there are some circumstances where you may not be liable for paying a debt. Cases where you may not need to pay a debt include: 

  • it’s been over 6 years since you made a payment or had any contact with the creditor (although you could still be taken to court)
  • there was a problem with the initial agreement (for example you signed a contract under duress)
  • you were an additional cardholder (e.g. the debt is in your spouse’s name)
  • if you’re under 18

It’s important that you check liability for each of your debts, so you know if they should be included in your plans for repayment.

To clarify this, it’s often a good idea to speak with your creditors. You should do this unless the time limit for court action has already passed, or will pass soon, and the debt will become statute-barred. This means it can no longer be enforced by the courts.

Typically though, speaking to your creditors will help your situation, even if it may feel uncomfortable. You should directly ask them to:

  • confirm all the specific debt details
  • stop chasing you for payment temporarily while you work out a repayment plan

remove further interest and charges (as you are making an effort to repay the debt).

3) Create a Priority List for Paying Your Debts

The next step is to decide which debts are the most impactful to you (i.e. the ones that can cause you the most serious problems) and deal with these first. These debts are referred to as ‘priority debts’ or ‘urgent debts’. 

From your list of debts, you should now pick out your priority debts so you know where to focus first.

The following are all examples of priority debts:

  • rent arrears
  • mortgage arrears or secured loan arrears
  • council tax arrears
  • gas and electricity bills
  • TV license payments
  • court fines

If you have any of the above debts, these should be your primary focus. Failure to make repayment on this type of debt is the most likely to result in court action and bailiff visits.

This list is not exhaustive, and it’s possible you have other forms of priority debt. It’s also possible that you have multiple priority debts from the list above, and aren’t sure which to focus on first.

If that’s the case… we recommended that you contact us immediately for free debt advice – we may be able to help consolidate your debts into one payment. 

After you’ve developed a repayment plan for these priority debts, you can start to focus on your other, non-priority debts. Although these debts may have less serious consequences, it does not mean they can be ignored.

Examples of non-priority debts include:

  • credit card debts
  • store card debts
  • unsecured loans
  • water bills
  • parking fines and tickets
  • debts to family/friends

4) Consider Options to Increase your Income

Of course, increasing your monthly income can also help reduce your debts. While this may seem like a case of ‘easier said than done’, getting a better-paid job is not the only way to achieve this.

Here are some options to consider:

A) Claiming Benefits & Welfare Assistance

You can use an online benefits calculator to get a quick idea of whether you may be legally entitled to benefits that you’re not claiming.

This is most likely to be the case if you fall into one of the following categories:

  • low income
  • currently looking for work
  • sick or disabled
  • a carer, parent or guardian
  • Pregnant

Plus, you may also be entitled to welfare assistance to help pay for some of your essential living costs. Each local council works slightly differently and what you may or may not be entitled to depends on where you live.

But if you’re entitled to Universal Credit or income-based employment and support allowance, you can usually apply. You’ll need to check your local council website for details.

B) Checking Wage Deductions & Tax

Many people don’t pay close enough attention to their wage slips.

As long as the money comes in, right?

Not so fast. Thousands of people are paying too much tax, or are victim to excess wage deductions. So if you’re currently employed, take the time to review your wage slips and current tax code. Anything that you can’t explain, or looks unfamiliar should be highlighted to your employer or HMRC.

You could also be eligible for tax relief or a tax refund on past payments. Check this out using the links below:

  1. check if you can get tax relief
  2. check if you can claim a tax refund

C) Discretionary Housing Payment (DHP)

If you qualify for housing benefit but still can’t afford your rent, you may be able to apply for a discretionary housing payment (DHP). To apply for this, you’ll need to contact your local council.

5) Reduce Your Living Costs

Reducing your regular living costs can go a long way to helping with your level of debt, so don’t under-estimate the value of this step.  

For example, you may be able to:

6) Know Your Debt Options

Even after prioritizing your debts, increasing your income and reducing your living costs, you may still be dealing with a significant amount of debt. The tactics you’ve employed so far will help with long-term financial management skills – but sometimes you might need extra help.

All the below options are viable ways to reduce your debt, but each has different requirements and there’s no one-size-fits-all solution.

  • Individual Voluntary Arrangements (IVAs) – an IVA is a formal debt solution if you have over £5000 of unsecured debt. Work with an insolvency practitioner to place all of your debts into one pot and make one affordable monthly payment, usually for 5 years.
  • Debt Management Plans (DMPs) – with a debt management plan, a debt management company will deal with your debts and look to freeze any interest and charges on your credit accounts. This is often looked at as a temporary way to help with debt as no debt is ‘written off’.
  • Trust Deed Scotland – if you’re living in Scotland and you have over £5000 of unsecured debt, a Scottish Trust Deed may be the best option for you.
  • Bankruptcy – often seen as a last resort, bankruptcy will completely wipe the slate clean, although it comes with some undesirable consequences.
  • Debt Relief Order – if you owe under £20,000 total, your income is low and you do not have many assets, a DRO may be right for you.

7) Seek Professional Help – Free Debt Advice UK

It’s great to understand the above debt management options, but it’s not always simple to know which is best for your specific circumstances.

We offer free debt advice (UK) to make sure you get the help that you need. We’ll help you to review your financial situation and ensure you make the best decision when it comes to managing your debt.

To do that, all we need is some initial information regarding your bills and lifestyle. Don’t worry if you can’t get some of the information about your bills, your advisor will be able to run a search of your credit files to get this. 

To give you an idea, here’s the kind of thing we’ll need:

Your bills:

  • credit card balances
  • loan balances
  • overdraft balances
  • any other types of debts (such as payday loans, catalogues, etc)
  • 3 months payslips
  • 3 months bank statements
  • proof of ID (driving license or passport)

Your lifestyle:

  • gas and electricity outgoings
  • rent or mortgage details
  • childcare details
  • travel expenses
  • food costs
  • housekeeping costs
  • phone costs
  • entertainment costs

Note: It’s important to be open and honest when assessing your current situation. Our advisors will look to build in allowances for certain expenses, so acknowledging everything you spend could really help you in the long-term.

Get Help with Debt Problems (UK) Today

That’s a lot of information to digest!

Just by reading this guide you already know more about managing debt that most people ever will.

But if you need some extra help to solve your debt issues, it’s a great idea to seek professional guidance to make sure you choose the right option for your circumstances.

Get started for free with our debt calculator tool.