How to Sort Out Your Debts

How to Sort Out Your Debts

If you are having problems with debt then don’t panic, but also don’t ignore the problem. In order to deal with debt you will need to:

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  • Sort out how much you owe
  • Determine the most urgent debt
  • Determine if you have money to pay debts off and how much you have
  • Determine how to deal with less urgent debts and how to pay for these
  • Contact your creditors and make arrangements to pay back what you owe.
  • Find out what your options are if you do not have enough money to pay of your debt.

Sort Out How Much Money you Owe

You will first need to know how much money you owe. Make a list of all the people and companies that you owe money to. Get the name and address of the creditor, the account or reference number and a copy of the original loan agreement that you signed.

You should keep the latest letters or statements for each debt in one place so you can find them easily.

Your Most Urgent Debts

Once you have created your list you will need to determine which debt is the most urgent.

There are some debts that are more urgent then others because they have serious consequences when they are not paid. These are called priority debts.

Priority debts include:

  • Mortgage or rent
  • Gas and electricity
  • Council tax
  • Court fines
  • Child maintenance
  • Income tax or VAT
  • TV license

You need to think hard about what debts are the most important ones.

Non-priority debts include:

  • Credit debts
  • Water and sewage charges
  • Benefits overpayments
  • Student loans
  • Parking penalties
  • Borrowed money from friend sand family.

Once your debts are sorted into urgent and less urgent ones you will need to figure out of you have enough money to pay them off by creating a budget. You can also get advice from a debt counselor.

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