How to Deal With Debt

If you are in debt and have been unable to cope with the situation, then you need a solution right away. The longer you ignore a debt, the worse things get. To help you get started, we have created a list of some of the things you can begin implementing in order to improve the situation. With these tips in mind, you should also consider getting independent advice from a professional to find the best way to deal with the debt issue.

Tips for Dealing with Debt

1. Make a List of What You Owe

First and foremost, you’ll want to sort out just what you owe and who you owe it two. These parties are referred to as creditors and if you owe money, you are called the debtor.

2. Put the Debts in Order of Importance

Debts with the highest importance are referred to as priority debts, and they are not always the biggest debt. A priority debt is one where serious action can be taken against you if you do not settle it. Examples include losing your property, getting disconnected from a service, and even going to jail. Types of priority debts include:

-Utility bills

-Taxes

-Mortgage repayments

-Court fines

-Rent

-Secured loans

-Rates

You need to sort these ones first before the rest. Debts that are considered non-priority include:

-Overdrafts

-Bank loans

-Catalogue repayments

-Home-collected credit

-Money borrowed from friends and family

You cannot overlook these, but you do not have to handle them as a first priority. You can seek help in sorting out your priority and non-priority debts.

3. Create a Personal Budget

If you are struggling with debt, chances are you have a budget that does not suit your lifestyle as well. So, work out a budget and figure out your income and expenses. This will help you know where you can cut back and save money. Also, a budget will help you decide what you can manage to pay your creditors, in a realistic manner.

Again, you can get help from professionals in creating your budget. Also, there are numerous self-help packs and tools online that you can use to achieve the same.

4. Seek Independent Advice

As hinted earlier, there are many ways to deal with debts. You can make arrangements with your creditor or use debt specialists for a more formal approach. Keep in mind that sometimes, there are additional costs involved and terms you have to agree to.

It is imperative to seek independent advice if you want to figure out the best way to handle your debts. Independent free advice is readily available.

5. Talk To Your Creditor

You will want to ensure that you talk to creditors for priority debts first. Once you are aware of what you can manage to repay, you can then talk to the creditors regarding your situation and what you intend to do about it. You can get a debt advisor to do this for you, and sometimes, they do it for free.

Ensure you are realistic about what you can afford to repay and do not think that you will be in a position to pay back more down the line. It is imperative to follow up a call with a confirmation letter of what has been agreed. When applying for a loan it is important to know that you can pay it back.

Again, deal with the priority creditors first. Chances are you will be left with little to nothing to deal with non-priority debts, but you should still hold a conversation with these creditors as well, explaining your situation.

You can tell them that you’ll be able to pay them at some point down the line, but avoid making promises that you cannot keep.

And there you have it, a few tips to help you deal with your debt situation. This is not a comprehensive list of things to do, but it merely shows you the right direction.