General advice on managing financial debt
1. Don't panic and bury your head in the sand
No matter how desperate things seem, there are ways to manage your debts. Ignoring your debt problems will only make them worse. Don't ignore calls or letters from the people you owe money to (your creditors). Contact them to explain why you're having problems. The sooner you do this, the more options you'll have for solving your financial problems.
2. Get advice
There are many local, regional and national organisations that offer free and independent money, housing or employment advice. On these web pages, we can direct you to advisers who can help you work out the best course of action.
3. Pay your priority debts first
There are some debts you need to pay first before others, because the consequences of not paying them can be much more serious. For example, mortgage or rent debts are a priority as if you don't pay these you could lose your home.
4. Work out your monthly budget
Work out how much money you've got coming in and going out of your household on essential expenses like food and bills.
5. Make savings on your household expenses
Look carefully at your spending and see if there is anything you are able to cut down on. For example, you could shop around for a cheaper gas or electricity provider, or look at cheaper mortgage or insurance providers.
6. Maximise your income
Are you getting all the money you're entitled to? There may be benefits available and you don't necessarily have to be out of work to claim them. Anything from home insulation to reduce your fuel bills, to council tax rebates, Tax Credits, or support with school meals may be open to you.
7. Think twice about taking out a loan to pay off all your debts
It might seem an easy opt out, but you may end up paying back a lot more than you borrowed and at very high interest rates. You may not be able to afford the repayments and the loan may be secured against your home, which you could then lose.
8. Buy locally
Businesses are feeling the effects of the economic downturn more than most, and you can help support them by goods locally.