Coping With Debt

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Debt Those of you who have ever been in debt know that it can be an overwhelming feeling and sadly it is easy for the situation to spiral. There is always a solution to your debt problems. I know it is an easy thing to say, but you really have to put things into perspective when it comes to it. Being in debt is really difficult for some people to handle, but if you ever find yourself in this situation you really must think positive – there are far worse things that can happen in life – and do your best to get yourself out of it!Have an action plan;Ok so I got here – how do I get out? Make a list of all your debtors.

the name and address of the creditor
the account or reference number
the amount you owe
a copy of the original loan agreement you signed.

Put them in a list by order of priority;Priority debts include:

Mortgage or rent arrears. If you don't pay these, you could lose your home
Energy company arrears. If you don't pay these, you can have your fuel supply disconnected
Council tax arrears. If you don't pay these, a court can use bailiffs to take your goods. If, after this, you still have arrears unpaid, you can be sent to prison
Court fines such as magistrates' court fines for traffic offences. If you don't pay these, the court can use bailiffs to take your goods. If, after this, you still have arrears unpaid, you can be sent to prison. Parking penalties issued by local authorities are not priority debts
Arrears of maintenance payable to an ex-partner or children. This includes Child Support you owe to the Child Support Agency. If you don't pay these, a court can use bailiffs to take your goods. If, after this, you still have arrears unpaid, you can be sent to prison
Income tax or VAT arrears. You can be sent to prison for non-payment of income tax or VAT.

If you ever have the misfortune of dealing with debt collection agencies, they will all try to bully you into paying them the most first, or they will threaten you with court action. This is not the case. If you are making every effort possible to repay your debt and are doing so on a regular basis then you should not be harassed for more money.Non Priority Debts;Non-priority debts include:

Benefits overpayments
Credit debts such as overdrafts, loans, hire purchase, credit card accounts and catalogues
Student loans
Money borrowed from friends or family
Parking penalties issued by local authorities.

You can't be sent to prison for not paying non-priority debts. But if you don't make any offers to pay,
without explaining why, your creditors may take you to court. If you still fail to pay when the court has ordered it, your creditors can take further action. For example, they can get another court order which allows them to send bailiffs round to take your property away. This will be sold to cover your debts.Then it is VITAL that you sort out a budget!What have you got coming in every month? What can you afford to repay? If you use excel, then you can find some useful template to work from at the Microsoft Website. Speak to your debtorsNever ignore the threatening letters. Yes it is scary getting a letter threatening you with action, or additional costs, or worse. Most of the time you can come to an arrangement with the debtor BEFORE it reaches that stage.If you ignore the debtor long enough, they will ‘sell’ your debt to a collection agency. If you ignore them, then they threaten you with bailiffs. If you ignore them then they will take you to court. The result = added costs at every stage and this means that your debt mountain grows.

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