Sit down with statements and letters and make a list of which companies you owe money to and how much you owe them.
Once you have an accurate picture of how much you owe to each creditor you can start budgeting.
Use our Budget planner to see how much much you have coming in and going out.
Then prioritise your bills so you pay off the most important ones first – see Dealing with debt to see which these are.
Speak to your creditors as soon as possible
It doesn’t matter whether you’re having difficulty paying your mortgage or rent, keeping up with your gas or electricity bills or repaying money you have borrowed. As soon as you start to have problems meeting payments, it is essential that you speak to the people you owe money to - your creditors - in an organised fashion. Be sure to keep a record of all telephone conversations you have and letters or emails you send.
Tell each creditor that you are having difficulty meeting your bills and explain your situation. If you let them know they may very well be able to help you. They may consider:
- Freezing any outstanding charges
- Offering you a payment holiday until you are back on your feet
- Agreeing to reschedule the payments you owe, or the deadline for payment
- Negotiating a repayment arrangement where you can clear any arrears in instalments
Dealing with payday loan companies
Despite promises to deal with debtors fairly, payday loan companies can be difficult to negotiate with. See this Payday loan survival guide for advice on dealing with payday loan companies.
Negotiate a repayment scheme
Most creditors will be reasonable if you explain your situation to them. So get in touch with them as soon as you start experiencing difficulties to see how you can work together to improve your situation.
There are numerous free debt advice organisations that can help you prioritise your debts and help you negotiate with your creditors. Many also offer free debt management plan services whereby they will help you work out what you can afford to pay and come to an agreement with some of your creditors about how much you can pay each month.
They can help you decide which, if any of the options below may be suitable for you, for example:
If you need help, contact The Royal British Legion's Benefits and Money Advice service. For other free debt advice organisations see Where to get help if you are in debt.
CASHflow – A recognised way to negotiate with creditors
You may be able to use a free advice process called CASHflow to help you negotiate with your creditors. Using CASHflow shows that you have taken advice about your debts and worked out your repayments in a fair way. This can make it more likely that your offers are accepted.
In order to access CASHflow you need to speak to one of the free advice organisations that use it, which include National Debtline, many Citizens Advice Bureaux and local advice agencies - see Where to get help if you're in debt.