7 ways to deal with your debts

7 ways to deal with your debts

Jonathan Chesterman, advice manager at StepChange Debt Charity, the UK’s leading debt advice charity, shares his plan for tackling debts.

1. Work out what you owe

You can’t solve the problem until you know exactly what you’re dealing with. Get all your paperwork together including bills, payment demands and credit agreements. A lot of the people we speak to struggle to open post as they’re scared of what they might be told, but at this stage it’s really important to know where you are with each debt. Sit down and make a list of what you owe, and to whom, including any interest and charges you may have accrued.

2. Create a budget

This may sound simple, but it can be so easy to lose track of what we spend day-to-day. Make a comprehensive list of all your incomes and outgoings (not including debt repayments). You may want to use your latest bank statement to give you an idea of what a typical month looks like. Remember to budget for things that aren’t always paid on a monthly basis, like service and MOT costs if you own a vehicle, or important occasions like birthdays and Christmas. Try and identify areas you can realistically cut back on – could you switch your energy supplier to find a cheaper tariff, or try using a budget supermarket, for example?

3. Pay priority debts first

If you have any money left over to put towards your debts after your essentials are budgeted for, be sure to prioritise your payments. The creditors who are shouting the loudest aren’t necessarily the ones you need to pay first. Focus on the ones that will have the most serious consequences if they aren’t paid – your mortgage or rent, secured loans, council tax, utility bills and CCJs, for instance.

4. Maximise your income

Having even just a little extra money coming in each month can really help. Make sure you’re claiming any benefits or tax credits you’re entitled to – try this free benefits checker to see what you might be missing out on. You could also try taking up extra part-time work, or consider charging board if you have adult children living with you.

5. Contact your creditors

Always engage with your creditors. Be honest, and explain your current situation. If they can see that you’re making steps to pay back what you owe, they’re more likely to be willing to offer you support, and work with you to agree an affordable repayment plan.

6. Consider all your options

Many people in debt worry that bankruptcy is the only option available to them, but there are lots of solutions out there. A debt management plan (DMP) could enable you to make monthly repayments at a level you can afford, or if your debts are below £15,000 and you are on a low income with very few assets then a Debt Relief Order (DRO) may be an option. An individual voluntary agreement (IVA) is also an option for many as there are fewer risks than in a bankruptcy application.

7. Get free advice

A recent survey told us that over half of our clients waited more than a year between realising they had a debt problem and getting advice. Situations often get much worse in that time, so it’s crucial to seek free, confidential advice from an organisation like StepChange Debt Charity (0800 138 1111) as soon as possible and get that support you need to tackle your debts once and for all.


What are the nation's favourite thrift tips? Find out here. Plus use our Christmas money planner to set a budget for the festive period.