Debt can easily spiral out of control. When faced with debt problems one of the most common mistakes is to try to avoid tackling the subject. The bills wont disappear and if you don’t respond to letters in the post or telephone calls from your creditors then things are only ever going to get worse. Most companies want to distinguish between people who won’t pay and people who can’t pay. If you talk to them, many companies will be helpful. If they are not helpful then you can seek advice elsewhere.

Don’t hide your head in the sand. Write down all of your expenditure on essential living costs and bills and work out what budget you have left to pay your debts. Prioritise your debts. For instance, if you are a homeowner and you fail to pay your mortgage or any other loan secured on your property you could lose your home so this would normally be the number one priority and included within your essential living costs. If you need your car for work or taking the kids to school then that may also be essential. 

Some debts have higher interest rates or carry higher penalties for making late payments so this also needs to be taken into consideration. 

You may be able to look at your lifestyle, analyse your income and expenditure and find ways to tighten the financial belt, free up some of your money and take control of your debt. Unfortunately though, irrespective of how many cost cutting activities you do, you simply just may not have enough income to cover your bills and basic living expenses. Read our guide to establish if you can consolidate your monthly bills into one lower monthly payment or explore how the law can protect you to reduce your monthly outgoings without taking out a cash loan.

Not sure of what debts you have. Get your credit report for free from Experian.