This debt help giude gives you basic advice about debt and simple guidelines for dealing with money problems. It is important not to panic about debt problems but also you shouldn't ignore them - they won't go away.

If you are worried about how to deal with your debts, there is free, confidential advice available on

0845 612 2626

There are four steps you can follow to help you deal with your debts:

Debt Help Step One - make a list of your debts

Before you can tackle a debt problem, you need to collect together information about your money affairs. Make a list of all the people and companies you owe people to (your creditors). You will need the following information for each debt:

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.

It’s a good idea to keep the latest letter or statement for each debt together in one place so that you can easily find them if you need them.

If you've received any court papers or letters that seem urgent, you may need to act quickly. If you are not sure from the papers what you should do next, get advice straight away from an experienced adviser.

Once you've made a list of all your creditors, you need to work out which ones to deal with first. You need to deal with some debts first before others because the consequences of not paying these debts can be more serious than for other debts. The debts you deal with first are called 'priority debts'. The debts you deal with after your priority debts are called 'non-priority debts'.

Debt Help Step Two - work out your budget

List all the income and expenses for your household. Be honest and make sure that the amounts are realistic.

Under income, include:

wages or salaries for your partner and yourself. Put in your net earnings, that is, after deductions. This should be the amount you regularly receive. If the amounts are different each month, average them over three or six months
any benefits you are paid, including Child Benefit and tax credits
maintenance from an ex-partner for you or your children. Include any Child Support from the Child Support Agency
contributions from other members of your family and any lodgers.

Think about the ways in which you might earn extra money or increase your income. You may be able to claim benefits or tax credits. There's a useful website that lists organisations which give grants to people in need. For example, it lists some charities which give grants to people to help pay their bills or buy essential items.

Debt Help Step Three – sort out your priority debts

Don't ignore letters or phone calls from your priority creditors. Get in touch with them as early as possible and explain to them why you are in debt. If you phone, you should follow up the call with a letter, confirming what you said on the phone. Keep copies of any letters you write to them.

If your priority creditors are threatening to take court action or have started to take court action against you and you need a little time to sort out your finances, send them a holding letter explaining your problems. Say that you will contact them again within two or three weeks. Ask them not to take any further action during this time. For more about negotiating with your creditors, see under heading Negotiating with creditors.

When you have worked out how much you have left over after paying your expenses, contact each of your priority creditors and try to make an arrangement to pay back what you what you owe. For example, you may be able to pay an extra bit each month until the arrears are cleared. Or you may not have any extra money at the moment but know you will have a lump sum in three months' time which will clear the debt completely.

If you can’t afford to pay anything to your priority creditors and your situation isn’t likely to get better, the outcome may be very serious. Get advice straight away.

Debt Help Step Four - sort out your non-priority debts

After dealing with your priority debts, you will need to work out how to deal with your non-priority debts. How you deal with your non-priority debts will depend on whether you have any money left over from dealing with your priority debts and paying for essential household expenses like housing costs and food.

If you have money to spare

If you have money to spare, you may have several options for dealing with your non-priority debts.

You should weigh up the advantages and disadvantages of each of these options carefully. Get as much information as you can before making a decision and don’t sign anything until you are sure it is the best option for you. If you have any questions, get advice.

You may have the option of: making offers to creditors yourself – see under heading Making offers to creditors yourself
asking a Debt Management Company to make offers for you – see under heading Debt management plans
applying for a court order that allows you to pay only a proportion of the debt. This is called an Administration Order – see under heading Administration Orders
arranging a legal agreement with your creditors. This is called an Individual Voluntary Arrangement (IVA) – see under heading Individual Voluntary Arrangements (IVAs)
putting all your debts into one loan. This is called loan consolidation – see under heading Putting all your debts into one loan – consolidation

PLEASE CALL 0845 612 2626 FOR DEBT HELP. OUR ADVICE TEAM IS AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK INCLUDING ALL PUBLIC HOLIDAYS