It can feel very stressful and troubling to find yourself in debt, but remember the sooner you asses your situation and seek advice, the easier it will be to deal with it.
The first thing you should do is write a list of all your unpaid debts, including bills or money owed to friends and family. Also include any bills you might not yet have fallen behind with but feel you’re struggling with, for example if paying them means you’re left short of money for other essential things each month.
Bills you’re responsible for
As a rule of thumb, you will be responsible for all bills that are in your name. There are a few exceptions to this, such as if at the time you took out the debt you were under the age of 18, you were suffering from mental health problems, or you were persuaded to take out the debt by another person. A debt adviser will be able to help you with these exceptions. If more than 6 years have passed since you made a payment or wrote to a creditor, you should speak to an adviser.
If a bill or debt is under more than one name, you will be jointly responsible for paying it with the other named person, and either one of you will be responsible for paying back the full amount if the other person is unable, or unwilling, to make repayments. If this happens, give the creditor the contact details of the other person so they can contact them directly to ask for payments.
There may be some circumstances where a debt is under yours and someone else’s names, but you need to keep using the service the debt relates to, for example a debt for rent or mortgage costs on your home. In this case you should seek free housing advice from an appropriate organisation about your right to remain in the property.
If you’re not sure about all of the debts you might owe, you can get a credit history report which will give you details of all the debts under your name, including any join debts.
Working out your budget
Putting together a budget is the best way of looking at your financial situation, including how much money comes in and where it goes out again. It will highlight areas where you might be able to make savings and will indicate how much money you might have left over to put towards paying off debts. Many creditors will ask for a copy of your financial statement (budget) as part of their negotiations regarding any debts you owe them. Your financial statement will also be used by debt advisers to look at your best options for managing your debts.
Begin your budget by writing down your income. Then write a list of where you spend money each week or month. Try to be as thorough and honest as possible, otherwise your budget is unlikely to work and you’ll be unable to keep to any arrangements you make with creditors. Include all your regular household bills, but write down the amount that you should pay each week or month if you weren’t in arrears with payments. List any arrears or debts you have separately.
Once you have this list written down, you might be able to spot areas where you could make savings or reduce debt.
Another thing to think about is checking that you’re receiving all of the benefits and tax credits that you’re entitled to. This might include help with rent or council tax. If you have children and are separated from their other parent, and you don’t currently receive child maintenance from them, you could arrange setting up regular payments from them, with help from Child Maintenance Options.