Recovery and Insolvency Services

Dealing with Debt

Take advice from your local authority, citizen’s advice bureau or an insolvency practitioner.  Be extremely wary of advice from creditors (who will be mainly interested in securing repayment for themselves) or debt management companies who will take payments from you but may not be able to negotiate with creditors on your behalf. The creditors may refuse to deal with them.  The debt management companies are paid by you either directly (fee) or indirectly (commission), and in either case there is less money for you to offer the creditors.

If you are not in arrears but are simply overwhelmed with the total amount you owe, try “snowballing”. Make the minimum payments to everyone but throw any spare money at the debt with the highest interest rate.  Once you have paid that one debt off, your will see progress and can choose another target.

If you are negotiating with your creditors, you need to be open and honest with them.  They will want details of your assets and other liabilities as well as your income and expenses.  You need to also consider providing them with details of your partner, as they are almost always financially associated with you.  The Debt Arrangement Scheme may help force your creditors to accept payment by installment, but you have to be able to pay them in full. See the DAS website for further details.

Do not make unrealistic offers.  If you make an offer and it is accepted, you should not expect a second chance if the current arrangement falls through.  Work out how much you need to pay your necessary household bills and divide what is left amongst your creditors in line with how much is owed to them.  Bear in mind that you have to pay ongoing amounts as well as make inroads into the arrears.  If they can see that you are reducing the amounts, however slowly, then creditors are more likely to be sympathetic. But you should not struggle with insurmountable debt. If interest on the debt means that your payments are not reducing the balance then the time has come to tell the creditors that unless they freeze the interest you will have to consider a trust deed or sequestration.

There are sources of free advice.  Use them!

Sources of free advice 

For advice on dealing with debt contact your local authority or: