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 are a number of debt organisations that offer free, confidential debt help advice.

There are four stages you can follow to help you deal with your debt, make a list of your debts, work out your budget, sort out your priority debts, sort out your non-priority debts.
Before you can deal with your debt problem, you need to make a list of all the people and companies you owe people to (your creditors).

Keep all paperwork together in one place so you can easily find them.
Once you've made your list, you need to work out which ones to deal with first – these are called ‘priority debts’ and include mortgage or rent arrears, fuel arrears, council tax arrears, court fines such as magistrates' court fines for traffic offences.

Non-priority debts include benefits overpayments, credit debts such as overdrafts, loans, hire purchase, credit card accounts and catalogues, student loans, money borrowed from friends or family.

You can't be sent to prison for not paying non-priority debts.
The next step is to create an income and expenditure form for your household. Under income, include: wages for you and your partner, benefits you may receive, maintenance for your children or you, child support, contributions from lodgers.

Under expenditure, include: housekeeping, housing costs, council tax, gas, electricity & water, telephone, travel expenses, childcare, tv license, clothes, medical & dental and savings for the replacement of essential household goods.

When you've added up all the figures, you'll see if you have any money left over to pay your debts.
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.

After dealing with your priority debts, you will need 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, you could make offers to creditors yourself, speak to a debt management company to make offers for you, apply for a court order that allows you to pay only a proportion of the debt (administration order), arrange a legal agreement with your creditors (IVA) or put all your debts into one loan (consolidation).

If you have little or no money left after you have done your budget, the options you will have would be to ask your creditors to write off your debt or apply for bankruptcy.

You are allowed to negotiate with your creditors and most creditors will consider any reasonable request or offer of repayment that you make. Sometimes, you need to contact creditors several times before they will agree to what you are asking.
 

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