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How you deal with your debt problems depends a lot on both the size of the debt, and the extent to which the problem has been allowed to build up. For smaller debts, making a few cutbacks may be enough, but more serious debt problems require more drastic action.

Do the maths

To start to deal with the problem, you will first need to sit down and work out exactly how much you owe. Not facing up to the problem means that you will start getting County Court Judgements and worse. As a rule of thumb, if your debt repayments take up more than a fifth of your budget, then you are in the danger zone.

Work out your budget

Add up your income, and then subtract your mortgage payments, bills and other essential outgoings from the figure. It also helpful to check whether you are owed any benefits, tax credits etc.

See where you can cut down on your spending, such as cutting down on nights out, takeaways, and so on.

Share the problem

It will help to tell family and close friends about you debt issues, help and support from friends and family may well help solve the problem.

Deal with the most urgent debts first

Those that carry the most serious penalties for default should be dealt with first. For instance, not keeping up with mortgage arrears will eventually result in repossession, so it is vital to prioritise such debts.

Talk to creditors

This is a better option than avoiding the issue; lenders may be able to help by agreeing affordable repayments.

Don’t borrow more to pay off debts

Although it is advisable to switch credit cards and loans to find cheaper deals, borrowing more money to pay off debts could only lead to more trouble.

IVAs and bankruptcy

You should consider Individual Voluntary Agreements and bankruptcy if you are employed full-time and can be used if you owe more than £10,000 to three or more creditors. bankruptcy. In an IVA which typically repays 35p to 40p in the pound off your unsecured debts while the interest is frozen.

However, secured debts, such as mortgages, still have to be repaid in full, so this may not be the best option if you have mortgage arrears.

In more serious cases bankruptcy may be the only option, though it means that anything you own, plus a proportion of your income will be taken and passed on to creditors. This should be regarded as a last resort.

Sell your house fast

If you are threatened with repossession, a quick house sale may leave you with enough to pay off debts and avoid bankruptcy. Filing for bankruptcy will adversely affect your ability to get credit in future.

With Molae Properties, house sales can be arranged quickly, and there is also a sell and rent back option which may allow you to stay in your house as well.

Latest testimonial

The sale of my property was well managed with regular communication and advice and support provided throughout the process.  The company also provided legal support through one of their panel solicitors which was professional friendly and reassuring during what was a complex sale.  They are trustworthy and reliable and I would recommend this company to anyone looking to sell their property.  Thank you for making this a much easier process.
R. Mangal, Leyton, London, E10

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