Debt advice - an important first step

13 May 2009

Whatever debt problems you`re up against, getting some professional debt advice is an important first step. Talking to a debt adviser should increase your chances of clearing your debts as quickly (and painlessly) as possible - they can help you steer clear of the `pitfalls` that so many people run into when they start tackling their debts.

Debt advice - the benefit of experience

1. "Which debts are the most important?"
2. "What`s the best way to use my `spare` cash?"
3. "What should I do if I can`t make all my payments?"

To most people, questions like these can be confusing, even intimidating, as they realise that taking the wrong approach can easily make a bad situation worse.

To a professional debt adviser, however, the questions are straightforward - and so are the answers:

1. Your priority debts (mortgage / rent, utility bills, secured loans, etc.) are the most important - the consequences of not paying these debts are far more serious than the consequences of not paying your non-priority debts (credit cards, store cards, catalogues, overdrafts, etc.).
2. Your `spare` cash should probably be used to overpay the debt with the highest interest rate, as this will be growing the fastest. Just check and make sure you won`t be hit with an Early Repayment Charge for this.
3. Once you`ve budgeted for your priority debts, you should contact your non-priority lenders, explain that you can`t make the payments as agreed, and tell them you`re asking all your non-priority lenders to accept reduced payments - `pro rata` payments (based on how much you owe each of them).

Of course, these are just brief answers. A list of bullet points is no substitute for one-to-one debt advice from a professional who can make sure they`re taking your individual circumstances into consideration.

Debt advice - the first step on a road to financial stability

Debt advice is an important first step, but it`s only the start. Once your adviser has helped you draw up a plan, it`s vital you put that plan into action. In many cases, though, getting started can be the bit that takes the most willpower - if you`re overpaying your debts, for example, the feeling of making progress can be all you need to stay motivated...

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