Stay in control
There are many effective ways to ensure that you
are in control of your debt and finances. The most important is being aware of
how much you owe, so that you do not forget anything when making your
repayments. Knowing how much you owe can help you to understand where you stand
and can also allow you to appropriately allocate funds to each debt. Credit
reports from credit agencies such as Experian and TransUnion are a great way to see what you have borrowed
and paid back, but it is still important to keep your own personal record. It
is crucial that you do not take on new debt if you are struggling to
pay back what you
already owe, as this can affect any progress you may have made towards managing
your finances.
Optimise your
repayments
Paying off your most expensive debt can often be
the best and most beneficial step to take, as this is usually the debt that
costs you the most money due to high interest rates. But it is important that you are still able to
make at least the minimum payments for the rest of your borrowing, so that you
do not incur late fees which will add to your costs and could affect your
credit file. The best way to be able to ensure you are covering all your debt
is budgeting. Creating a budget shows you how your money is
spent each month and what disposable income you have available after you’ve
paid for your essentials.
Ask for help
Please remember, if you are finding it difficult to
make your repayments you can reach out to organisations such as StepChange and National
Debtline. They offer free
advice and have resources available to assist you with getting back on track.
Setting up a debt management plan allows you to pay off your debts at a rate
you can afford. It is an agreement which is set up between you and your
creditors where you can pay a reduced amount each month off your balance.
Debt consolidation can be another alternative method of support
to help you start paying back what you owe. Debt consolidation involves putting
some or all your borrowing together into one new account and it might work out
that you end up saving money on interest or monthly payments. However, before
you decide to consolidate your debts, it is important to do your research and
find out if it is the best thing for your current situation.
Unlike debt consolidation, debt relief orders are often viewed as a last resort solution as
it is a form of bankruptcy which freezes your debt for 12 months with a chance
of it being written off after this period. However, there are many things to
consider before getting a debt relief order and speaking to your creditors can
be useful to understand how they can help if you can’t repay your debt.