Taking the First Step

If the debt warning signs have indicated that you have debt troubles, then it's time to take some positive action. The major problem most people have is not taking their debt seriously enough. It may seem easier to ignore those unpleasant-looking envelopes, than it is to open them and see the full extent of the problem. However, leaving bills unopened doesn't help to solve the debt, and it certainly doesn't stop us worrying about it.

To find a way out of your difficulties, you first need to see how big the problem is. This is in some ways the most difficult step to take, as it means facing the problem head on - something you may have been trying to avoid doing for some time.

You'll need to make a list of all your current debts and the other things you are spending your money on, and all your forms of income. This list will show you how large the problem is, and how much money you have available (if any) to start repaying your debts. It will also provide a basis for discussions with the people who are chasing you for payment, as you will be able to use it to convince them that what you are offering to pay them is the absolute maximum you can afford. We will look at this process in more detail in our Managing Your Debt section.

Having worked out your budget, you must look at it carefully, calmly and above all, honestly, and try to look at ways to reduce your debt. This will involve maximising your income and minimising your spending.

It's very important to understand the law concerning debts, to know exactly what your rights are. There are various rules when it comes to repossessions and evictions, and you should make sure that your creditors don't use your current vulnerability to take advantage of you.

The main advice though, is DON'T PANIC! There are many places where you can obtain advice concerning your debts, some of it for free. The sooner you seek advice and put it into practice, the easier the problem will be to solve.