Debt advice

1. Managing money

Preparing a personal budget is the first step to helping you tackle your debt problem.

A personal budget plan will help you to:

  • see what you are spending your money on and where savings can be made - at the same time you can check whether you are getting all the money you are entitled to by using the online benefit calculator on GOV.UK
  • find out how much disposable income you have available after paying your essential/priority payments
  • work out the right solution for dealing with your debts

There are some helpful and easy to use budget planners on the Money Advice Service website and on the National Debtline website.

How a personal budget plan will help you with your debts

Once you have prepared a personal budget and maximised your income you will be able to start to look at your debts and work out how much you can pay to them.

Firstly, you will need to look at your priority debts. Priority debts are debts where non-payment can have serious consequences for you such as the loss of your home, loss of services or goods that are essential to you.

Type of debt Possible consequences of not paying
Mortgage or rent arrears Possession action, loss of home
Gas and/or electricity arrears Prepayment meters being fitted, supply being cut
Council Tax arrears Enforcement officers being sent to your home, attachment of earnings order, deductions from benefits, bankruptcy, imprisonment - for wilful refusal to pay only
Magistrate Court fines Magistrates Court enforcement officers being sent to your home, attachment of earnings order, deductions from benefits, warrant of arrest being issued
Hire purchase, conditional sale, log book loan arrears Loss of car/other vehicle or other hire purchase items

Once you have worked out how much money you have left after priority payments you can then look at options for dealing with your debts and your debt problem as a whole.