Getting Out of Debt - Where to Start

When struggling to deal with debts it can be difficult to know what to do or who to turn to for help and advice. Companies advertising on daytime television, in the newspapers and all over the internet, each claim to offer "independent" and "best" advice - but do they really have only your best interests at heart, and are they giving you value for money?

Whilst fee-charging debt management companies can provide a good service, we would certainly only recommend paying for a debt solution if you are unable to deal successfully with creditors yourself, or cannot get the help you need from a charity or free-service provider.

The purpose of this site is very simple, to remove the uncertainty surrounding how, and where, to seek debt help. By following our "5 Steps to Resolving a Debt Problem" you can be sure that you have utilised every available form of debt advice and have approached the problem in the most cost effective way.

5 Steps to Resolving a Debt Problem



Step 1. Carry out a Personal Financial Assessment

Confirm what debts you actually have

Before you do anything it is important you understand exactly what your situation is. It is not uncommon for people suffering debt worries to bury their head in the sand, and if this applies to you then you may not even be aware of exactly what debts you have.

The first thing to do is make a list of all your debts. This should be available from your regular statements but, if necessary, contact all of your creditors and get the following information from each:

  1. Full outstanding balance
  2. Current monthly payment amount
  3. Minimum monthly payment amount
  4. Current interest rate (APR)

Putting together this information is the starting point for any action and will be required whether you attempt to deal with your debts yourself, or via a 3rd party advice service.

A quick change you might make, having put this information together, is to reduce any low interest rate creditors to the minimum payments so that the difference can be paid to higher interest rate creditors. Remember it is always in your best interests to pay your highest interest rate debts fastest

Put together your Personal Financial Statement

The next step is to sort out your income and expenditure, i.e. how much money you have coming in and how much you are spending. The aim here is to maximise your income whilst at the same time reducing your expenditure, giving you more 'disposable income' - the amount you can afford to pay each month towards your debts.

Putting together a Personal Financial Statement can be complicated so, to make things simpler, we’ve put together an easy-to-use online tool to help you:

    Launch myFinancialStatement    

Once you have completed your income and expenditure it is always worth spending a bit of time looking at the figures and seeing where you might be able to make savings or increase your income in order to maximize your monthly disposable income.

Click here for more tips on how to maximize your monthly disposable income

Step 2. Discuss your situation with your creditors

Now is the time to contact each of your creditors and let them know that you are having difficulty maintaining the payments towards your debts.

Using the income and expenditure document you put together in the first section you should be able to demonstrate that you are genuinely struggling, and present a proposal for reduced payments and the freezing or lowering of interest.

When speaking to your creditors make sure you are realistic about what you can afford to repay and don't assume you'll be able to pay back more in the future. If you do reach any agreement to lower payments, freeze interest etc then it's important you follow up the call with a letter to the creditor confirming what has been agreed, and asking for written confirmation of the same.

If a creditor only agrees to a temporary change to your repayments (for example for 6 months) then make sure you mark down the date it ends, and remember to be proactive and contact them to reassess the situation before they do.

Step 3. Research which debt solutions may be suitable

You should now have a clear picture of how much debt you have and how much you can afford to pay towards it each month, so it is time to do some research to get a basic idea of which solutions may be appropriate in your situation.

In most situations there will be a number of options available and each option will have its own advantages and disadvantages, so doing some research before speaking to your creditors or seeking any 3rd party debt advice will help you to avoid being "sold" a solution that isn't right for you.

Click here to compare the main features of each debt solution

Self Help Debt Consolidation Debt Management Administration Order IVA Debt Relief Order Bankruptcy
Suitable unsecured debt levels Any Any Generally £3k+ Upto £5k Generally £10k+ Upto £15k Any
Length of time No fixed period No fixed period No fixed period Variable, until last payment made. Usually 5 years Usually 1 year Usually 1 year, but you may need to make payments for up to 3 years
Clears debt No No No Only if the court makes an order for this Yes, when the terms of the IVA are completed Yes, after 12 months debts included in the DRO are discharged. Yes, once discharged for all debts included in the Bankruptcy
Legally binding No Only on debts repaid in full Only on debts repaid in full Yes Yes Yes for all creditors included in the DRO application Yes
Protection from action
by unsecured creditors		 No Only on debts repaid in full No Yes Yes Yes Yes
Protection from action
by secured creditors		 No No No No No No No
Effect on
employment		 Probably none Probably none Probably none Probably none Probably none Possibly Possibly
Affects credit rating Yes Probably Yes Yes Yes Yes Yes
Home at risk? Not if mortgage payments are maintained Not if mortgage payments are maintained

Not if mortgage payments are maintained

 Not if mortgage payments are maintained Possibly. You may be required to remortgage in the final year of an IVA to release equity. No, homeowners do not qualify for a DRO. Yes

You can also use our Q&A service to find the answers to many common questions. If the information you need isn't already available, you can simply post your own question (you do not have to give your real name) to have it answered by an expert.

Recent Visitor Questions

Got a question? Ask the experts for an answer!

Once you have researched your debt problem, the potential solutions available and asked any questions you may have, you are ready to move on to the next step in our process

Step 4. Speak to a charity / no-fee DMP organisation

If, having already approached your creditors yourself, you find you are still struggling with your debts then now is the time to seek third party advice. There are a number of Government funded or charitable advice centres as well as companies who won’t charge you a fee directly for their services and these should be your first port of call.

When you contact these organisations be sure to have your list of creditors and your income and expenditure document to hand as it is likely you'll need to provide this information to them in order for them to give you advice on your options

CCCS Review

CCCS

The CCCS is a registered UK charity providing assistance to people in financial difficulty. It offers a free national telephone service as well as ten regional centres allowing it to service people throughout the UK.

Tel: 0800 138 1111
Available: Mon - Fri 08.00 - 20.00
More Information: Click Here

Citizens Advice Bureau Review

Citizens Advice Bureau (CAB)

The Citizens Advice service helps people resolve their legal, money and other problems by providing advice and information via 394 Bureaux across England and Wales, all of which are are registered charities.

Tel: N/A - visit www.adviceguide.org.uk to find your local CAB.
Available:
More Information: Click Here

Community Legal Advice Review

Community Legal Advice (CLA)

Community Legal Advice (CLA) is a free and confidential service paid for by legal aid. People living on a low income or benefits, may be eligible for legal aid to get free specialist advice on various areas, including debt

Tel: 0845 345 4 345
Available: Mon - Fri 09.00 - 18.30
More Information: Click Here

Debt Advice Foundation Review

Debt Advice Foundation

Debt Advice Foundation is a debt advice and education charity registered in England and Wales (1095705) that was established in 2002. The charity has developed a range of education guides aimed at schoolchildren and has opened the UK’s first dedicated Money Education Centre.

Tel: 0800 043 40 50
Available: Mon - Fri 08.00 - 20.00, Sat 09.00 - 17.00
More Information: Click Here

National Debtline Review

National Debtline

The National Debtline (Money Advice Trust) is a registered charity providing free confidential and independent advice on how to deal with debt problems to people in England, Scotland and Wales.

Tel: 0808 808 4000
Available: Mon - Fri 09.00 - 21.00, Sat 09.30 - 13.00
More Information: Click Here

Clearstart Review

Clearstart

Tel: 0800 988 9345
Available: Mon - Fri 08.00 - 21.00, Sat 09.00 - 17.00, Sun 10.00 - 16.00
More Information: Click Here

Payplan Review

Payplan

Tel: 0800 280 2816
Available: Mon - Fri 08.00 - 21.00, Sat 09.00 - 15.00
More Information: Click Here

Step 5. Get help from a fee-charging debt company

If, having exhausted all the steps above, you are still struggling with your debts you may decide it is worth contacting a fee-charging debt solutions company.

DIY Debt Help is operated by Bridgewood Financial Solutions who are passionate about providing good quality, ethical debt advice and solutions, as well as being one of the only commercial companies in the industry who do not charge any set-up fees.

Bridgewood provides support to individuals across the UK and would be delighted to help you resolve your debt problem.

If you would like to speak to Bridgewood you can call them on freephone 0800 987 1010, available Monday - Friday, 9am - 6pm or visit their website for more information by clicking here.

Compare fee-charging debt companies to find the right one for you

Most, if not all, companies offer free advice, however at some point there will be a fee involved and it is important before you commit to anything you are comfortable with both the level of fee charged and the quality of service provided.

By entering you proposed monthly debt repayment below you can compare what fees each company charges and make an informed decision on who to contact

Find the best value fee-charging debt companies

(Enter to the nearest pound. Minimum £100)

We would recommend speaking to at least 3 companies before committing to one for a debt management plan, so that you can decide which company gave the best service and you will be most comfortable dealing with going forward.