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Debt problem

Do You Have A Debt Problem?

If you have a debt problem, it is best to act promptly and deal with it immediately to prevent the debt from growing.

Here are some suggestions on debt management you can use:


1. Make a list

Face up to every debt problem you have and make a list which includes details such as:

  • the amount you owe

  • who you owe the amount to

  • when the debt has to be repaid

2. Prioritize your debt problems

It is not necessary to prioritize your debt problems according to the largest amount owed. Sometimes, the most important debts may not be the ones where you owe the most money.

Prioritize those debt problems where serious court, legal action, or bankruptcy proceedings can be taken against you if you default on your repayments.

  • Priority debt problems may include items such as mortgages, rent, utility bills, and purchase debts on essential goods and taxes.

  • Non-priority debt problems which should not be ignored, but can be dealt with after the priority debts have been taken care of. These may include credit card payments, bank loans, and money borrowed from family or friends.

3. Prepare a realistic budget

The next step to take towards successful debt management is to plan a weekly or monthly budget taking into account your income, your outgoings, and your debt repayments.

Once you have a budget, you may be able to think of ways to increase your income by:

  • making savings by switching to a cheaper utility provider, for example

  • earning more money by getting a better paid job

4. Approach your creditors

After working out your budget, you will know more accurately the amount you can afford to make debt repayments. Debt management can be reached by using several options:

  • Informal arrangements: Contact your creditors and inform them of how you are planning to manage your debt problems. Be honest in what you say and what you can afford to pay. This is not legally-binding, but is a good start.
  • Consolidating your debts: A popular method of debt management is debt consolidation where you combine all your debts into one single debt ideally with a lower interest rate. Be careful about taking out a loan secured on your house as it may put your home at risk.
  • Debt management companies (DMC): You can employ the services of a DMC who will negotiate with your creditors on your behalf in order to reduce your total repayments. The downside is that some DMCs charge a fee which means you end up spending more money to try to clear your debt problems.

Compare debt consolidation providers

 
 
 
 
 
 
 
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