Debt Management
Having a serious debt problem when you are 50 or more is not something any us want. Unfortunately, this is the worrying reality for far too many of our age group. Now, getting out of debt isn’t necessarily easy but it definitely is possible.
So if you are in this position – Don’t Panic!
Debt management can be a frustrating process and making a wrong decision along the way can mean you actually take longer to pay off your debt and end up owing even more. Therefore, it is worthwhile speaking with a specialist debt counsellor from the outset. There are various agencies in the UK with a wealth of experience that can offer you free-of-charge independent and confidential advice, including:
Whether you decided to work with a debt counsellor or do it yourself, you will need to follow these five basic but important steps:
Step 1 Gather Information: The first step is to gather together all the information you have relating to each debt/creditor creating a separate file for each. The information should include:
• | All bills | |
• | Any letters between yourself and the creditor | |
• | The signed credit agreements | |
| • | Court papers and letters | |
• | Any other relevant material | |
Your aim: At the end of this step you should have a separate and complete (as possible) file for each of your debts/creditors.
Step 2 List & Prioritise Your Debts: Having gathered the information you can now list and prioritise your debts.
List Your Debts: Make a complete list of all your debts/creditors noting the following details:
| • | Name and address | |
• | Account/reference number | |
• | Credit agreement number | |
• | Amount owed | |
Where possible you should show the amount owed less interest and any penalty charges with these shown separately. This will help you or your advisor highlight any errors or anomalies.
There is a spreadsheet you can download to help you with this: Club50 Debt Manager
Whilst doing this, it is also a good time to check that you agree with the amount, interest and charges your creditors are claiming, noting any anomalies or errors. If you wish to check that the agreement you have complies with the law a useful site to visit is: www.financialagreementsolutions.co.uk
Prioritise Your Debts: Once you have listed your debts you need to prioritise them into Priority and Non-Priority debts.
Priority Debts are those which must be dealt with first as they have the severest consequences such as:
| • | Repossession of your home | |
• | Disconnection of services | |
• | Imprisonment | |
• | Valuables seized by bailiffs | |
The following are usually considered Priority debts:
| • | Mortgage/Secured Loan | |
• | Rent | |
• | Council Tax/Community Charge | |
• | Gas/Electricity/Water/Telephone | |
• | Maintenance/Child Support | |
• | Magistrates Court Fines | |
• | Hire Purchase Goods | |
Non-Priority Debts are those that have less severe consequences and the creditor’s main course of action is to sue you in the County Court. Those debts considered to be non-priority include:
| • | Overdrafts | |
• | Student loans | |
• | Credit cards | |
• | Unsecured loans | |
Be realistic about how you prioritise your debts as you will probabably need to justify this to your creditors and maybe a court.
Your aim: At the end of this stage you should have a complete single list of each of your debts that details who you owe, what you owe and whether the debt is a Priority or Non-Priority debt.