Here at MoneyAware we want to promote wise use of credit, to...
How can I get out of debt?
**To deal with your debts now use Debt Remedy – our free online tool will give you a personal action plan explaining exactly what to do**
If you’re reading this it’s likely there’s a question keeping you awake at night: How can I get out of debt?
And in this digital age you’ve turned to the web to find out, as so many other people do nowadays.
We’ve got over 20 years’ experience helping people get debt free, so here’s our 5-step plan to a debt free future.
Step 1: Face the problem
From experience we know on average people wait a year to get debt help. If you’re reading up about “how to get out of debt” you’ve taken the first step in getting your finances back on track.
The golden nugget of advice is this: free, impartial debt help is the answer. Extending your overdraft, payday loans, credit cards isn’t. If you’re in debt applying for extra credit of any kind usually won’t help.
We’re here to give realistic, practical and achievable ways to get out of debt.
Step 2: Draw up a budget
Budgets are important because you can only ever be made to pay credit debts at a rate you can afford. You should be paying them off with your ‘disposable income.’ This is the money you have left once you’ve paid priorities like rent, mortgage, household bills, food, living costs etc. So seeing how much money you have spare is important.
Step 3: Take stock of your debts
It’s human nature to put off things you don’t want to do. You might have a stack of unopened reminder letters. You might have moved address and not informed your creditors.
Don’t beat yourself up about it, it’s in the past. But knowing now how much you owe now is crucial in sorting out the problem.
Getting your credit file is the clearest way to take stock of your debts. Noddle offers access to your credit file free of charge. It will show who you owe money to, your balances and if you have any County Court Judgments (CCJs). Noddle is free but they’ll probably show you ads for credit – it could go without saying, but ignore them!
Sometimes the credit search can’t locate you. If this is the case don’t panic. Follow our next step.
Step 4: Speak to your creditors
It can be nerve-wracking contacting a creditor but remember:
- Credit companies are businesses not Gods
- People who work in collection departments are simply doing their job
- Don’t be forced to pay more than you can afford towards a credit debt
Armed with those three pieces of information you can contact the creditors with confidence. Inform them you know you owe them money, you’ve fallen into arrears and are taking steps to rectify it.
Ask them if they can temporarily freeze any interest or charges while you seek advice. Then move onto step 5!
Step 5: Get a debt solution
So you want to get out of debt. You’ve drawn up a list of your outgoings. You’re armed with who you owe money to and how much. Now it’s about seeing which debt solution is right for you.
A free debt management plan (DMP) is one way of repaying your debts, an Individual Voluntary Arrangement (IVA) or bankruptcy are others. The best way to ensure you get what’s right for you is to get impartial advice from us.
We offer a debt advice online with Debt Remedy – enter your budget information and it’ll instantly recommend the best solution for you. It’s free, confidential and easy to use.
Or if you’d prefer you can call our Helpline.
The key points to remember:
- No debt problem is impossible – facing it can often be the hardest hurdle
- If you’re struggling, don’t apply for more credit – it won’t help
- Creditors cannot force you pay more than you can afford – you just need to work out how much that is
- Don’t be tempted to pay for debt help – free, impartial advice is always best
- You’re not alone – we’re here to support you!