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Step 1 - Getting started
Although there are many different ways of dealing with debts, depending on your situation, only one or two options may be available to you. However, no debt problem is insolvable!
No matter what your circumstances are, there are a number of essential steps that you will need to take to effectively deal with your debt problem. The first of these steps is to sort through all of your paperwork.
In order to successfully deal with a your debts, you will need to gather and collect as much information as you can find to illustrate your financial position. Only when you have gathered this information can you develop an effective strategy for dealing with your financial problems.
This involves collecting together all of your unpaid bills, bank statements, loan agreements, letters from your creditors, credit card statements, pay slips, unopened mail benefit or pension books, and any other documents that you can find that relate to your finances.
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The following list can be used as a rough guide as to what documents you will need to gather together. Of course, not everyone’s situation is the same, so you may not have some of the items listed (or you may have thrown them out!). If this is the case, don’t worry – just collect as much many of the items as you can together. If you can, try and find the following:
- Your last 4 to 5 pay slips
- Your Benefit or Pension books (and any letters relating to them)
- Mortgage details
- Secured loan details
- Details of Rent (such as a rent book or current tenancy agreement)
- Details of Ground Rent or Service Charges
- Council Tax bills (and any letters relating to them)
- Gas and Electricity bills for the past year (and any letters relating to them)
- Water charges bills (and any letters relating to them)
- Details of any insurance policies – Life, Buildings, Contents, Endowments, etc
- Details of any Occupational, Personal or Stakeholder Pension policies
- Your last 4 to 5 telephone bills
- Bank Statements
- Credit or Charge card statements
- Store card statements
- Details of any catalogue or Hire Purchase (HP) agreements
- Details of any Personal Loans or Overdrafts
- Any court papers that you may have
- Details of any other company or person (including family members) that you owe money to
- Any other information, letters, papers or bills that you think may be important
While you are collecting all of this information together, you should try to separate all the letters, bills, statements and so on, into different piles so that you have one pile for each creditor or collection agency who you owe money to, with the most recent letter, bill or statement at the top.
Take note
Once you have sorted through all of your paperwork, you should start to go through it and make a list of everyone you owe money to (legally called a ‘creditor’) and their contact details. You should attempt to note as many details as you can about each debt. If you can, you should try and record the following details:
- The name and address of each creditor (or collection agency) – These details are essential as you will need to contact your creditors to let them know that you are experiencing difficulties.
- Account or reference numbers – Most creditors will use an account number, a reference number or both to access their records. You should make a note of these numbers (normally printed on any correspondence they send you), as you will need to quote them when you contact your creditors.
- The name(s) shown on the bill – It is important that you make a note of whose name is printed on the bills, as this will determine who is liable for the debt. It can be your name, just your partners, or both.
- The outstanding balance – You should make a note of the last known balance. You can obtain this information by checking the last piece of correspondence you received from the creditor, such as a bill or statement.
- Brief details of the debt – You should also make a note of what type of debt it is (e.g. credit card, loan, mortgage, etc) and the last date that you had contact with the creditor.
Your creditor list will be handy when you start to contact your creditors. We have provided a blank creditor list for you to print off and complete (depending on the number of creditors you have, you may need to print more than one!) – or you can just make your list with a pen and paper, it’s up to you.
Please click here to download a blank creditor sheet
Once you have completed your creditor list, you will need to start dividing your debts into two categories – your priority and your non-priority debts. For more information on Priority and Non-priority debts, please click here
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