How to deal with problem debt

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If you've explored the usual avenues to get control over your debt, and you're struggling to cope then it's important you know what options are available to you.

Don't panic, things can never be so bad that there isn't a solution. The first step is recognising that things are getting out of hand, and the second step is knowing who can help you.

Start by understanding your situation

Take stock of how much you owe, and how much you of this debt you can afford to repay. Essentially, we need to figure out how much more your outgoings are compared to your income.

Knowing exactly where you stand will aid any conversations you have with the people who are going to help you get things under control.

Next, get your spending and budgeting in check

If you're experiencing problem debt then getting a budget in place is crucial. It will help compatmentalise your expenses, and seeing everything in one place will help you understand where you are spending the most money, and where you need to make some cuts in order to prioritise repaying your debt.

If you're not sure where to start, then try a budget planner to get you started.

Speak to your lenders

Most people who are struggling to repay their debt think that owning up to their lender is the worst thing to do. However, lenders deal with people in this situation everyday.

If you feel as though you're falling behind, and you're worried that you might miss a payment or default then it's a really good idea to give your lender pre-warning.

There are steps lenders might be able to take in terms of rearranging the terms of your loan to help make things more affordable. Preventative action is always easier then trying to find a cure.

Seek professional help

There's lots of charities who offer free, professional debt counselling. They can get to know your personal circumstances, and help you decide on the best course of action. They're particularly helpful if you feel under a lot of pressure from your lender or from debt collection agencies.

Provided you've sought help from one of these debt counselling services, then there is a Code of Practice which means that debt collectors will be ordered to leave you alone for 30 days with no contact.

It can give you the breathing room you need to get your action place together. During this period you can work with the service to negotiate payment freezes and debt management plans with your lender, or they may recommend whether an IVA, DRO or Bankruptcy are suitable options.

Examples of these organisations are;

- Citizens Advice

- StepChange

- PayPlan

- National Debtline

Don't be nervous about asking for help. These are trained professionals who are paid to to get you back on track by finding the best solution for you.

The only drawback is they can take a while to get back to you, since the service is so busy helping lots of people in a similar position. But, there's no time like the present to kick the process off.