Start Your Debt Recovery In 2016

Debt can be a cause of concern, but there are solutions to such financial problems. Make 2016 the year you go into the black by following these five simple steps.

Start Your Debt Recovery In 2016

Take Control

Acknowledge your debts, and commit to taking positive action in dealing with the issue. Critically assess your financial situation by making a list of your expenses and income to allow you to look realistically at where your money is coming from and where it is going. This written account is known as a financial statement and can be shown to creditors.

Maximise Income and Cut Expenses

Check that you are receiving any benefits you are entitled to and that you are not paying more tax than you have to. You can also consider ways to boost your income such as taking in a lodger and taking on a second job or working overtime.

Just remember not to include any additional income in your calculations until you are actually receiving the money.

When it comes to cutting back on expenses, remember that small changes can eventually lead to big savings. You could also consider balance transfers, if you are eligible, and switching utility suppliers to save money each month.

Prioritise Debts

Try to at least pay your creditors something each month to show willingness to manage your debt. If finances are extremely limited, prioritise your debt according to the penalties you are likely to face for defaulting. High-priority debts are likely to include mortgage or rent payments, utility bills, council tax, Inland Revenue payments and magistrate’s fines.

Contact Creditors

Inform creditors in writing if you are having difficulties, and include a current list of debts and your financial statement.

Once they contact you, the negotiations can begin about managing the debt. Just remember to deal with your most urgent debts first, and do not promise payments you cannot afford.

Long-Term Strategy

Look beyond the short term and work out a plan for the future. This could involve anything from a debt consolidation loan to an Individual Voluntary Arrangement, such as those arranged by An IVA’s remit is that it acts as a formal arrangement to pay reduced amounts.

Other options include debt management plans and even bankruptcy. You could also apply for an Administration Order, whereby you will pay the court and your money will then be distributed.

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