Managing Debt and Repayments

Understand Your Debt

The first step to managing debt is understanding exactly what you owe. Write down all your debts in one place, whether it’s a physical notebook or a document on your phone.

List your debts and write down:

• The name of the creditor (e.g., bank, utility company).

• The amount owed.

• The interest rate (if any).

• The minimum payment due each month.

• Any payment deadlines.

• Organise your debts: You can arrange them in order of priority. Priority debts include things like rent, utilities, or council tax, which could have serious consequences if not paid. Non-priority debts might include credit cards or personal loans.

If you find this task too difficult, ask a trusted friend, family member, or support worker to help you gather this information.

Review Your Income and Expenses

Next, look at your income (the money you receive regularly) and your expenses (what you spend each month). This will help you understand your financial situation and whether you can pay off your debts.

1. Track your income: Write down how much money you get each month from jobs, benefits, or other sources.

2. List your essential expenses: Include rent/mortgage, utilities (electricity, gas), food, transportation, and any medical costs.

3. Calculate what’s left: Subtract your essential expenses from your income. The leftover amount can be used to pay off your debts.

If you find it hard to calculate this, there are free online budgeting tools or apps that can help simplify this process. You can also ask for help from a friend or family member.

Create a Budget

Creating a budget helps you track your spending and ensure you can pay your debts.

1. Create a simple budget: Write down your income and expenses each month.

2. Allocate money to debt payments: Make sure to include at least the minimum payments for all debts, prioritising the most urgent ones (like rent or bills).

If you have difficulty sticking to a budget or need extra support managing money, consider using an automatic budgeting app or tools that will help you stay on track.

Communicate with Creditors

If you’re struggling to make payments, it’s important to contact your creditors as soon as possible. Don’t ignore letters or calls from debt collectors.

• Explain your situation: Let your creditors know you are having trouble paying and ask if they can offer a lower payment or extend the deadline.

• Request a payment plan: Many creditors are willing to work with you, offering flexible repayment plans or lowering interest rates temporarily.

• Be honest about what you can afford: It's important to be realistic about how much you can pay, so you don’t fall into further financial difficulty.

If you struggle with communication, it’s okay to ask someone you trust to help you make these calls or even write letters on your behalf.

Prioritise Your Payments

Not all debts are the same, so it’s important to prioritise:

Priority debts (these are essential bills that can have serious consequences if not paid). They include:

1. Rent/mortgage

2. Council tax

3. Utility bills (gas, electricity)

4. Child support or maintenance

5. Income tax or National Insurance

Non-priority debts: These are debts that usually won’t lead to severe consequences if unpaid for a short time, such as:

1. Credit cards

2. Personal loans

3. Store cards

Focus on paying priority debts first. If you have any leftover money, allocate it to non-priority debts.

Consider Debt Solutions

If you’re finding it difficult to manage all your debts, there are different solutions available. Some options may help you reduce or organise your payments:

• Debt Management Plans (DMP): A DMP is an agreement with your creditors to pay a set amount each month, which may be less than your original payments.

• Debt Relief Orders (DRO): A DRO is for people with low income and few assets, where you may not have to pay certain debts for a period (usually 12 months).

• Individual Voluntary Arrangement (IVA): An IVA is a formal agreement with creditors to pay off part of your debt over a fixed period (usually 5 years). It may involve freezing interest or reducing your total debt.

• Bankruptcy: This is a last resort and should only be considered if other options aren’t viable. It can wipe out most debts, but it can have long-term consequences for your credit and financial history.

These options can be complex, so it's important to get professional advice before committing to any of them.

Seek Support and Advice

If you're feeling overwhelmed, there are many organisations that can help guide you through managing your debt:

Debt charities and advice services:

1. StepChange (UK): Offers free debt advice and helps you create a plan for managing your debt.

2. National Debtline: Provides free, confidential advice about managing your debts.

3. Citizens Advice Bureau: Offers free, impartial advice on debt and financial issues.

Mental health support and support for people who are neurodivergent:

1. Mind: Offers support for mental health problems and financial difficulties, and can help you manage anxiety related to debt.

2. Autism Initiatives or National Autistic Society: Can offer advice and support to people with autism on managing finances and debt.

If you’re struggling with your mental health, consider reaching out to a therapist, counsellor, or support group to help you manage any stress, anxiety, or other emotions that might come up.

Take Care of Your Mental Health

Dealing with debt can be stressful, especially if you have mental health challenges. It’s important to look after your well-being while managing your finances.

1. Take breaks: Don’t try to deal with everything at once. Break tasks down into smaller steps and take breaks.

2. Talk to someone you trust: Sharing how you feel with a friend, family member, or support worker can help ease the burden.

3. Practice self-care: Focus on activities that help you relax, whether it’s listening to music, walking, or doing something creative.

Review and Stay on Track

Managing debt is an ongoing process. As you start making payments and seeing progress, take time to review your budget and make adjustments if needed. This will help you stay on track and avoid getting overwhelmed again.

• Regularly review your finances: Set a time each month to check if you’re sticking to your budget.

• Celebrate small wins: Acknowledge when you make a payment or reduce a debt. Progress, even small, is important!

Summary

1. Understand your debt: List your debts and their details.

2. Review your income and expenses: Track what you earn and spend each month.

3. Create a budget: Allocate money for debt payments.

4. Communicate with creditors: Ask for lower payments or flexible options.

5. Prioritise payments: Focus on priority debts first.

6. Explore debt solutions: Consider options like DMPs, DROs, or IVAs if needed.

7. Get support and advice: Reach out to debt charities or mental health organisations.

8. Take care of your mental health: Manage stress and talk to someone you trust.

9. Review regularly: Monitor your progress and adjust your plan.

Final Thoughts

By taking it step-by-step, and with the right support, managing debt becomes more achievable. You’re not alone, and help is available to guide you through it.