Managing Debt

In today’s economic climate, more and more people are finding themselves in financial difficulties, and with increasing burdens, such as redundancy and divorce, many are struggling to keep up with their debt repayments. Unfortunately, creditors will not always know about individual circumstances, especially when some old debts are sold on to third party companies.

When repayments become overdue, the constant barrage of letters and phone calls from companies looking for repayment can become a very stressful experience, one which many are unsure how to handle.


The first step to avoid problems with creditors is to establish how much they cost per month and then introduce a strict budget, avoiding any unnecessary expenditure whilst making repayments. The second step is to then prioritise which debts should be paid.

Mortgage/Secured Loans/Rent

The most important repayments should be towards a mortgage or any secured loans, as should these go into arrears, there is a possibility the individual may end up losing their home. In the case of a tenant, keeping up rent repayments is equally as important, as a landlord could take an individual to county court requesting eviction, and the outstanding rent will still be owed.

Council Tax and Utility Bills

As with any tax, non payment of council tax can be taken very seriously and therefore it is important to keep up with repayments. However, if there is a serious issue with paying, it is always worth contacting the council as soon as possible as they may be able to help such as Council Tax benefit if appropriate.

Non payment of utility bills can result in the service being cut off, so essential utilities such as gas, electricity and water should be considered a priority. If a phone is considered an essential, such as for a business, then this should also be prioritised as such.

Magistrates court fines/Maintenance/Child Support

If any of these are left unpaid, then it is possible that a bailiff could be sent to seize goods to the value of the amount owed, such as a television, car, sofa etc. If the goods don't cover the amount outstanding, then the remaining debt is still owed.

Credit cards and overdrafts

Credit card and overdraft debt could be considered as lower priority debt in that an individual will not go to prison or lose their home if they are not paid. However, these creditors could get a court order to enforce repayment, often with additional costs added. If the debt remains unpaid then there are other options and enforcements that may occur. This could also apply to personal unsecured loans and store credit.


If budgeting and prioritising is no longer keeping the creditors at bay, it is vital that the individual speaks to all of them to advice of their circumstances. It may be possible to negotiate a fair repayment plan with each of them. Failing that, it may be worth considering a debt management plan, or in more severe situations, an individual voluntary agreement. In all cases, there are many people that can offer advice on the best course of action, from the Citizen’s Advice Bureau (CAB) to the Consumer Credit Counselling Service (CCCS) and National Debtline.