You should sort out exactly what you owe and who you owe it to. The people you owe money to are known as your creditors. If you owe money, you are known as a debtor.

 

Step two - put your debts in order of importance
The most important debts are known as ‘priority debts' and they aren't always the biggest ones. Priority debts are ones where serious action can be taken against you if you don't pay what you owe. For example, you could lose your home, be disconnected from a service or even go to prison.
Priority debts usually include things like:
mortgage repayments
secured loans
rent
Council Tax
utility bills
taxes
court fines
You need to sort out payments on your priority debts first.
Non-priority debts include things like:
credit card and store card payments
bank loans
overdrafts
home-collected credit - like a Provident loan where the agent collects payments weekly
catalogue repayments
money you've borrowed from family or friends
You can't ignore these, but you don't need to deal with them as a first priority.
You can get help sorting out your priority and non-priority debts for free from organisations like Citizens Advice and the National Debtline.
Which debts to pay off first

Step three - work out a personal budget
Work out a weekly or monthly budget to see what your income and expenses are, it can also show you where you can save money. A budget will help you decide what you can reasonably afford to repay your creditors, so it's important to be realistic.
You can get free and independent help working out your personal budget from organisations like Citizens Advice and the National Debtline. There are also self-help packs and online tools you can use to help you.
Personal budgets - how they can help you
Use the Money Advice Service budget planner

Step four - get advice on the different ways to deal with your debts
There are lots of options for dealing with debts. For example, arrangements you can make with your creditors or more formal ones that debt specialists can organise for you. There are sometimes extra costs involved and conditions you have to agree to.
It's important you get independent advice to help you find the best way to deal with your debts. Free and independent advice is available face to face or over the telephone from organisations like Citizens Advice and the National Debtline. 

 

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