How to Conquer Your Debt

Personal debt can be daunting, here’s how you can get help.

By Emma Meakin

There are times when we all need to make our pounds stretch a little bit further. Sometimes we need to take on that extra line of credit. But trouble can arise when it comes to paying our creditors back.

It's the repayment that causes anxiety when it seems there's no way out. Yet there are various options available to help you consolidate your debt and get your repayment back on track.

Why not speak to your creditors?

It sounds obvious but when you have those demand letters hitting your doorstep, it's easier to hide your head in the sand and hope they'll go away. But this really isn't the best option in the long run. If you don’t engage with your creditors and ignore them, they'll escalate their collections activities and you could end up in court - or worse - losing your house.

If you keep your creditors updated on your position, simply by calling them, they're probably going to be reasonable. A creditor is more concerned with brokering repayment than issuing court claims. If you're honest about what you can pay and when, they'll work with you to ensure a positive outcome for all involved.

Debt management plan

A debt management plan is an arrangement between you and your creditors, which sets out the agreed repayment plan for your debts. A plan is appropriate when you can make small monthly repayments or you need a repayment break to allow you to get back on track, and pay your creditors after a period of a few months.

You can only utilize a debt management plan if you have unsecured debt. This is to say, debt that hasn't been guaranteed against your property, an asset or a third party's assets.

Utilizing a debt management company

You can establish this plan between your creditors yourself or by using a debt management company, which will liaise with your creditors on your behalf. If you choose this route, they'll charge you fees for establishing and conducting your plan, but they'll take over the management of your debt, taking the burden from you.

The Money Advice Service is a good place to start when looking for a debt management company - it offers both national and regional firms' details. If the company you use is registered with the Financial Conduct Agency (FCA), you can ask them for advice and to escalate your complaint.

If a debt management plan isn’t for you and you wish to know about the other debt consolidation options, why not read our other articles on managing debt on The Knowledge Hub?