Debt Help Consolidation - article on debt problems.

It is important not to panic about debt problems but also not to ignore them - they won't go away. You have to look at your debt problems and decide how bad your debt problem is.

Before you can tackle a debt problem you need to collect together information about your money affairs and follow some simple steps.

Make a complete list of your debts. Decide which ones are the most important to tackle first, this may be based on interest rates or pressure that the creditor is applying.

Work out your income and expenditure. Be honest and make sure that the amounts are very realistic. Your resulting budget will show you if you have any money left over to divide up between your creditors. You may even be able to identify where you can make some savings.

Do not ignore creditors' letters or phone calls. Contact your creditors as early as possible and explain to them why you are in debt. If you phone, remember to make a note of the date and time of the call as well as the name of the person you have spoken to. You should follow up the call with a letter, confirming what you said on the phone. Send all the creditors a copy of your budget and the list of your debts.

If you have only a small amount of money available for your creditors after your essential spending, you may have to offer all of this to your priority creditors. You could have very little, or nothing, to offer to non-priority creditors and you should explain this to them.

If a creditor is pressurizing you for payment, it may be because they are not aware of your financial circumstances. If you tell them creditor about your difficulties, they may agree to accept reduced payments from you. In some rare circumstances, a creditor may give you a short payment holiday.

The creditors will want details of your family's income and expenditure. How you deal with your debts will differ, depending on whether you have any income to spare after you have paid your mortgage or rent and met the costs of essentials like food, clothing and transport. You should also look at whether you have any assets that are worth selling, and whether your situation is likely to get better or not.

If you have only a couple of non-priority debts, you could consider transferring the debts to another account which charges a lower rate of interest. However, paying a lower rate of interest can mean that you pay off the debt over a longer period of time.

Debt Problems