If you're in debt and you are finding it hard to cope, it's important to deal with the problem straight away - the longer you ignore your debts, the worse the situation becomes.
Make a list of everything you owe
The first job is to sort out exactly what you owe, and who you owe it to (your creditors). You then need to put these debts in order of importance.
The most important ('priority') debts aren't necessarily the biggest ones. Priority debts are ones where serious action can be taken against you if you don't pay what you owe. You need to sort out payments on your priority debts first.
Priority debts
Priority debts are things like mortgage repayments, secured loans, rent, Council Tax, utility bills, taxes and magistrates’ court fines.
If you don't sort these out, there's a possibility you could lose your home, be disconnected from a service or even go to prison.
Non-priority debts
Non-priority debts include credit card and store card payments, bank loans and overdrafts, home-collected credit (such as a Provident loan where the agent calls out and collects the payments weekly) catalogue repayments and 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.
* Which debts to pay off first
Work out a personal budget
To find out what debt repayments you can afford, work out a weekly or monthly budget to see what you need to live on. It's important to be realistic and honest with yourself.
Your budget will show how much money you can afford to commit to paying off your debts. Your budget may also show you where you can save money.
Help with your personal budget
National Debtline provides a free self-help pack and leaflets, including help on how to work out a personal budget. You can download these from its website or ask for them to be posted to you by calling the helpline.
What options do you have for dealing with your debts?
There are lots of options for dealing with debts. It is important that you look at what is best for you before you take action. Before you talk to your creditors, get free, independent advice about your options.
Talking to your creditors
Once you know what you can afford, you can talk to your creditors about your situation and what you're going to do about it. Offer to pay each debt off in a way you can afford - it's important not to offer to pay more than you can afford, and not to assume you'll be able to pay more in the future.
It's important to follow up a phone call with a letter confirming what you said and agreed.
Make sure you deal with your priority creditors first. You may have little or nothing left to offer your non-priority creditors, but you should still talk to them, explaining the situation. You may be able to tell them that you will pay them back at some point in the future - but don't make promises you can't keep.
Please visit the Direct Gov website if you are struggling with debt problems, www.direct.gov.uk