DIY Debt Plan
This is a guide to dealing with low to moderate debt with numerous unsecured creditors. There are 5 important steps you need to do first, however, it is vitally important that if this is going to take time to complete then at least get in touch with your creditors first and tell them what you are doing; they will understand.
1 Find out who owes what and to whom
Your first job is to establish exactly how much you owe and to whom in unsecured borrowing, this is credit cards, loans and bank overdrafts and make a separate list
- in your name only
- your partner's name only if applicable
- those in joint names, if applicable
2 Establish what loans are secured
Such as mortgage, loan on a property and hire purchase. Also identify other priority creditors, utilities, council tax. Remember if you do not pay secured creditors you may lose the security and if you don't pay priority creditors such as gas, water you may lose the services they provide. Make this list separate to your unsecured creditors.
3 Disposable income
This is the amount you have available to pay unsecured creditors after you have paid the secured ones in full. To find this figure you will need to complete an income and expenditure form, Apart from establishing the actual amount of spare income to pay creditors this form will clearly illustrate, in no uncertain terms, where your money is going every month. In my view this form often dictates what your options are when deal with creditors.
4 Assets
Now work out what assets you own, this can be a house, the difference between the mortgage and the value is known as equity, however, if the home is jointly owned then the other named person may well be entitled to half the equity. For example, if your home is jointly mortgaged with your partner for £80,000 and is valued around £140,000, then there is equity of £60,000, to be divided between you both, your share would be £30,000. ...
LOGIN / SIGNUP REQUIRED
To see the rest of this article you need to login...!
Once you have filled in this short form, you will be returned to this page.