If you have urgent debts to pay and you do not have the money you are very likely feeling very stressed. You can probably not concentrate on anything but your urgent debt problems. This advice may seem simplistic but it is important so take note: the most important thing you can do is to keep in contact with the lenders you owe money to. Simple! Think about it. Is this not something you would want if someone owed you money?
Keep in contact with creditors
It is very important to keep in contact with the lenders you owe money to (these are your creditors) because, well, they are human too! Your creditors will want to know that you are not running from them and trying to evade them. They will want to know that you are trying to make a plan to pay back the money you owe them. If the person or company you are in debt to does not hear from you they will assume that you do not want to pay them the money you owe. They will very soon start to take action against you by approaching a lawyer. Once a creditor has started to take action against you for unpaid bills or a loan which has not been paid back your problems will start to escalate out of control. Sometimes an unpaid debt will escalate completely out of proportion to the amount you owe.
Before you contact any of your creditors you will need to gather information and make a list of your debt. Note down everyone you owe money to and how much money you owe to each creditor. Be completely honest with yourself because this is an exercise which needs to be faced and done correctly. One you start to take control of your debts and your finances things will start to improve even if it is slowly.
Decide which debts are the most urgent to pay
Once you have listed your creditors you will need to decide which debts are urgent. When you have a list of urgent debts decide if you have enough money pay them off. Some debts will be much more urgent than other debts because the consequences of not paying them will be serious. The most urgent debts are called your priority debts and can include debts such as mortgage on your home, rent on your home and council tax debts. Naturally you will want to make sure you pay your mortgage so that the bank or financial institution does not repossess your home and throw you out. You will also want to pay your rent so that you keep the roof over your family’s head. You will also have to prepare a budget. The budget will show how much money comes in to your household and how much money goes out in essential expenses.
If you do have some money to pay off debts after you have deducted your basic living expenses you will have to pay off your priority debts first. When you have allocated money for your priority debts you can look at the less urgent debts such as bank overdrafts, credit card debts and any other loans you may have. The less important debts you have are known as non-priority debts.
After you have worked out how much you can pay each creditor you will have to contact each and every one and explain your situation to them. You will have to explain how much you can repay each month and then be prepared to keep to the promised payment plan.