10 ways to get out of debt

10 ways to get out of debt
If you’re currently worried about your debts, this article is for you. Debts can build up without you really noticing them, then something happens to rock the boat and you worry you might be about to sink. Here are ten ways to get out of debt:
1. Cut spending – You need to free up cash to repay those loans. Look for economies in your monthly budget.
2. Reduce interest – Many debt consolidation loans are at a high interest rate and simply put all of your rotten eggs in one rotten basket. Your best option is to increase your mortgage and pay off the expensive loans. Never do this without taking proper advice.
3. Renegotiate – Taking you to Court is not an easy option for your creditors. See if you can renegotiate the deal. Most big companies have teams who help those unable to pay.
4. Make a budget – It often helps illustrate your problem if you write down your monthly income and outgoings and show this to major creditors. If they know you why you can’t pay, they’re more likely to be sympathetic.
5. Check it’s yours – Unless you’ve signed a loan agreement, or incurred the expense yourself, you might not be liable for the debt. Married people for example are not automatically liable for each other’s debts.
6. Plead ignorance – If you were deliberately misled and that can be proved in Court, you might not have to pay the debt. Take legal advice.
7. Garnishee order – If you’re in debt because a business owes you, it’s possible to apply in Court for a garnishee order against one of their customers. This means the customer pays you, not the business it owes.
8. Keep talking – Ignoring debt just makes people angry. Keep in touch with your creditors and tell them honestly how things are.
9. Resist pressure – The law is very strict when it comes to chasing debts. Do not give in to bullying by one creditor; it can make matter worse.
10. Take advice – There are lots of advice agencies able to help you cope with debt. Some can negotiate with creditors on your behalf.

Priority debts
If you are facing lots of debts, there are some that need to be paid ahead of the others. The people who shout the loudest or send the most demanding letters are not always the ones you should treat as a priority. Here are some people you do need to put at the top of the pile.
Debt Worst thing that could happen
Mortgage Your house gets repossessed
Rent Your landlord has you evicted
Income tax/VAT You van be made bankrupt and even go to prison
Child maintenance A bailiff can take your things and sell them
Council taxes As above
Electricity/gas Your supply can be cut off
HP on the car It can be repossessed, then you can’t get to work

Other debts obviously need to be dealt with, but the creditor has to get a Court order against you. This can take time and even if they succeed and you don’t pay, they need to go to Court again to get consent to instruct a Bailiff. Then, when the bailiff calls, you do not have to let them in to your home or let them take anything away. None of these are nice things, but if your back is really against the wall you have to prioritise.

Finding help
The UK Government’s Insolvency Service provides free advice to anyone facing insurmountable debt. They can signpost you towards people able to help, as well of course as providing help themselves. Be wary of firms that advertise their debt solving services. Their service is not free and it’s possible they’ll put their own interests ahead of yours.

Bringing it to life
Some of the world’s most successful people have been in serious debt. Some have been bankrupt and emerged stronger, achieving fame and fortune later in their lives. If debt is bothering you, don’t worry about the stigma, just pick up the phone and get professional advice.

Many of these tips and more can be found in my book The Life Plan.