If you’re struggling with debt, you may not know where to turn. You don’t need to struggle alone, however. Getting debt advice from a professional organisation – like the Debt Advisory Centre (the author of this article) – could put you on the right track towards tackling your debts.

If, however, you’d like some pointers to get you started, this article could help.

Work out your budget

Firstly, you need to work out how much you can actually afford to pay towards your debts and other essential living costs each month. You can do this by making a budget. Look at your income (from your job, benefits and any other sources), and from that subtract the amount you spend each month on essentials. Your essentials include costs like mortgage or rent payments, bills, food and petrol – basically things you absolutely need to pay for each month.

You’ll then have a better idea of how much you can actually spare to put towards your debts, and from there you can decide whether you need professional debt help. If you do have enough to make your payments, you could still consider cutting back on some of your non-essential spending for a while, which can free up some funds to get your debts cleared more quickly.

If you’re finding it difficult to keep track of all your debt repayments, debt consolidation could help you. This basically involves combining all of your different debt repayments together into one. It could even help you reduce the amount you pay each month. However, this is not a sensible option if you’re struggling with your repayments already – in that situation you should seek expert help instead. Perhaps the DIY Debt Management Plan would be a good post to view next.

If you lack motivation to repay your debts

You may have enough money to make more than your minimum payments each month – but it can be hard to convince yourself to ‘overpay’ and clear them more quickly if you lack motivation.

In this case the ‘debt snowball’ method might be appropriate. Instead of tackling the debts with the highest interest rates first – which is the cheapest way to do it in the long term –  the snowball method involves overpaying your smallest debt first, gradually working up to the largest debt. That way, you can feel the sense of achievement of clearing a whole debt relatively quickly – which could motivate you to continue.

Getting debt help

If, however hard you try, you don’t have enough to meet your debt repayments along with all your essential costs, you might need a professional debt solution. There are quite a range of them available – but an expert can help you decide which one is best for you.

For example, if you can still afford to commit to (lower) monthly payments – and you think you’d be able to clear your debts in a reasonable amount of time – you may be eligible for a debt management plan. You can arrange this with your lenders directly (if they agree) or hire a professional debt management company to do it all for you.

A debt management plan is designed to lower your repayments to a level you can actually afford – and you’ll make these payments over a longer amount of time. Your lenders may also agree to freeze interest and charges (but remember, if they don’t, paying off debt over a longer amount of time will give interest more time to grow, so you’ll pay more in the long run).

If you can commit to lower monthly payments but you doubt you’d be able to clear your debts in full within a reasonable amount of time, an IVA (Individual Voluntary Arrangement) might be more suitable. This is a legally binding agreement which can only be set up by a qualified Insolvency Practitioner. You’d make more affordable payments – as with a debt management plan – but only for an agreed period of time (normally five years). After that time, as long as you’ve kept to the terms of your IVA, any remaining unsecured debt is written off. Get lots of advice if you are thinking of an IVA! You will see from other posts, I am not a fan.

Remember that any debt solution that involves directly reducing your debt repayments will affect your credit rating for up to six years.

If you’re not sure which debt solution is suitable for you, an expert debt adviser can help you to explore your other options. Perhaps Citizens Advice would be a good first port of call.

“Handling debt sometimes feels like you are handling Razor Wire” – Getting the right advice is essential. JD