Dealing with debts: Some useful advice

A poster advertising a payday loan "half-price sale" Credit: John Giles/PA

The Office of Fair Trading has estimated that the payday loan market was worth up to £2.2 billion in 2011/12, which corresponds to between 7.4 and 8.2 million new loans.

The Citizens Advice Bureau offers the following tips for dealing with debt problems.

Work out how much you owe

  • First, make a list of all your creditors so you can see how much you owe.

  • You will need to collect the following information for each debt: the name and address of the creditor, the account or reference number and a copy of the original loan agreement you signed

Prioritise your debts

  • Some debts have more serious consequences if they are not paid for than others.

  • Priority debts include mortgage or rent arrears, gas and electricity arrears, council tax, court fines and child maintenance payments.

  • Non-priority debts include benefit overpayments, credit debts, water charges, student loans and money borrowed from friends or family.

Work out your budget

  • List all the income for your household including net wages or salaries .

  • If the amounts are different each month, average them over three or six months.

  • Include any benefits you receive such as Child Benefit and tax credits, child maintenance payment benefits, contributions from other members of your family or lodgers.

What next?

  • Contact your creditors and make arrangements to pay back what you owe.

  • Sort out priority debts before coming to any arrangement with non-priority creditors.

  • You can ask non-priority creditors if they can freeze the interest on your debts while you deal with them.

  • Make a note of all telephone calls or meetings.

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