Having some level of household debt is normal for most people, particularly if you own your own home. However, rising interest rates, rising petrol and utility costs and disappearing pension schemes can all contribute towards difficulty in managing debt. Keeping control of debt in the first place is the best thing you can do, but should you find that debt is becoming overwhelming it is time to set things in motion to regain control as quickly as possible. Many options and tips are available, and the following are just a few that people have found useful. All have advantages and disadvantages so you should think carefully about what will work best for your particular situation.

Prioritising Debt

While it seems logical to pay off debts that carry the highest interest rate first, this is not necessarily so. First on the list is paying the debt referred to as ‘priority debt’. Priority debts are those which carry the greatest risk of loss. This could be loss of your home or the possibility of prison. Mortgage, rent and utility costs are examples of priority debt. Once these are dealt with you can move on to paying off the debts that are not a priority but may involve repossession of goods. Whenever possible, make larger payments than the minimum required; this will get rid of the debt faster. Looking for ways to increase income or reduce spending can help with this. Consider cutting back on car use, budget and bulk buying, cutting back on gas or electricity use and using any other inventive cost cutting means you can.

Re-mortgaging

It is easy to become stuck with a specific lender. Some home owners have found that refinancing the mortgage is a way to reduce interest rates. It may also be possible to borrow a little extra to cover other existing debts. This method does not always work and you need to be sure you are not simply creating more debt.

Consolidation Loans

A consolidation loan offers the advantage of simplifying debt repayments. This can be useful if you have a lot of debts with many lenders. The disadvantage of a consolidation loan is that while payments will probably be lower than paying individual lenders the debt will take longer to pay off and you essentially end up paying interest on the interest. Consolidation loans may sometimes be unsecured but are more usually secured. Failure to make payments can result in the loss of that security, probably your home or vehicle.

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Debt Management Plan

It is possible to make arrangements with creditors to find a way to pay off your non priority debts, assuming you have any money left after paying priority debts. Debt management companies are another option and while they usually charge a fee they offer the advantage of dealing with your creditors on your behalf. This alone can remove a great deal of stress which is a big reason many people procrastinate when it comes to dealing with debt. Taking on a debt management plan should not prevent you getting a mortgage but it may well cut down on your borrowing power.

Where to go for Help

If you are struggling to pay surmounting debts it is worth contacting an agency for debt management advice. Citizens Advice is an obvious choice and they can certainly point you in the right direction. Unfortunately, Citizens Advice is also often swamped with debt management cases. You may qualify for free assistance from a group such as Debt Advisory, or it may even be worth considering paying a fee, built into your debt solution plan, to get specific assistance that will lead to getting household debt back under control. The most important thing is to seek help before your situation gets any worse.

Mortgages, equity loans, credit cards, student loans and car loans can all be balanced although changes in circumstances or ignorance of hidden costs can creep up or jump out to bite anyone at any time. Trying to crawl out of spiralling debt problems is a truly frightening experience but help is available. A way can always be found to begin managing debt no matter how severe the situation.