Debt Management Step One Listing Your Debts

It may seem obvious, but the most important part of improving your debt management is working out exactly who you owe money to and how much you owe. Debt management is the process of simplifying the number of monthly debt repayments made, and taking control of your repayment strategy with the ultimate goal of eradicating all debt. It is not uncommon for debtors to owe money to more and more creditors, owing payments on separate dates for various amounts. Payment becomes more complicated, more difficult to keep up with.

This is why it is so crucial to begin your debt management process by establishing exactly how much you owe and to whom. Make a list of each creditor and the amount of debt outstanding and also keep all statements received from each in order to be aware of the interest being added to each of your debts each month.

Once you have completed a full list of your owings, the next step of your debt management process is to list each debt in order of priority. A priority debt is the debt with the greatest consequences for non payment. Creditors who suggest court action via post should be treated as priorities. Other priority debt can include:

• Mortgage or rent payments. If you fail to keep up with these payments then you may even find yourself homeless.
• Fuel bills. If you fail to pay your fuel bills on time then you may find yourself disconnected from these services.
• Council tax. If you fail to pay your council tax a county court bailiff may remove your goods for sale at auction, you may even be sent to prison.
• Court fines. If you have any court fines then you need to make sure that these are paid as once bailiffs get involved the charges can go drastically higher.
• Tax arrears. If you have outstanding bills for income tax or VAT then you need to make an arrangement to get these paid.

HMRC are not as horrible as you may think and will often set up a payment agreement with you. The important part here is that you contact them and be proactive with regards to tax debts.