Golden rules of debt managment | Education Support Partnership

Golden rules of debt managment

Eleven golden rules of debt managment. The tips below will help you to manage your debts and provides links to other sites of interest.

Golden rules

  • Stop borrowing. Do not be tempted to borrow to pay off existing debts
  • Don’t try to ignore debt. Get in touch with your creditors straight away and explain your difficulties
  • Draw up a detailed personal budget in order to assess the true state of your finances.Include all your essential expenditure but not your non- priority debts. (Loans, credit cards etc)
  • Tackle your priority debts first (mortgage, rent etc). If you have arrears of these debts they need to be negotiated first. Also rank your non-priority debts by size and interest rate (a store card at 30% interest is probably going to be better to pay off than a student loan for instance).
  • Work out reasonable offers to repay the money you owe to other creditors. Don’t worry if these offers seem small. Creditors prefer you to pay a small amount regularly than to make an offer you can’t afford.
  • Always keep copies of letters you send and receive and of any budgets or financial statements you send your creditors.
  • Know your rights and don’t be intimidated by debt collectors. Insist that all communication is by letter and do not be tempted to offer more than you can afford.
  • Don’t give up trying to reach an agreement even if your creditors are difficult.
  • If you are off work because of sickness or redundancy, check whether any of your liabilities are covered by insurance.
  • It is generally not advisable to consolidate debts by taking out a loan secured on your property. Any future default will put your home at risk. 
  • Beware of offers from companies that sound too good to be true. They may promise to reduce or write off some of your debts. This advice can be expensive and leave you in a worse financial position.

Further information