If you have debt problems, creditors (the people you owe money to) will often be willing to accept arrangements to pay the debt off over a period of time. If your debt has become too much for you to handle, take the steps discussed below before your creditors start court proceedings or take other steps against you to recover the outstanding amounts.

The first step you should take is to create a budget listing your debts, income and expenditure as discussed below.

List your debts

Separate the debts into priority debts and non-priority debts.

Priority debts

Priority debts would include those where non-payment could result in you losing your home, amenities or being sent to prison, such as:

• Mortgage arrears
• Rent arrears
• Gas and electricity arrears
• Local authority arrears
• Court fines and orders for payment
• Maintenance payable to an ex-partner or children
• Income tax, National Insurance or VAT arrears
• Other debts which in your particular circumstances must take priority

Non-priority debts

Non-priority debts generally include:

• Benefits overpayments
• Credit debts such as overdrafts, loans, hire purchase, credit card accounts and catalogues
• Student loans
• Money borrowed from friends or family
• Parking penalties issued by local authorities

You can't be sent to prison for not paying these debts, but you should not ignore them because your creditors may take you to court if you fail to pay. If you ignore a court order for payment, your creditors may take steps to enforce the judgment. In England and Wales they can use bailiffs or High Court Enforcement Officers to seize your property and if you still don't pay, sell it. They can get a third-party debt order to get payment of a debt another person owes you, an attachment of earnings order (AEO) to get money deducted from your pay or a charging order against your home. In Northern Ireland the Enforcement of Judgments Office (EJO) can seize your property, take money out of your wages via an attachment of earnings order; freeze your accounts via a garnishee order and charge your land and property via an order charging land.

Work out your income

Income will include:

• Any salary or pay (after tax) that you and your partner receive. If the amount you get varies from month to month you'll use the average over the last 6 months.
• Any social security benefits you receive, such as tax credits and child benefit.
• Other regular payments you receive, such as rent and child maintenance.

Work out your expenses

Consider taking temporary steps to reduce your expenses. You could, for example, reduce or cancel your broadband and TV packages and review any insurances for pets, electrical items or mobile phones. However, first check that you will not be charged cancellation fees.

Your normal expenses generally include:

• Food, toiletries, meals at school and work, cleaning materials, children's pocket money and pet food
• Rent or a mortgage or any other loan secured against your property, buildings and contents insurance, service charges (for flats) and life or endowment insurance policies that cover your mortgage
• Council tax (England and Wales) or Rates (Northern Ireland)
• Energy, water and other utility charges
• Travel expenses including both public transport and the cost of running a car such as road tax, insurance, and maintenance
• Insurance
• Childcare costs
• Clothes
• Any other essential expenses

Calculate your available income

Once you've calculated how much money you have available to pay off your debts, you should start by paying off your priority debts. Advice is available if you can't afford to pay anything towards these debts or if you need help making payment arrangements with your creditors.

Once you've paid the priority debts, work out how to pay off the non-priority debts.

Where to get advice

Many debt advice organisations are independent and don't charge for guidance. Use them before using a commercial service. Some of these free independent services are:

• National Debtline
• StepChange Debt Charity
• Citizens Advice
• Advice NI