Managing Debt

Ignoring the debt and not taking any action will not make the problem go away, it can in fact make your situation a lot worse, our booklet called "Student Debt" will give you some positive things you can do to take back control of the situation.

A good way to start is to sort out your debts into PRIORITY and NON-priority. The consequences for failing to pay these are very different as you can see below.

Priority and Non-Priority Debts It is advisable to prepare a Financial Statement. It will not only help with your budgeting but it can give creditors a clearer picture of your financial situation. This may help you to decide and your creditors to accept how much you can afford to repay each month.

Click below for a blank financial statement. We advise you to get some guidance on completing it in order to achieve the most success in negotiating with your creditors. Financial Statement

PRIORITY CREDITORS

You will first need to negotiate with your priority creditors and this should be done quickly to prevent further action to recover debts. Even if legal proceedings for recovery have commenced it is never too late to make an offer and seek a voluntary agreement.

A letter should be sent to all priority creditors, with detail and reasons for your financial difficulties, enclose a copy of your financial statement and a reasonable offer for payment of arrears, provided there is surplus money available. Sample letter to creditors It is important that creditors can see that you have treated them fairly so do not be pressured or threatened into paying one creditor more than another because the situation will just spiral and could get worse.

There is sometimes a reluctance to freeze interest and other charges but unless this is possible there is little point paying if the outstanding balance continues to rise, so try writing again.  Sample follow up letter to creditor Whether creditors agree to your offers or not it's better to make some sort of payment even if it's £1 month, if this is all you can afford, this will show your intent to repay the debt.

For further advice and guidance on debt management and completing financial statements you can go to Credit Action. This website is an excellent source of practical advice for negotiating with creditors and managing your finances.

See also our booklet Budgeting and Debt Management in the ASC Literature section.