How to manage your debt

Whether you have small overdue outgoings, or a mountain of debt, it needs to be managed. With a small debt, making regular payments and ensuring that no further debt is accrued, for example interest on the late payments or late payment fines, should see you clear your debt with relative ease. Managing larger debts can be much tougher, and often becomes a juggling act of paying off the debt and ensuring that payment terms are met to avoid increased debt.

Start By Making A List

Your list should include how much you owe, the due date, the creditor and the monthly payment required. This will become a helpful point of reference to manage your monthly payments and help you to see your debt reducing.

Avoid Late Payments

It goes without saying, late payments mean penalties. Use your list to record when payments need to be made and set reminders for them, set yourself a reminder and ensure that you pay on time. If your debt incurs interest and added fines, clearing your debt will become difficult.

Set Minimal Payments

If you can only afford the minimal payment, it will suffice. Of course it means that clearing your debt will take longer, but it shows willing and stops the debt being transferred to debt collection.

Prioritise Your Debts

You should rank your debts in a payment order, how you choose to prioritise them might depend on how old the debt is or how high. If possible, prioritising your smallest debts first may be the best option as it will give you a sense of achievement in what could be a difficult time. If you work your way gradually through the smaller debts, it will also give you increased money to pay your larger debts.

Find A Balance

It is important not to sacrifice good accounts for the bad ones. So if you need to choose between paying off the debt and keeping the good accounts in the black, make sure they are paid ahead of those already in the red.

Most importantly recognise that the debt will not go away, and if it is debt owed to HMRC, it is only going to get worse if you ignore it. If you do owe the revenue, they should be paid ahead of anyone else. If you have failed to make payments to HMRC, or failed to submit returns on time, contact Avanti to see how they can help you. Having recently helped a client who hadn’t submitted tax returns since becoming self-employed in 2012, Avanti are experienced in helping clients with late submissions and payments to HMRC.