No one plans to end up in debt, but sometimes circumstances just happen. You lose your job and you are unable to pay your bills or you simply have overextended yourself. However, being in debt is not the end of the world. Nowadays there are many options open to try to deal with your debt and eventually pay it off.
Many advise that the last payment you want to default on or be arrears on is your mortgage, as this puts your home into jeopardy. If you have missed a mortgage payment or are in arrears, legally the lender can foreclose on you and begin possession proceedings to take over your property. However, this process is time consuming and most lenders want to only use that as the last resort. You will find that in most cases your mortgage lender will be willing to work with you. Before despairing, approach your mortgage lender and explain your situation to them. In some cases, they can waive some payments and allow you to pay them later or even lengthen the term of your mortgage.
If simply your monthly bills and credit card payments are getting the best of you, one solution is to consolidate your debt. Many lenders now offer debt consolidation services, whereby they buy up your debt, re-package it, so that you have one monthly payment to pay. In many cases, you can reduce your overall interest payments, by eliminating expensive credit card bills.
If you have many different debts and have one or more High Court or County Court Judgement (CCJ) against you and your total debts are no more than £5,000, then you can apply for Administration Order (AO) through the court. What this does is it allows you make one monthly payment of whatever amount you can and the court splits the payment among the various creditors.
The last resort in dealing with your debt should be to file bankruptcy. This decision should not be taken lightly, as this will severely impact your future creditworthiness. However, by declaring bankruptcy, you will be protected from creditors taking you to court or sending bailiffs to try to repossess your assets. The court will, however, force you to make some kind of payments for the first two to three years of your bankruptcy to satisfy your creditors.