The bailiffs are back, or at least they will be very soon.  Bailiffs can resume their tasks from 23rd August.  If the thought of this is sending a shiver down your spine then now is the time to start taking action.  Here are some tips.

Work out your real-world financial position

Your real-world financial position means exactly that. You need accurate figures about your current financial state and your prospects for the foreseeable future (insofar as the future is foreseeable right now).  If you can’t get hard figures then you need to make your estimates as accurate as they can possibly be.  In addition to looking at your income, get a realistic valuation of any assets you own.

Your subsequent decisions are going to be taken based on these figures so take as long as it takes to do a thorough job.  If necessary, get help from a counsellor.  There are charities which offer debt advice for free and which may be able to help you put these figures together.

Work out whether or not you have enough income to pay anything towards your debts

The key point to keep in mind is that your creditors will want anything and everything they can reasonably get from you.  They cannot, however, take what you don’t have and they cannot take so much of what you do have that it leaves you destitute.  This is why it’s so important to have both accurate figures and a realistic view of what the future will hold.  Being overly pessimistic or overly optimistic about your prospects can do a lot of damage to your finances and your future, albeit in different ways.

Work out whether there is any way you can increase your income

This might seem impossible, or at least a very big ask, but it never hurts to look.  At the end of the day, the worst that can happen is that you draw a blank and wind up where you were before.  The best that can happen is that you figure out a path forward to make progress out of your debt situation.

If you own a property, then you should look particularly closely at opportunities to monetise it.  The most obvious option is to try to let out a portion of it under the government’s “rent a room” scheme.  If you don’t have a spare room then see if you could put children into one room or convert the living room into a bedroom.  It doesn’t have to be forever, it does, however, have to generate enough income to make a meaningful difference to you and your creditors and to justify any inconvenience.

Decide how to go forward

If you own your own home, then think very carefully about whether or not you can really afford to pay your mortgage for the foreseeable future.  If you cannot be confident about this, then you should at least give serious thought to selling on your own terms rather than risking foreclosure.

On similar logic, if you work out that you cannot afford to make even the minimum repayments on your debts and maintain a decent, basic standard of living and you cannot see any realistic prospect of this changing soon, then you may want to chart your own path into insolvency rather than waiting for it to be forced on you.

If you’re in between, then you need to work out a path forward with your creditors.  It may help to do this with a debt counsellor to strike the right balance between making a fair offer and ensuring you have enough for a decent, basic standard of living.

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