This guide has been put together to help the thousands of people in the UK who are struggling with debt. At the time of printing, the average household debt is £57,915 and a property is repossessed every 13.4 minutes. Every 51 seconds someone is also being

declared insolvent which is proof that many people in the UK are experiencing difficulty with their finances and unfortunately, the situation is not likely to im-prove unless action is taken.*

Should you need any assistance in using this guide or need to talk to one of our friendly advisors, you can contact us on freephone 0800 085 1825 or visit our website at www.thedebtadvisor.co.uk

The Debt Advisor website has many different tools from debt calculators & solution finders to handy hints and tips to relieve stress from our resident Psychologist.

The Debt Advisor was established in June 2000 in response to rising debt levels and as there was a noticable gap in the market for a debt advice agency who offered comprehensive advice and help with debt.

The Debt Advisor are members of DEMSA - Debt Managers Standards Association.DEMSA is the first trade body within the debt management industry to successfully secure approval for its code of practice under the OFT Consumer Codes Approval Scheme for advice on Debt Management Plans (DMP) and Individual Volutanry Arrangements (IVA’s).

The main aim of the DEMSA code is to encourage debt management companies to provide the highest services and standards in which the public and the credit industry can be confident in.

Membership of DEMSA which is an OFT approved Code of Conduct is strictly reliant upon UK Debt Management Companies being able to demonstrate that they comply with the high standards set out in the DEMSA Code of Conduct.

Learning to budget is an important step towards regaining control of your finances.

Before working out your budget, its important to gather all details together with regards to your income - this includes any benefits you may be entitled to.

We have set out a simple guide below to assist you....You may also want to check your benefit entitlement on helpful sites such as www.turn2us.org.uk

For further advice, you can also contact the Jobcentre Plus on 0800 055 6688

This table will help you work out your budget.

Fill in the spaces which apply to you and this will give you the total amount of money you have spare each month to offer to your creditors.

Please ensure to either work out a weekly or monthly budget - do not combine the two.For calculations help, see page 4.

If you need help completing your budget, please give our team a call on FREEPHONE 0800 085 1825

Arrears and priority debts need to have your attention as the consequences often result in some form of action being taken by your creditors.

All of the above arrears and priority debts are equally impor-tant and need your attention immediately if you have fallen behind with your payments.

By not paying your priority debts - especially your council tax, there are a number of actions that a creditor could take:

As with all debts, especially your Mortgage and Council Tax, it is always advised that you contact your provider and explain you are having financial difficulties. This way, they may be able to help you come to an arrangement.

In the case of mortgage arrears, lenders must follow the Pre-action Protocol which was introduced in November 2009. This states that lenders must demon-strate that they have tried to help you avoid repossession.

Both freehold and leasehold owner occupation can, and frequently will, be subject to a mortgage. The mortgage deeds contain a variety of terms which usually states that when the occupier falls into arrears with the repayments that the

lender has the right to evict the occupier and sell the property.

Before legal proceedings are started, the lender will normally issue a formal de-mand for all the arrears to be paid. They are not obliged by law to do this, but in practice, the Court will not look kindly upon a lender who has not given the occupier a chance to bring their arrears up to date.

The Pre-action Protocol introduced in November 2009 provides that lenders must demonstrate they have tried to help you avoid repossession. The FSA has also issued guidelines to lenders on the type of stepts they ought to consider to avoid repossession.

Your lender must:

* Provide you with details of what you owe along with any charges* Consider any reasonable request with regards to changing the way you pay your mortgage* Consider and respond to any offers of payment* Detail their reasons for declinding your offer within ten working days. If you are unable to keep to an arangement with your lender they will notify you in writing of their intention to start court action.* The lender cannot evict the occupier without an Order for Possession from the County Court. The Court is not obliged to grant the possession immediately and has the power to grant a suspended order for possession on condition that the occupier continues to pay current installments and a fixed amount off the arrears.

The Court will only exercise this discretion if it is of the view that the arrears can be cleared in a reasonable time. (Administration of Justice Act 1970, s.36; Town & Country Building Society v Julien, 1991). But reasonable could cover the balance of the mortgage term. If it does not think this can be done, then the order will be final. This will usually be suspended for at least 28 days to give the occupier time to make alternative arrangements.

Reasonable Time to Clear the Arrears

There is no formal definition of reasonable time. Until recently, the courts had normally considered one year a reasonable time in which to clear the arrears (Cheltenham & Gloucester B.S v Grant, 1994). It has now been said that the Court should take as its starting point the full period of the mortgage. Timescales & Help

Your lender will eventually apply to the courts for a repossession order should your arrears build up from month to month. Most High Street lenders are falling in to line with the governments’ stipulation that lenders should not take pro-ceedings during the first 5 months of arrears.Lenders must demonstrate that they have tried to discuss and agree some sort of arrangement when a borrower falls into arrears with their mortgage payments. This might include some form of repayment holiday until the borrower can make full payments again or it could include changing the type of mortgage. Extend-ing the terms of repayments is also possible.

8 of the largest lenders have now signed up to the ‘defer payment’ initiative by the government which represents 70% of the mortgage market.

This could apply to you if you have been made redundant or are facing a signifi-cant loss of income. This provides that lenders should allow you to defer a pro-portion of mortgage interest for up to two years and the Treasury will underwrite the risks. Also, two government-backed schemes have now been introduced to help homeowners avoid repossession.

This scheme can help in two ways depending on the circumstances. Help can be given by:

•Paying off a proportion of your mortgage & they then own a share of your equity •They buy your property and you rent it back To qualify for this scheme you must meet certain elements of criteria. Your household must earn less than £60,000 per year and the value of your home must be lower than certain levels in your area. There must also be a need for you to stay in your home; if it is cheaper for you to move elsewhere then this would not qualify. You must not own a second home and the value of your debts must not be greater than the value of your home.

This scheme can help by lenders agreeing to reduce the borrowers’ monthly mortgage repayments or defer the payments in arrears & add them on to be paid at a later date.

To qualify for this scheme you must again meet certain elements of criteria. You must have suffered a loss of income which is not expected to be permanent and you must have discussed the pre-action protocol with regards to making some level of regular payment.

Your mortgage must not exceed £400,000 and you must not be in receipt of SMI (Support for Mortgage Interest). You must not also own a second home.

If you are facing a possession order as a tenant, you should seek a suspension of the possession order on condition that you pay your normal monthly plus an amount off the arrears.

Many County Courts these days have a duty representative scheme on the day rent and mortgage possession proceedings are heard. They are typically staffed by agencies from the public, private and voluntary sectors.

If the arrears are minimal, the housing practitioner or the duty scheme represent-ative would, wherever possible, negotiate prior to the hearing that no suspended possession order be made. It is not uncommon to get agreements that matters be adjourned on the basis that the tenant pays the ongoing rent plus a small amount towards clearing the arrears. If the tenant does not keep to the deal, the landlord will be able to have the case restored.

Suspended Possession orders can be most problematic and should be avoided if the tenant relies on some form of means tested benefit. Housing benefit can take anything from four weeks to twelve weeks to determine the claim, some local authorities have been taken to task for taking up to 12 months to resolve a claim.

Housing benefit is usually paid in arrears and any delay in payment can find the tenant facing possession proceedings through no fault of their own and ulti-mately the tenancy could be ended.

If, as a tenant, you are facing a possession order then you can apply for the order to be staid or suspended. If the application is successful, this puts you back in the position you were before and as such restores your option to apply for the Right to Buy.

A debt is considered as ‘unsecured’ when it is not secured on anything such as your home or your car. Unsecured debts include:

By completing the income and expenditure section on page 6, you should be in a position to know whether you have any disposable income or not.Disposable income is the money you have left at the end of the month after you have paid your household bills, priority debts and provided for your food and toiletries.

You now need to list your unsecured credit commitments on the next page to see how much you should be paying each month.

By completing the section below, this will give you an idea of how much you need to be able to pay your credit comitments. You should include all of your credit forms such as credit cards, personal loans, overdrafts, catalogues, door-step loans and personal debts to family and friends...

If your total amount at the bottom of the table is more than what you have left on your income and expenditure on page 6, then you need to make arrangements to start paying down your debt.

You should now be in a position to come to a conclusion with regards to what steps you need to take next.

You should fall into one of three categories...

If you have completed the income and expenditure on page 6 and you have enough money left over to also cover your credit commitments on page 15, it would appear that you do not need any form of debt help and maybe just need some help on budgeting - please see our website for handy hints and tips on budgeting: www.thedebtadvisor.co.uk

You can offer lower payments to your creditors on a ‘pro-rata’ basis. (Pro-rata means that all your creditors will receive a fair share of what you can afford - see page 17) You can then write to your creditors using one of our template letters explaining your situation and requesting that they accept the offer and also freeze any interest and charges.If you need help, there are free services available such as the CAB and CCCS. Other options such as IVA’s or Full & Final’s may be applicable; Contact us for further information.

If you have no money left to offer to your creditors, you will need to demonstrate this by sending them a copy of your income and expenditure and a letter explaining why you are unable to pay. You can ask your creditors to put your account on hold until your situation improves. You could also offer ‘token’ payments of £1.

You may also want to consider the below options if you have little or no money to offer to your creditors:

Bankruptcy is often considered the last resort for people with serious debt problems especially if you have a property to protect.You must owe £750+ to a creditor for them to make you bankrupt. For you to make yourself bankrupt, charges are currently £600 (made up of £150 court fee and £450 official receivers fee). Contact us for advice.

A DRO enables you to have your debts written off after a 12 month period but needs to be carried out through an approved agency such as the CAB. The criteria is strict but you may be able to qualify if:* Your debt is under £15,000* You only have £50 or less left at the end of each month* You have assets of less than £300 (your car should be worth no more than

For example, Mr Jones owes £2,000 to his bank but only has £40 left for his creditors. In total he has £6000 worth of debt.For his offer to his bank, his calculation would be: * £40 x £2,000

* Divided by £6,000* = £13.33 This is the pro-rata offer

If you have debts with your bank or building society and you can no longer afford repayments to your loan/overdrafts, you may need to change your bank account.

This is due to banks and building society’s having the right of set off. This means that as you owe money to them, they can legally take your wages/benefits or any other funds which have been paid into your account to clear the overdraft or loan.

You should consider opening a new account with a bank or building society unrelated to your current provider just in case.

Not all of your creditors may be willing to accept your offer of payment straight away. In some instances, they may request you pay more than you can afford and this is where you need to be persistent.

If creditors will not accept your offer:* Pay the amount you originally offered* Continue to write to the creditor to give them updates and ask them to reconsider your original offer* If they send a doorstep collector, you should continue to offer the same amount

Harassment by creditors quite often goes unreported and unchallenged and is usually expected by debtors. Under Section 40 of the Administration of Justice Act 1970 “the Act” harassment is defined as “trying to coerce a person to pay a contract debt by making demands for payment” subjecting debtors to “alarm, distress or humiliation by the frequency, publicity of manner in attempting to collect the debt”.

Under the act it is also regarded as harassment if a creditor claims non-pay-ment of a debt is criminal which it is not.

Harassment can take place orally or in writing and included obviously marked vehicles, calling repeatedly at unsociable hours, calling on neighbours or the debtor’s place of work. It also includes more importantly abusive or threatening behaviour and ALL acts or threats of violence.

Harassment is a criminal offence.The following steps may help should the harassment continue:

* Keep a diary recording details of telephone calls/visits including any specific acts of harassment.

* In matters of extreme harassment the police MUST be contacted immediately

* In these cases friend’s neighbours and relatives should be alerted to the situation, if possible so they are able to provide a “safe haven” or support to the debtor.

* Advise the caller that continued harassment will be reported to the local trading standards officer

If harassment continues report the matter is writing to your local trading standards officer.

A creditor may sell or instruct a debt collection agency to collect the debt - this is normal procedure and does not necesarilly mean bailiffs will visit your property.You should try and communicate with them as you would with any of your other creditors.

Court’s are often keen for you to come to an arrangement with your creditors without their action and so you will not usually need to attend court.

* If a creditor has decided to take action, you will receive a claim form from the court which you will need to complete.If you do not agree with anything on the form, you need to fill in the ‘defence ’ form and return the form back.

* If you agree that the information provided is correct, you need to complete the reply called the ‘admission form’ where you can detail your offer of payment - similar to the income and expenditure form within this pack.Once you have completed this, you need to return it back to the creditor.There is a time frame by which you need to return a claim form and this is within 16 days from the date on the postmark. If you fail to return the form, the court can order you to pay the whole amount you owe in one lump sum.

* Should the creditor accept your offer, you should receive an order from the court to pay the sum agreed on a monthly basis - you will need to keep a record of the payments you make.Should the creditor not accept your offer, the court may decide what you should pay. If the debt is under £50,000, the case will not go to hearing. If the debt is over £50,000 the judge will decide himself by examining your case or by a hear-ing in your local court.

* If you find you are unable to pay what the court has asked, you could ask the court to look at your case again. You need to do this within 14 days of receiving the order. The case should then be referred to your local court for you to attend. The district judge will have the overall say but if the first order was made without a hearing, then a hearing must be had in order to have your case looked at again.

If you intend on making pro-rata offers to your creditors, you can use our template letter below. Remember to also send your creditors a copy of your income and expenditure form and keep copies of everything you send.

All you need to do

is fill in the blanks andsend the

letter to yourcreditors

with a copyof your

income andexpenditure.

If you do not intend on making offers to your creditors, you can use our template letter below. Remember to also send your creditors a copy of your income and expenditure form and keep copies of everything you send.

All you need to do

is fill in the blanks andsend the

letter to yourcreditors

with a copyof your

income andexpenditure.

If you intend on making token payments to your creditors, you can use our template letter below. Remember to also send your creditors a copy of your income and expenditure form and keep copies of everything you send.

All you need to do

is fill in the blanks andsend the

letter to yourcreditors

with a copyof your

income andexpenditure.

Not only must you deal with the practicalities of the actual debt resolution you must focus your attention on yourself.

Its time to take 100% responsibility

If you are in debt it’s absolutely essential that you accept 100% responsibility for your situation. It’s not the fault of your friends, partner, spouse or family. No one else is to blame. If you are pointing the finger of blame at anyone else you are playing the victim. You are the one who spent the money, handed over the credit card or signed the loan agreement. Harsh though this may seem, your financial situation is a result of some choices you have made. Accepting responsibility can be a challenge admittedly, but once you do it will empower you to take control instead of allowing others to pull your strings.Apply the following equation to any situation in your life before you make a decision or response and be amazed at the enormous relief you will feel when you accept responsibility for where you are in your life.

E + R = O

Event + Response = Outcome

Confused? Turn the page to find out how this simple equation can help...

Recognising, accepting and managing your debts can be a very stressful time in your life. It is vitally important to manage your stress effectively in order to avoid possible long

Negative response: Bury your head in the sand; wishing and praying for your debt issues to resolve spontaneously only to find that when you pull your head out of the sand, as you will inevitably have to do at some point, that your debts have escalated, your relationships are breaking down and your health is suffering.

Remember it is ultimately your choice how you choose to respond to your life events.

Get Adequate SleepSleep is essential for the healthy functioning of the physical and mental self. Restless or inadequate amounts of sleep can result in you not feeling very well physically but may also leave you unable to function mentally too. This can result in you feeling unable to think straight, feeling confused and unable to make the simplest decisions. You can soon feel overwhelmed and unable to cope and things appear much worse than they really are.

In order to get a restful night of sleep:- •Go to bed and get up at a regular time each day. This regulates your body clock. •Avoid napping during the day. Save your sleep for the night. •Avoid caffeine and alcohol especially in the evening. Caffeine is a stimulant. Both caffeine and alcohol will dehydrate you. •Start to wind down your mind and your body towards the end of the day to prepare for your sleep. Try reading or listening to calming music,•Avoid over stimulating the brain watching sensationalised television or reading the newspaper.

Positive response: You seek help and use the advice to overcome your financial challenges and improve your life circumstances.

Exercise to the point where you feel you need to take much deeper breaths for about 20 minutes, 3-4 times a week. You will not only improve your physical health but your mental well being will improve as during exercise the body re-leases natural “feel good” chemicals called endorphins.

Stuck for exercise ideas? Try the following:- •Take the dog out for longer and walk more briskly. •Join a gym. Preferably a local authority leisure centre that doesn’t cost as much as a private club. •Get out on your bike. •Play a sporting activity such as tennis, badminton or football with your friends, colleagues or family. Group activity can be much more fun. •Go swimming. •Do the housework, ironing, hovering and dusting with much more vigour. •Walk instead of getting the bus or train to work. If it’s too far, get off the stop before and walk the rest of the way. •Go dancing. Salsa, Ceroc and disco are great for the body. •Try something new like pilates, yoga or stability ball. Variety will keep you en gaged and motivated. •Take the stairs instead of the lifts

Physical ExerciseTaking exercise is a great therapy for managing stress. It need not be a painful process. Encompass it into your daily life. It will make a huge difference to the way you think and feel.

Whilst under stress it is too easy to adopt a less than healthy eating approach. The saying “you are what you eat” is very true. A good diet rich in fruit, vegetables, proteins, carbohydrates, vitamins, minerals and water will enhance your physical and mental well being.

Avoid stimulants such as caffeine, alcohol and fizzy drinks.

Keep processed foods to a minimum in order to maximise your energy levels.

Eat foods with lots of colour. These will be packed with nutrients and give you much more vitality than the pale, dull and insipid processed and fatty foods. Fill your plate with as many rich vibrant colours as possible such as green sugar snap peas and cabbage, the rich orange of sweet potatoes and carrots and the vivid red of peppers and tomatoes.

Eat only when you are truly hungry for food. If you eat when you are not re-ally hungry then you are comfort eating to block out the emotions of stress and anxiety. Comfort eating is likely to result in weight gain which in turn can lead to further emotional and physical stress.

Drink lots of water. It will help hydrate your body, keep you alert, flush out toxins from your body and keep your digestion working effectively.

Eat a Well Balanced DietA nutritious, balanced diet leads to a healthy body that bounds with energy and copes with the challenges of life much more readily.

They are the ones with the energy, the oomph, the determination and the moti-vation to do whatever it takes to create the life they want.Start creating the life you truly desire by working on your self esteem.

Here are just a few ideas for you to experiment with:-

•Learn how to assert yourself in order to avoid people taking advantage of you and draining you of your personal energy. Learn how to say “no” politely and firmly and you will find that you will be able to manage your stress much more efficiently. •Think more positively by turning every challenge and negative experience into a positive outcome. •Manage your time by making “to do lists”, delegating where possible and prioritising the most important jobs you have to do. •Start to give yourself some space, relaxation and quality recovery time. •Remember no one is perfect and you cannot please all of the people all of the time only some of the people some of the time. •Get yourself a “Feel Good File”. This will be your victory log or your trophy room similar to those you find in many sporting venues likes Old Trafford Football Stadium. Reminding yourself of all the positive things you have achieved will help keep your motivation for success alive, especially at times when you feel things are not going the way you want. Create your own book or file and fill it with records of all your achievements.

Start to develop your self esteemYour self esteem is your beliefs about yourself that you are a capable and worthwhile person. People with healthy self esteem are more likely to achieve success in life and manage their stress and their challenges effectively.

Make them achievable but also stretch yourself. Ensure they are meaningful to you and not just to keep someone else satisfied and be very specific about what you want to achieve. Ensure that the goal has a time limit on it. A good example of a short term goal will be “By June 14th 2011 I will have reduced my overdraft down to zero” A good example of a long term goal would be “By July 27th 2012 I will have met all my contributions into my IVA and all my debts will be settled in full.

Don’t Beat Yourself UpA good debt stress management tip is not to beat yourself up about your situation. Ok you may have made some poor choices about your spending activities in the past but that is “up until now”. Now you are going to make better choices. We are all human, no one is perfect and we all make errors in judgement.

When you feel that you have failed at something remind yourself that you can learn from your experience. If you have made mistakes in the past this does not mean you have failed. You have in fact learnt a way of not doing it next time. You have discovered what does not work and now you know you need to do something different in the future. However, to repeat your behaviour time after time of over indulging/over spending and still expecting your financial problem to disappear spontaneously is unrealistic and self defeating.

Remember “if you always do what you have always done, you will always get what you have always got”.

Now is the time to learn from your past mistakes and respond with healthier and more positive choices not only in terms of your debt management but also your life. Learn and grow from all your experiences.

Set realistic goalsSetting and achieving your goals is a fantastic way to build your self esteem. Set yourself goals for the short and long term.

This could be fear of reprisals, fear of shame, humiliation or guilt, fear of losing a relationship and very often fear of being seen as a failure.Do not allow yourself to stay in your comfort zone. As the book by Susan Jeffers says “face your fear and do it anyway”.

F.E.A.R stands for false expectations appearing real. Often, especially when in debt and suffering from debt anxiety, small problems can appear huge and unmanageable, things get over exaggerated and minor life challenges appear catastrophic or sensationalised.

You need to put things into perspective - 85-90% of what is feared never actually happens in reality.Remember during the time you spend ruminating over things, you allow your imagination to live through the feared event as if it were actually happening. Your mind and body experience the fear even though the event is only in your imagi-nation. The subconscious mind does not know the difference between real and imagined. Each time you feel the emotion of fear to an imagined event eg. your house being repossessed, your physical and emotional well being are put under stress from the release of body chemicals which causes an increase in heart rate and blood pressure, the palms to sweat, the mouth to become dry, the digestion to become upset and breathing to become more rapid.

How much do you scare yourself by imagining what might happen? Most fear is self created and irrational and it will paralyse you, if you allow it. Write down what you are imagining you are afraid of to help empower yourself to overcome it.

Face your fearAvoiding confronting your problems, burying your head in the sand and/or continuing to spend money you cannot afford is often a sign of fear.

Face your fear... continued

I would really like to ……………………………,

and I scare myself by imagining ……………………………………………….

This quote from Anais Anin will help you realise that you risk more pain staying where you are than the pain of actually facing up to what you fear.

“And the day came when the risk it took to remain tight inside the bud was more painful than the risk it took to blossom”.

And good luck, you will win!

If you need any assistance with using our self help pack, please feel free to contact a member of our team:

Address:WestPoint3rd Floor West501 Chester RoadOld TraffordManchesterM16 9HU

Website: www.thedebtadvisor.co.ukEmail: advice@thedebtadvisor.co.uk

Freephone: 0800 085 1825*

© The Debt Advisor LtdThis pack is not to be reproduced or distributed without our written permission* Although our phone number is freephone, calls may be charged if calling from a mobile