When situations change, it is all too easy to get in to trouble with the debt that you owe, in which case debt management will be necessary. There are a number of solutions that are possible when it comes to dealing with debt problems, some of which will be touched on here. If you are in difficulties though it's best to get in touch with a company that offers free debt advice.

Make a Budget

By making a budget you will know exactly what your in-goings and outgoings are, and this is an important way of keeping on top of the debt that you owe. Ideally you will have made a budget before you get in to trouble, but either way it's important to make one once your situation changes.

The first thing to do is to set out what your income is, including all of the people in the household if there is more than one of you. Then you should account for all of your expenses. Don't worry about making any cuts or reductions yet, just put down what you are spending at the moment.

Taking this approach, you will immediately get a very clear idea about how much money you get in and how much you spend, and whether there is a discrepancy. If you're in difficulties there probably will be, in which case you're going to have to start prioritising the payments that you make.

Of course the things that should take priority are the essential living costs that you have. This will include everything from food to rent to utility bills. Something else it's important to keep up with the payments on is secured debt as you may lose your home if you don't.

What you'll be left with after that is luxury items, as well as unsecured debt. In terms of the luxuries, you should make reductions on what you spend on them, or cut them out altogether. For example if you go out drinking every week, then perhaps you could cut that down to every fortnight or maybe cut it out altogether.

After that you'll be left only with the unsecured debt to deal with, and you should know exactly how much you can afford to pay towards it. You should take a little bit out of that though just to deal with any contingencies or emergencies so that you are not right on the edge every month. At this point it's time to start looking at debt solutions.

Debt Plans

One of the best solutions to a debt problem is a debt management plan. In this case, you can get a third party, debt advisers perhaps, to negotiate reduced payments with your creditors. The sooner this is done the better, preferably it will be before you miss any payments.

The aim of debt management plans is to reduce the amount you have to pay every month to what you can actually afford. That's why it's so important to make a budget, so that you know how much that actually is. If your creditors agree then you can just make a single monthly payment to the third party who negotiated the deal, and they will distribute it to your creditors.

However this relies on all your creditors agreeing to receiving a reduced amount. If not all of them will, then an IVA might be more appropriate. You have to owe at least 15,000 to multiple creditors, and have a disposable income of at least 200 after essential livings costs have been taken in to account to qualify.

If you do qualify, and 75% of your creditors agree to receiving a reduced payment, then this will be a legally binding arrangement to all of them. And after 5 years, what you have not paid off will be written off.

There are many more plans available, with bankruptcy only being a last resort. Again, it's a good idea to get in touch with an expert for free debt advice before you make your decision as to how to deal with it.

George Turner has expertise in wide ranging financial matters. He enjoys writing frequently at http://www.debtadvice.net a place you can find out much more about Debt Management.