Finance

Dealing with debt

The following points apply to both personal and business debt. If you are a director of a limited company, then the company is classed as a separate legal entity to you and so the business and household debt should be kept separate.

External Resource

1 min read

  • Be extremely cautious when considering borrowing money to pay off debts, it is usually only worthwhile if you are borrowing at a cheaper rate of interest.
  • Check you are claiming all the benefits and tax credits you are entitled to. Families with a joint income of less than £72,000 may be entitled to some form of benefit.
  • Work out your business and household budgets. This may help you identify areas where you can reduce spending and will also be of use when you are negotiating with creditors.
  • Write to your creditors at the first opportunity. Sample letters are available from organisations such as Business Debtline. Keep copies of all correspondence.
  • Deal with priority debts first. Debts which could result in you closing your business, losing your home or having your electricity or gas supply cut off are priority debts. You may be able to get help with the interest on your mortgage from government.
  • Work out how much money you can reasonably afford to put towards your debt each month. It is better from a creditor's perspective that you repay smaller amounts than agree to an amount you cannot afford.
  • Contact all of your creditors, explain the situation and attempt to reach an agreement. Do not be deterred if creditors become difficult to deal with.
Bg

Get advice, support, and sample letters from Business Debtline Scotland

Learn more

You might also be interested in

8 tips on identifying the main costs when starting a business

You’ve done your research and you know your idea has got legs. But before you decide if starting a business is for you, it’s vital that you understand the costs involved in setting up, and work out if you have the budget to cover these.

Cut your operating costs

As businesses are facing significant cost increases across energy, staffing, materials and distribution, many are looking at ways to cut operating costs to protect margins and stay solvent.

Cashflow: Managing your invoicing to get paid faster

Ensuring your customers and clients pay you promptly is important for maintaining cashflow. There are a few simple but important steps you can take when you are invoicing to make this process a little smoother.