This is the Debt Wizard DIY debt guide to dealing with low to moderate debt with numerous unsecured creditors. There are 5 important steps you need to take first, however, it is vitally important that if this is going to take time to complete then at least get in touch with your creditors first and tell them what you are doing; they should understand.

1 Find out who owes what and to whom

Your first job is to establish exactly how much you owe and to whom in unsecured borrowing, this is credit cards, loans and bank overdrafts and make a separate list

• in your name only
• your partner's name only if applicable
• those in joint names, if applicable

You may find our very own unique and free budget form helpful.

2 Establish what loans are secured

Such as mortgage, loan on a property and hire purchase. Also identify other priority creditors, utilities, council tax. Remember if you do not pay secured creditors you may lose the security and if you don't pay priority creditors such as gas, water you may lose the services they provide. Make this list separate to your unsecured creditors.

3 Disposable income

This is the amount you have available to pay unsecured creditors after you have paid the secured ones in full. To find this figure you will need to complete an income and expenditure form, apart from establishing the actual amount of spare income to pay creditors this form will clearly illustrate, in no uncertain terms, where your money is going every month. In my view this form often dictates what your options are when deal with creditors.

4 Assets

Now work out what assets you own, this can be a house, the difference between the mortgage and the value is known as equity, however, if the home is jointly owned then the other named person may well be entitled to half the equity. For example, if your home is jointly mortgaged with your partner for £80,000 and is valued around £140,000, then there is equity of £60,000, to be divided between you both, your share would be £30,000.

5 Communication

Are you a WON'T PAYER or a CAN'T PAYER?

If you fail to make your payments to your creditors and do not communicate with them you will be regarded as a won't payer and leave the creditors no other option but to take legal action against you to recover their losses.

You need to contact your lenders who will then request the information detailed above before they make a decision on how to help you. Most of the lenders have departments with staff specifically trained to help in situations such as this. The above information that is generated from points 1 - 4 is often referred to as, "a statement of affairs" or “statement of means”. Information under Assets is vitally important because it may offer other options such as a re-mortgage. You will need to think this through carefully and consider your partner's position.

You are now ready to contact your creditors, whenever possible try to write to them rather than telephone so that there is a written record. 

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