When you find yourself in a tricky financial situation, life often becomes very difficult, and realising that you do not have enough spare money each month to meet your financial obligations leaves you feeling stressed and worried. Further borrowing on credit and store cards may offer some respite, but eventually you will have exhausted those funds as well, and soon you may not have sufficient financial headroom. It is important to act now, whilst you have sufficient headroom to be able to make a minimum monthly repayment of £200 to service unsecured debts between £12,000 and £30,000. For larger debts you will probably need to be able to afford to pay more each month.

As soon as you realise that you are struggling with your finance, you should take action. Draw up a monthly budget and include all expenditures such as food, leisure and clothing. Read the list carefully and see if there are any areas where you have been overspending, especially on luxury items.

If you realise you are able to repay more to service your unsecured debts each month, you should do so. This will help you to pay off the debt faster and possibly avoid excessive monthly interest rates and charges. Even though this may take time and commitment from you, eventually it will all be worth it and you will feel a sense of relief knowing that your accounts have been paid in full.

Another option: approach your creditors and speak about your financial problems. Many of them are quite sympathetic and are willing to help you pay back your debts by agreeing to accept lower monthly payments.

You may decide to explore a debt management plan which could enable you to make reduced monthly repayments to your unsecured creditors whilst protecting your mortgage and other priority payments which you must continue to make. The disadvantage of a debt management plan when compared to an IVA is that your plan will continue until all your debts are repaid in full.

Another option would be to apply for an IVA, a legally binding option that many people use as an alternative to filing for bankruptcy.

Or you could take out a debt consolidation loan,

Alternatively, you could try to sort your financial problems out by yourself. You could start by downgrading your lifestyle and selling some of your possessions. You need to evaluate all your spending and determine whether you really need satellite TV and the latest mobile phone. Restructure your lifestyle and soon you will have more money for more important things.

If, at the end of the day, your only option would be to file for bankruptcy, make sure you get good advice beforehand. Search all other avenues before deciding if bankruptcy is the way to go