Six Stages of debt advice
In order for you to get the best service a debt adviser follows six key stages of the formal debt advice process, which involve a systematic approach to assessing your financial situation and developing a sustainable plan.
These six key stages of the formal debt advice process involve a systematic approach to assessing your financial situation and developing a sustainable plan for you. While specific wording may vary slightly among different advice organisations, the core steps are consistent:
Stage 1: Explore the debt problem The adviser obtains comprehensive information about your entire financial situation, including all debts, creditors, threats of legal action, and personal circumstances like illness or housing situation.
Stage 2: Deal with your urgent issues/emergencies Any immediate threats, such as eviction notices, bailiff action, or disconnection of essential utilities (gas/electricity), are addressed immediately with the goal of halting enforcement action.
Stage 3: Check liabilities and list creditors The adviser confirms whether you are legally liable for the debts and lists all creditors and outstanding balances. This may involve checking if the debt is statute-barred (too old to be enforced through court action) or if you are a victim of fraud.
Stage 4: Maximise income and list expenditure The adviser conducts a full benefits check to ensure the client is receiving all entitled income and creates a detailed budget by listing all essential and non-essential expenditures.
Stage 5: Draw up a financial statement A comprehensive financial statement (often using the Standard Financial Statement common in the UK) is prepared to calculate your disposable income (money left after essential living costs).
Stage 6: Deal with priority and non-priority debts The adviser helps you to choose a strategy for dealing with your debts, prioritising those with the most severe consequences for non-payment (e.g., rent, mortgage, council tax). This involves negotiating repayment arrangements with creditors and implementing the agreed-upon solutions.
Get help
If you need advice about your situation, we can help for free.
- Email: info@youthlegal.org.uk
- Phone: 020 3195 1906 (Mon to Fri, 10am to 6pm)
- Contact form: youthlegal.org.uk/contact-us
All our advice is free and confidential.