Flowcharts to explore your debt options

Financial Summary

Example of Financial Summary highlighting important numbers

This page has links to flowcharts that will give you an overview of what your debt options are likely to be based on your Financial Summary. If you haven’t done a Financial Summary, this would be a good point to do it! But if you want to dive in and look through the flowcharts to get a feel for them, you can come back afterwards and work the numbers out.

You will need the figures marked 1, 2, 3 and 4 from your Financial Summary:

1 is the amount that you have available to pay towards your unsecured debts. It is your total Income less Expenses including secured debt repayments such as mortgage and HP

2 is the total of the minimum payments you have to make to your credit cards and loans every month

3 is the ‘surplus’ left after you have made these minimum payments

4 is the total amount of your unsecured debts

If any of these figures look “wrong” to you, then go back and have another look at what you put into the Financial Summary: perhaps you missed something out, or put an annual expense in as though you paid it each month?

The following four flowcharts are PDFs. This makes them easy to save on your PC and simple to print out. If you have a printer accessible, then a good approach is to print them out, get a big black pen and go through crossing out all the boxes and routes which are clearly wrong for you, so it’s easy to focus on the likeliest routes.

The boxes are colour-coded. If your route ends up on a green box then this is highly likely to be the best option for you; if it ends up at a yellow box this is a way forward that you should look into but there may be alternatives for you. Think of yellow as being “suggestions” and green as being “recommendations”.

Sometimes the boxes contain numbers that are defined by law – for example you cannot get an Administration Order if your debts total more than £5,000 no matter how much you think this might be a good option for you. Sometimes the numbers are those that Debt Camel feels are generally suitable. When you look at the alternatives in more detail in the Debt Options section of this website, it emphasises which numbers are set in stone and which are for you to consider.

Initial Debt Diagnosis Flowchart

The debt diagnosis flowchart is the basic starting point for debt advice. Everyone is divided into one of three categories:

  • not enough money even if you pay nothing towards your debts - if this is you, then you need to read Not enough to live on? and then look at how you can Improve your Finances, because you can’t start to tackle your debts until you are in a more secure place
  • enough money for monthly debt payments – that’s great because you are tackling your debt situation before it has got too bad. You need to “Snowball your debts” and make this go faster by Improve your Finances.  You don’t need the other flowcharts, although the “House Owner chart” below might be of interest.
  • not enough money for monthly debt payments – you don’t have enough money to Snowball, so unless you can Improve your Finances significantly, you are going to need to choose one of the other Debt Options. The next three flowcharts will help you decide which might work for you.

Debt Management Plan Flowchart

A Debt Management Plan is the commonest method of tackling a debt problem. The DMP flowchart looks at whether one might suit you or if you should look at other choices.

buy-jigsawHouse Owners  Flowchart – housing options

Owning a house or having a spare room gives you some additional options that you may want to consider. None of them may work for you, or even if they do you may not want to take them. But have a look what they are on the house owners flowchart.

Formal Debt Solutions Flowchart

If a DMP isn’t right for you and if your house doesn’t add any attractive options, then you need to consider one of the formal insolvency options. The Formal debt solutions flowchart works through which one(s) you should look at in more detail.

Too simplistic?

Obviously these flowcharts are simplistic. The complications are usually of three sorts:

  • you may not have a good long-term budget – if the numbers coming out of your Financial Summary aren’t realistic, then you have to rework them so that they are.
  • you may expect your situation to change significantly over the next few years. This is usually best handled by accepting you are a “sheep” at the moment and need to look at the sheep’s options, but don’t choose anything that will wreck your life when you turn into a “goat” next year.
  • you may be borderline between two options – in which case read up about both and see if any of the comparisons in Hard Choices helps you.

What next?

At this point you should have a snapshot of your situation. You have a Financial Summary and you now know what the most likely Debt Options are. So go and explore those Debt Options further and also have a look at Improving your Finances.