Recent figures show that around 31,000 individuals declared themselves bankrupt between April and June this year.

Bankruptcy doesn't have the stigma attached to it as in days gone by but it's far from being a desirable state of affairs.

Unpaid debt results in a poor credit rating which affects how much you can borrow and at what rates.

You may find yourself resorting to payday lenders or taking out credit cards at punitive interest rates which will make getting straight even more difficult.

Barring drastic, unforeseen circumstances there is only one reason for bankruptcy and that is living beyond ones means.

Dickens's character Mr Micawber had it right, 'Annual income twenty pounds, annual expenditure nineteen pounds, nineteen shillings and sixpence, result happiness. Annual income twenty pounds, annual expenditure twenty pounds and six shillings, result misery.'

So, what to do if you find yourself in debt?

The first thing is to face up to it. Stop hiding the statements and demands and understand exactly what you owe and to whom.

Second; work out how much you can afford to repay each month. Do this by knowing how much income you have coming in and working out how much you are spending.

Cut out unnecessary expenses. Prioritise necessary expenditure: rent/mortgage, utilities and food. Everything else is discretionary so if you are out shopping and you pick something up ask yourself the question, 'Do I need this or do I want it?' If it's a want – put it down.

As a start to understanding where the money goes get a receipt for everything and sit down every week and make a list of what you've spent.

If you don't get a receipt from a shop keep a notebook with you and write one out yourself. You will be amazed how much money just trickles through your fingers.

Third; once you know how much you can afford contact your creditors and negotiate repayment terms.

They will be pleased to hear from you and will be happy to help. There are many helpful websites to give you guidance about budgeting and debt management. Use your search engine to find one you like and work with it.

If you would like to find out more about Molyneux Financial Planning or if you would like to book an appointment, click the red button below.