Are your finances maxed out? If you are worried about meeting your next mortgage payment or you've taken out one credit card to pay off another, it's time to wake up and smell the coffee.
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Most people fall into debt through no fault of their own. The monthly budget can be jogging along quite happily, then boom! It gets knocked off course by a big tax bill, an increase in the mortgage interest rate, or an illness or divorce.
Credit; Martin Poole
The first step is to acknowledge you have a debt problem and take control of the situation. Tell friends/family members so they can support you.
Get free, independent, specialist advice. Talk to one of the debt advice agencies, such as the National Debtline (0808 808 4000) or the Consumer Credit Counselling Service (0800 138 1111). They offer free advice on the full range of debt remedies (including bankruptcy, County Court administration orders, Individual Voluntary Arrangements). Don't ever pay for debt advice.
Working out what's gone wrong is crucial in helping resolve debt problems. Research by Callcredit shows that more than 60 per cent of consumers simply don't know how much they owe. Start by making a list of your creditors (mortgage lender, landlord, utility companies, council, Inland Revenue, credit card companies, banks, friends, etc). Speak to them as soon as you can about your financial difficulties and clarify how much you owe. Most companies are sympathetic to people who act quickly and want to come to some agreement.
Michael Coogan, director general of the Council of Mortgage Lenders says: 'Many [lenders] go to exceptional lengths to provide debt counselling, reschedule payments, extend loan terms, or in some circumstances even allow payment breaks.'
Credit; Tetra Images
It's easy to be panicked into paying a debt if you've been sent a threatening letter or court summons. But it's essential to deal with priority debts first - the ones that could lead to you losing your home, being evicted or having your gas or electricity cut off. Non-priority debts include arrears on bank loans, overdrafts, credit cards, catalogues, charge cards and personal debts to friends and family.
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