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Debt Advice - Going backwards
You need help – as quickly as possible. As difficult as it seems,
take some time to try to sort your finances out and then you’ll be able
to relax in the knowledge that you’ve started to take positive action to
deal with your debt.
- Make a very detailed list of your
monthly income and expenditures and work out the shortfall. Be
realistic - include things like alcohol, cigarettes and gambling if
you are likely to spend on them. There’s no point in fooling anyone
at this stage – you need to know where your money is going and
you’ll need to show this to lenders later, so if you don’t add them,
they will.
- Prioritise your debts, which means
working out which ones must be paid, and which ones that can wait.
For example, if you don’t pay your mortgage or a secured debt, you
risk losing your home. At the other end of the scale, mail order
debt is often unenforceable unless there is a written credit
agreement in place. Don’t pay the company that shouts the loudest or
who hassles you most.
- If you are reasonably confident
about negotiating, write to each of your creditors (people you owe
money to) and give them a copy of your monthly income and
expenditure statement and ask if they will accept less than the
precise amount due. It’s not a good idea to offer less than 40% of
your current monthly payment. Also ring your utility companies and
the rates people and ask them what help they can give you. Some have
charitable trusts who can give support.
- Otherwise, consider getting free
professional money advice with a view to entering in to a Debt
Management Scheme. Call the National Debtline on 0808 8084000 or try
the Consumer Credit Counselling Service. In the private sector,
there are many Debt Management Schemes available. They will organise
monthly payments on your behalf and help you to negotiate lower
monthly payments to banks and credit card companies. These are
informal arrangements that don’t carry the stigma of insolvency such
as an IVA (Individual Voluntary Arrangement) or bankruptcy. Call 1st
Call 4 Mortgages for a recommendation to reputable Debt Management
Scheme providers.
- Think about approaching your
family for help. They’d probably rather help you than see you being
stressed out by debt.
- Go through the recommendations in
our Short Term Problems and
Debt eating
you up sections.
Your credit rating may not permit some of the recommendations, but
it’s worth checking to see whether some other changes might help
your financial fortunes. You can get a 30 day trial, including a
free copy of your credit report by clicking
here.
If you think your position has gone beyond the above suggestions, go
to our Debt Out of Control
page.
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