Welcome to Debt Advice Trust Blog

If debt is causing you to miss the odd payment on your loan or credit card statement, it won’t do much harm. On the other hand, if this is a regular occurrence, then it could be a lot more serious.

What does missing payments do, exactly?

Missing payments entirely will send out warning signals to creditors to look into your financial history further. You will be refused credit and only considered for loans at a higher interest rate, as you will have proven to be a higher risk. Refusing to make payments will leave a stain on your credit rating which will be very difficult to remove. In addition:

• A history of late payments will remain on your credit file for 3 years whereas a CCJ or default will stay affixed for six years.
• If you went into bankruptcy as a result of reckless spending, you could expect a restriction order to stay on your credit record for up to fifteen years.

How YOU can stop missed payments harming your credit rating!

If debt hasn’t taken a hold and you genuinely do forget to make payments on time, direct debits are a great way to protect your credit record and keep your creditors happy, plus you can wave goodbye to late payment charges.

If debt really is the issue, you should contact your lenders immediately to work out a way of reducing payments. This is the stage where most people seem to go slightly crazy and start surfing the internet to apply for loans. All of these loan applications are recorded on your credit file which can indicate that you have hit hard times.

People take out loans for all sorts of reasons, but research shows that a third of loans are used for debt consolidation, so as repayments can be turned into one manageable monthly sum.

Why debt consolidation?
Many people are starting to wake up to the idea of reducing their outgoings and see debt consolidation as a positive way to keep creditors happy and still have a little cash left in the kitty as the end of the week.

Can debt consolidation help you?
Consolidating debt into one affordable sum can bring some key benefits for those who want to settle bills that have been clinging on for a while. Often creditors will offer a generous settlement figure for debt clearance.

The main culprits that can be zapped with debt consolidation are high interest store cards, credit cards and personal loans.

Who uses consolidated loans?
The South East and London are the two main areas where consumers are seeking debt consolidation loans and over 35% of people have acquired loans solely to manage debt. Unsecured loans have been the most popular choice.

The average amount of debt consolidation loans being taken out is estimated at around £13,000 which shows how a stream of credit can trickle into an ocean of debt.

Can it be used for credit card debt?
Credit cards are not recommended for debt consolidation and can clock up extra debt on the financial treadmill due to their high interest rates. A good unsecured loan will offer a lower APR and become the most cost effective way to manage debt.

Keeping debt at bay is a difficult thing to do if you own a business, but by taking a few safeguards against debt, the chances of it taking a hold can be reduced.

Protect your business from debt first
If you are considering trading with a client, always carry out a credit check to ascertain how much credit you can offer. This could be based on the overall credit score of your new client and the amount of debt that they have acquired on their record. If a client ever exceeds a set credit limit or is untimely with payments, put a hold on their account until it is brought back in line with the terms of the agreement, it could save both you and your client from suffering with debt problems.

Always ensure that your clients have read and understood the requirements of your terms and conditions before you begin, and ask them to sign and return a copy. This will be a useful document if one of your clients fall into debt and you need to proceed with legal action. Any invoices should always stipulate the payment due date and the terms of payment.

Keep an eye on your clients debt
If some of your customers appear to be accumulating a large debt with you, it is advisable to make some subtle enquiries to find out if they are experiencing financial difficulties or are experiencing any other problems which make it difficult for them to pay you.

If you have tried every method available to retrieve an unpaid debt, you could take the matter to court or hire the services of a debt collector. In some cases, a debt collector will buy the debt from you and work independently to retrieve monies owed.

More people are staying in the red than ever before, because they just cannot keep up with the mounting debt from overdrafts, loans and mortgage repayments.

It has been estimated that most workers go into the red just 27 days after they have been paid. During the past year alone, over 10 million people have gone into the red and over 2 million people are consistently overdrawn. This makes it increasingly harder to stay out of debt, as a large chunk disappears on the overdraft immediately and more people find themselves looking for debt solutions.

Those who manage to stay in the black, often slip into the red on or around the 20th day of each month, which is just four days short from most people’s regular pay day.

These findings show the difficulties that people encounter when the Bank of England’s base rate multiplies five times within twelve months.

Half of the people surveyed admitted that they dipped into their savings or borrowed on credit cards to see them through to pay day. Some people took out a pay day loan, which they had to repay in full along with high interest when they receive their wages.

How can you avoid dipping into debt before pay day?
A healthy budget plan will allow people to see exactly how they can cut back on spending, so as they are not reduced to battling with debt in the run up to pay day.

As summer winds down in the UK and many look overseas for a last glimpse of sunshine, many women push debt to the back of their minds as they splash out on the perfect holiday look.

It has been estimated that this year alone, women will spend well over £7 billion on extras to make their holiday that little more special.

To accompany the new wardrobe which has been hand picked for the location, women will happily spend more than they can afford. Shoes, accessories and beauty treatments will be the cause of debt for many, as women go all out to look beautiful on the beach.

The average cost for this summer’s ensemble will be £300 per woman which will include essential finishing touches such as £30 for a waxing treatment, £20 on fashion jewellery, £30 for that sexy new bikini and £15 for that pair of sunglasses which look good with just about anything.

And it’s not just the ladies who overindulge at holiday time…
Men also spend at least £100 on a holiday makeover with many spending £30 on a chest and back wax along with £25 on the old barnet. Add to this, a new selection of shorts and T-shirts and some trendy sunglasses and the look is complete.

When the total cost of a week in the sun is calculated, the total debt before the holiday even begins, is an average of £545. This includes travel insurance, books for the journey and airport taxes.

Bankruptcy has recently been declared the most humiliating embarrassment that could ever happen.

Being caught in a drunken stupor by your boss or getting divorced, is considered less degrading than being found out that you have filed for bankruptcy, a report revealed. The only shame worse than bankruptcy was found to be "being arrested for drink driving".

However, despite the social stigma attached to bankruptcy, over 17,000 people chose this as a debt solution during the first quarter of 2007.

Insolvency occurs for many, when financial pressures become debilitating. Interest rates add to this agony and people suddenly realise that debt they could usually control is suddenly spiralling out of hand.

People simply do not take their financial situation seriously ...and when the message finally hits them, an IVA or bankruptcy is the only option left available.

Many people continue to run up debt with the strange notion that they will somehow be able to manage repayments. They rely on hopes of a pay rise or expect a big win on the lottery or to receive a huge inheritance. With these comforting notions in mind, they continue to ‘buy now, worry later’ and hope that the day will never come when they have to meet their debt head on and face the harsh realities of life.

What can you do to avoid that day arriving?

Debt may be in your life, it may be making your life difficult but there are a few simple tips that you can follow that will help reduce your debt into a more manageable amount, till eventually, hopefully your debt has gone completely and you can declare yourself debt free!

1. Don't panic!
By panicking about your debt you will loose concentration and you won't be able to focus on the job in hand. Sit down, take a deep breath and come to terms with your debt, its a very healthy first step.

2. Reduce your spending!
Cut back on the things you don't need and you will soon see that you are saving money all over the place that can go towards paying off your debt!

3. Get a second job!
If your debt is still too much with budgeting, try getting a second job if possible, this will help you in more ways than you think. By working more, you will earn more (helping to pay off your debt of course), however the cunning bit is that you would not be spending anything whilst you are working so it's almost like you are double saving! Which is always good...

4. Get Help!
Find some professional debt advice if your debts are too much for you to cope with. By getting honest, impartial debt advice you will be able to get an independent professional who can explain to you the next best steps for you to take with regards to your debt.

5. Consolidate your debt!