Archive for November, 2009

Why debt management puts you back in control of your finances

Monday, November 30th, 2009

If you’re in debt, everything can seem to spiral out of control very quickly. Rather than seek debt advice straight away, the temptation is to just let things coast along and hope that it won’t get any worse. Trouble is, adopting that ‘ostrich’ syndrome means that your finances are out of control and will continue to be so – unless you take control back and seek a debt solution.

Debt management is exactly what it says it is – managing your debts and getting them back under control. The first step is to realise that you can’t let the situation carry on in its present state any longer and to sit down, with a debt management expert if necessary or speak to the national debt helpline, and take a good, hard look at your finances. Make a list of your major creditors and then get in touch with them. By contacting them and informing them of the situation, not only will they be more willing to negotiate more manageable repayment terms, but you will also prevent them from sending you those dreaded final demands every day.

Work out your outgoings as compared to your income, but remember that you have to leave yourself something to live on otherwise the spiral of debt will get worse. Prioritise your creditors (don’t forget the little guys, but at this stage your major creditors take priority) and allocate a certain amount of your income towards paying them off first. You may not be able to write off debt but once things are on a more stable footing and you’ve taken control back, it’s easier to work out payment plans that will help you to clear the debt more quickly.

If all of this seems daunting and you’re still in a panic about managing your finances, talk to an independent debt counselling service. They’re specialists in debt management and may know some ‘tricks of the trade’ to help you control your money in a more manageable way. Never be afraid to ask for help.

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Why an IVA debt solution could help you with serious debt

Tuesday, November 24th, 2009

When serious debts are mounting up, many people fear the spectre of bankruptcy and the devastating impact that can have on your finances, your credit rating and your life as a whole. But seeking debt advice from an independent debt management service and applying for an individual voluntary arrangement (IVA) could be a better way to achieve unsecured debt consolidation on credit cards and personal loans, making repayments more manageable.

An Individual Voluntary Arrangement is a contract between you and your creditors. You pay an agreed monthly sum, usually for 5 years. This is divided up between people you owe money to, who accept the sum in settlement of the amount you owe them. Once the term of that IVA is over, you have the chance to start afresh without the impact declaring yourself bankrupt can have over the long term. Unlike bankruptcy, an IVA does not prevent you from running a business so if you want to start up your own business during the term of the IVA, you can. It could be a way of getting yourself out of debt and back on your financial feet much more quickly.

The first step is to get some IVA debt help – speak to the national debt helpline or to any one of the specialist IVA companies in the UK. In essence, IVAs restructure your payments to creditors so that they become more realistic and effective, putting you back in control of your finances. By opening the lines of communication and sticking to an agreed repayment plan, you reduce the amount of pressure that is often placed on those in debt by their creditors, making life much more manageable.

Bankruptcy is a last resort debt solution and, even though it has become more common particularly during the recession, it still carries a certain amount of social stigma and does invariably affect your credit rating for years afterwards. An IVA helps you avoid this unenviable situation and prevent it from becoming a millstone around your neck for years. Talk to an impartial debt advisor if you think an IVA may help you control your debts.

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Debt questions – what are the drawbacks of bankruptcy?

Wednesday, November 18th, 2009

In just one day, 362 people in the UK will be declared insolvent or bankrupt. KPMG estimate this will increase to 411 people a day throughout 2009 or 1 person becoming bankrupt or entering into an Individual Voluntary Arrangement (IVA) every 3.5 minutes and many others seeking help from debt management services.

Frightening statistics. And if you don’t believe the recession is as bad as the headlines have been making out, consider that if the number does increase to 411 per day declaring insolvency or bankrupt, that will mean an incredible 150,000 people could be declared bankrupt by the end of the year. That’s the size of a medium sized town. Bankruptcy seems to be presented as an easy option to take if you get into difficulty financially. The attraction of not having to pay creditors and effectively write off debt may be tempting many to sign on the dotted line and bankruptcy doesn’t seem to have the social stigma that it once attracted.

But there are significant drawbacks of declaring yourself bankrupt. Your credit rating will be seriously damaged. Of course, if your financial circumstances are severe enough, you may not really care that much about your credit rating and simply need immediate help managing debt, but it can have lasting consequences even years afterwards. Your financial history may also impact your chances of applying for certain jobs, particularly in the banking and finance sector. Let’s be honest – would you take financial advice from someone who’s been declared bankrupt?

Finally, it can seriously damage the finances of those you owe money to. So not only is your financial situation affecting you – like ripples on a pond it spreads out into the wider community. Obviously, the best option is not to get into such a financial pickle that you have to consider bankruptcy in the first place. But if you are in trouble, and before you reach for the insolvency paperwork, talk to a professional debt advisor who may be able to show you an alternative that keeps you in business, trading and financially viable.

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The top five reasons people seek debt help

Wednesday, November 18th, 2009

People seek debt help for reasons as varied as the people themselves. Whether it’s an unexpected turn of events or a gradual build up of problems, facing debt problems is always a worrying time, but thankfully there are a number of debt counselling services available. The top five causes of debt range from the unexpected to a ‘dripping tap’ effect.

Credit card debt

One of the primary causes of the economic recession was the ease with which ordinary people could run up thousands of pounds of debt on ‘easy credit’. Total credit card debt in July 2009 was £53.9bn, and with the interest charges on credit cards being higher than the base rate by a considerable amount, credit card debt is a growing problem. Many people solve runaway credit card debt by looking for debt consolidation help.

Unemployment

One in 33 people in the UK is facing unemployment in 2009. The financial buffer of a regular income can be ripped away very quickly and because savings are at an all-time low in the UK, very few people have the money put by to cover themselves in case of unemployment. Losing your job can mean rapidly mounting debt in a very short space of time. If you lose your job and can’t make your payments you need to act quickly; start with government debt advice – they can recommend an appropriate debt management solution.

Illness and divorce

Illness can put you out of work for the long term, and even if you keep your job you will only be eligible for statutory sick pay – a far lower amount than your usual income. Divorce and separation can also be a financially trying time leading to debt, as people have to reassess their lifestyle and their outgoings. A good debt management service will understand the implications that personal problems can have on debt.

Poor financial management

The ‘dripping tap’ effect, poor financial management and a temptation to adopt an ‘ostrich’ syndrome to mounting debts won’t make the problem go away. Perhaps one of the easiest areas to tackle, poor financial management can be quickly turned around with the right debt advice and help.

Failure to maintain credit agreements

If you are committed to credit agreements and you fail to maintain your end of the bargain, the interest charges can start to mount up. Creditors will start chasing for payment (and charging you for the privilege), but again, this is an aspect of financial management that can be tackled relatively easily to get you back on track.

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The three most important pieces of debt advice that can help you get out of debt

Thursday, November 12th, 2009

Facing up to debt and getting professional debt advice can be a terrifying prospect. The Citizen’s Advice Bureau deals with over 9,000 enquiries a day concerning personal debt, and with the effects of the recession still being felt, they expect that number to continue rising for the foreseeable future. Other services such as the National Debt Helpline are seeing similar figures. But there is light at the end of the tunnel, and by taking three simple steps, you can start the process of seeking help with debt, reducing your payments and, eventually, becoming debt free.

1. Admit there’s a problem
Ignoring mounting debts and hoping that they’ll either ‘magically’ go away if you don’t admit to them or spending most of your time desperately worried about coping is not the right way to manage a debt problem. To take control, you first need to admit that there is a problem.

2. Get professional debt advice
Trying to solve the problem on your own will be difficult if not almost impossible. If you are in debt, there are things you can do to drastically reduce the problem that a debt counselling expert will be able to tell you about. They spend their entire careers helping people get out of debt every day, and having that expert advice can make all the difference in a financial crisis. So as soon as you realise that there is a problem, get in touch with an impartial debt advice service who will be able to sit down with you and help you plan a strategy to take back control of the situation and get you out of debt.

3. Have a plan
A debt advisor will be able to help you put together a debt management plan that, if you stick to, can mean that you’re debt-free far more quickly. But for that plan to work, you have to stick to it. By informing your creditors of your situation and drawing up voluntary agreements with them to repay the outstanding amount over a longer period of time but with smaller, more manageable payments, for example, you can avoid the bankruptcy route and problems with credit later on.

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Seeking debt help as recession bites – how the economic climate is causing a rise in debt problems

Friday, November 6th, 2009

The recent recession (which the headline writers now say we are slowly starting to climb out of) hit hard and fast. Whilst everyone was quick to blame the banks’ exuberance and penchant for huge bonuses and high risk deals, the truth is that the age of easy credit for all was the real cause of the financial meltdown. Unlike other recessions, this one has hit everyone, from the average man in the street to the high-flying city bankers and the numbers of people seeking debt help has significantly increased. 

Because credit cards, ‘interest free’ credit and other financial carrots were dangled in front of an eager and willing public for so long, many people have found themselves seriously overstretched financially when the doors slammed shut on the easy credit culture of the 90s and as a result more and more people are looking for debt management solutions or even ways to write off debt. A far more cautious financial market is now less willing to repeat the same mistakes of that boom time and is coming down hard on those in financial difficulty. Despite billions being pumped by the Government into the banking industry, there has been very little trickle-down effect to the ordinary consumer, leaving them in as much financial trouble now as at the start of the crisis, and consequently many are seeking debt solutions from IVA companies and debt management services. 

The headlines may claim that the green shoots of recovery mean an end to the current financial crisis. But the aftershocks of one of the worst meltdowns in banking history are still affecting ordinary people with mounting debt problems. The average household debt in the UK (including mortgage repayments) is over £58,000. The average owed by every UK adult is £30,188 (including mortgages). This is 130% of average earnings. So it’s obvious that personal debt is still out of step with income, meaning that the after effects of the recession are set to continue for some time to come.

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Ostrich syndrome – why bad debt can make you want to hide at a time when you most need debt help

Tuesday, November 3rd, 2009

The bills just keep on mounting, you feel hopelessly out of control, creditors are chasing you for payment – at times like these the temptation to adopt an ‘ostrich’ stance against mounting bad debt can seem like a good idea. The last thing you might want to do is to seek debt help and actually deal with the problem. Hide and it’ll all just go away, right? 

Wrong. Hiding from your bad debt will not make it disappear, it’ll make things worse. By not talking to your creditors, by not taking control and responsibility for your debt, and not taking appropriate debt advice, you face angry creditors who are not prepared to listen to your side of the story. Not everyone gets into debt because of a poor grasp of finances; debt is now a common problem for many ordinary people who have been hit hard by misfortune, the recession or perhaps through losing their job. Sticking your head in the sand and hoping that ‘tomorrow it’ll all be different’ is a shortsighted (although understandable) reaction. If you run away from the problem, it’s still there and it’s still a problem that needs to be tackled properly, with a clear debt management strategy. 

Picking up the courage to admit that you have a bad debt problem to a stranger can be incredibly difficult, but by sitting down and looking at your finances with an impartial debt advisor, you are taking back control of the situation. Debt advisors aren’t there to judge you – they’re there to help you. They’re there to guide you through the fiscal landscape to a safe haven that will see you back in control and with your head firmly out of the sand. Being in debt can make you feel like you’re the only person in the world who’s in financial trouble. But you’re not alone, and you needn’t tackle the problem by yourself. If you start talking to creditors, planning your finances and discussing your situation with an advisor, you may even find out that you’re not in as much trouble as you first thought. There are all sorts of options available from IVA debt advice to debt management services that can help you write off debt. The light at the end of the tunnel is not always an oncoming train…

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Light at the end of the tunnel – why, with the right debt advice, getting out of debt might be easier than you think

Monday, November 2nd, 2009

Whilst that moment when you sit down and finally admit to yourself that you’re in over your head money-wise may be a daunting prospect, rather than sinking into a depression about your finances, use it as a wake up call to get your money matters back on track. Getting out of debt is easier than it may first appear, as long as you approach it in an open and honest manner and seek debt advice from an independent expert. 

If you lie to yourself, you’re storing up trouble for the future. Be honest – sit down and work out exactly how much you owe and to whom. Talk to a debt counselling service and get them to help you do a complete analysis of your outgoings against your income and by doing this you’ll be able to spot areas that could be trimmed back, freeing up some of your money to go towards repaying your debts. 

If you’re really in a pickle, sit down with an impartial debt advisor and discuss strategies that might enable you to write off debt interest payments by putting a debt management strategy in place. These debt help professionals aren’t there to judge you – they’re there to help. It is estimated that the average household debt (including mortgages) is £58,280. So it’s pretty clear that you’re not the only one in financial trouble. Admitting to debt problems is now no longer seen as an admission of failure; there’s no social stigma to being in debt any more. This makes it much easier to tackle the problem head on and to get the debt advice you need. 

Simple things such as changing your utility suppliers, cutting up your store cards or swapping your outstanding credit card bill to a card with a lower interest rate can all mount up quickly, again giving you spare capital with which to pay off your debts. Base interest rates are at an all-time low at the moment, so it might also be the right time to think about switching your mortgage to a better, fixed rate deal. You may even want to arrange an IVA debt solution. There is plenty that you can do yourself to start managing your debts effectively, but the best advice is talk to an expert.

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