Students advised over debt

Even though you may be able to come out of bankruptcy within a year, the bankruptcy usually stays on your credit report for six years. Student Loans Company loans are not wiped out by bankruptcy and will still have to be repaid in full. Even after a bankruptcy has been discharged, the fact that you were bankrupt is likely to stop you getting credit for some time – and if you are offered credit it is likely to be at less favourable rates because lenders are likely to see you as a high-risk customer. Even after six years, the effects of bankruptcy can still hit hard as mortgage lenders often ask if you have ever been bankrupt.

. Key tips for dealing with debt from Citizen's Advice

• Don’t panic and don’t ignore the problem – it can seem tempting to stuff bills and threatening letters unopened into a drawer but they won’t go away.
• Avoid borrowing further to try and pay off existing debt – this is likely to lead to more problems in the long run.
• Talk to your creditors – don’t just stop payments without explaining why. They can sometimes be more understanding than you’d expect.
• Work out which debts and expenses are your priorities – mortgage, rent, council tax, utilities – and pay them first. Don’t fall into the trap of paying whoever shouts loudest first.
• Work out a budget that covers all your income and essential outgoings. Only offer to pay off debts at a rate you can keep up – it is easy to be panicked into offering more than you can afford.
• Think twice before paying for debt advice – Citizens Advice offers free advice. It has outlets all over the country and many years of experience helping with debt problems and negotiating with creditors.

Student debt – the statistics
According to Mintel ii, since the introduction of the Higher Education Bill, nearly all universities in England have announced that they will charge the maximum of £3,000 per year in tuition fees for UK and EU students, resulting in additional debt of £1,875 per student per year.

Student debt has risen rapidly over the past five years. According to a report from UNITE iii, over half of students (56 per cent) report varying degrees of difficulty with managing their finances. For a third (34 per cent) this means they struggle from time to time, for one in six (16 per cent) keeping up with their financial commitments is a constant struggle and one in 20 (six per cent) are either seriously falling behind or have real financial problems.

The UNITE report also revealed that, overall, UK students already in higher education say they currently owe an average of £5,865 as a direct result of being at university and anticipate owing £10,085 by the time they complete their studies. For the majority, this debt takes the form of a student loan. However, a third of students have an overdraft and one in eight owes money on a credit card.

For further information
For more information see www.citizensadvice.org.uk
Advice and information www.adviceguide.org.uk

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