Search: Help with debt problems
- Pros and cons of loans- witch to a cheaper credit card
Anyone from a stockbroker to street cleaner can get into debt and need help to get themselves out of their financial problems. But don't despair, help is at hand.
One source of free advice is the Consumer Credit Counselling Service (www.cccs.co.uk). Their counsellors will review your financial position and help you draw up a plan to pay off your debts.
This is done by prioritising the most important financial commitments such as rent, council tax and tax debts which, if ignored, can lead to loss of your home or bankruptcy.
Secured vs unsecured loans
Some debtors make the mistake of turning unsecured loans such as credit card bills into secured loans (which means that the loan is guaranteed against the value of your home) and could lead to repossession. You can contact the CCCS on 0800 138 1111 (8am to 8pm) or if you are in Scotland ring its debtline on 0800 138 3328.Other sources of help for advice on debt management include www.justask.org.uk or www.creditaction.com - an educational charity that explains all aspects of money management.
Another is Community Legal Advice, which is the government's free legal aid service that provides telephone and web advice. Get in touch by calling: 0845 345 4345 or visiting: www.communitylegaladvice.org.uk.
Don't bury your head in the sand
If you ignore your debts, your creditors have various means of forcing you to pay up. If they know where you work, they may seek an "attachment of earnings order" which means that they will ask your employer to deduct the money owed from your salary. This is acutely embarassing and means that you have less control over your money.Alternatively you might be the subject of a "garnishee order" which usually involves the creditor contacting your bank to have the money owed paid directly from your account. Alternatively, the creditor may take out a "charging order" on your property so that you could not sell it without paying your debt.
If all else fails, a creditor may send bailiffs to your home. You will be given one last chance to pay or the bailiffs will remove possessions to the value of the money owed which will be sold at auction.
If your belongings are insufficient to pay off your debt, your creditors may bankrupt you. This may involve you losing your home and access to credit of over £250 for three years.
Avoiding debt in the first place
Clearly, it's better to avoid debt in the first place.
This can be done by drawing up a budget with a list of your monthly outgoings such as mortgages, rent, utility bills, cash for spending, holidays, council tax and so on. Then factor in some money for emergencies or special occasions. It's always better to over-budget than under-budget.Then check that you are getting a decent interest rate on your bank balance. Many online bank accounts offer top rates on credit balances and some high street banks offer none. Also be sure to pay off your credit card bills in full each month. Otherwise, the charges mount up quickly and some store cards charge exorbitant rates of interest of between 20% and 30% APR (annual percentage rate).
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