DEBT HELPDEBT HELP
Debt Help & Advice
Prioritise your debts
Before making payments to people, work out which debts are the most important. Don’t just pay whoever is shouting the loudest. You need to analyse your circumstances and focus on keeping you liberty and a roof over your head.
Therefore your priority creditors should be: the lender that provided your mortgage – or your landlord if you are in rented accommodation; the provider of other loans secured on your property; and then household bills, including utilities. Next look at credit cards, store cards and other unsecured loans. Of course, they all need to be paid eventually, but you will have to be totally ruthless in deciding which must be sorted out immediately. Your home is the most important thing, so deal with that first.
This article continues on with several subpages - each with more articles and a step by step guide to getting out of debt
Reduce interest payments
One of the major difficulties with clearing debt if you can’t afford to pay it all off in one go, is the cumulative problem of mounting interest. If you have outstanding credit card debts then look to switch them to a provider which offers zero per cent on balance transfers for as long as possible. Every penny you repay will go towards lowering the outstanding debt. If you can’t clear it all then you can consider moving it again at the end of the interest-free period.
Other loans
Another option is to consolidate all your debts by taking out a loan to cover the entire amount- either secured or unsecured. However, you must read the terms and conditions very closely, warns Stuart Glendinning of Moneysupermarket.com, as some for example, will charge you a penalty for paying it back early. It’s also essential to compare the overall costs of different options. “It can make sense if you have a store card on which you’re paying 29 per cent APR and you get a three year personal loan for 9 per cent as you will reduce your monthly outgoings,” he says. “However, if you could have cleared the debt within six months, then it would have been cheaper to stick with the store card as the loan would work out more expensive because you are paying over a longer period.” You also resist the temptation to continue borrowing if you opt to consolidate existing debts, warns David Kuo, head of personal finance at Fool.co.uk, as research by the website shows that three out of five people end up in trouble again. “Consolidation loans can be a welcome lifeline for people caught up in financial difficulties,” he says. “However, that can quickly turn into a noose if people run up further debts
Don’t leave it too late
The important thing is not to either panic or bury your head and hope the debt will go away.Don’t be tempted to pay for debt advice, particularly companies that require you to ring an expensive premium rate number for privilege. The Citizens Advice Bureau and the Consumer Credit Counselling Service can provide all the help you need-free of charge, so all you need to do is pick up the phone or visit websites and they will help you find a solution. According to Moira Haynes, spokesperson for the CAB, Christmas related debt problems have become a commonplace that January and February are now the busiest months of the year for the organisation’s debt advisers. “ A lot of people run up thousands of pounds worth of debt just to cover their Christmas spending,” she says. “Credit is very easy to get and tempting offers on loans credit cards are dropping through letterboxes almost every day.”