How can I get out of debt?
Find out which debt solution is right for youGet started
Answer a few simple questions
See if you are suitable
Understand your next steps
It’s a New Year and a traditional time to make a fresh start. If you’re struggling with repaying what you owe, then why not aim to make 2018 the year you tackle your debt problem?
One month at a time, you could take back control of your finances! In fact, you could start your journey towards becoming debt free from today, so here’s how to get your plan into action.
Do you have a debt problem?
First of all, how do you know if you have a debt problem? Below, you’ll find seven tell-tale signs. Have you noticed many of these issues creeping into your life?
- Sleepless nights: Troubling money problems that keep you awake most nights
- Cutting back: Missing out on lifestyle essentials, such as food and heating, due to a lack of money, or so you can pay back what you owe
- Mounting bills: Utility bills remaining unpaid because you can’t afford them, or because you’re prioritising unsecured debt repayments like credit cards, loans, and catalogues
- Creditor anxiety: Avoiding calls, letters, and texts from your creditors because you’re too worried about your situation to speak to them
- Borrowing more: Applying for more credit so you can repay your debts, despite this potentially making your situation worse
- Relying on credit: Using credit more and more to pay for lifestyle essentials, such as food and petrol
- Getting declined: You’re no longer being accepted for new credit
Do you recognise any of these issues? If one or more have been a regular problem for you, now’s the time to get your money back under control.
Now is the best time
Debt problems have a habit of getting worse over time. If you’re struggling with your repayments, perhaps either missing some or making them late, then your lenders may start adding extra interest and charges to what you owe.
So you find your balances going up, despite your best efforts to control them, but the sooner you tackle the problem the better. You may have already decided you want to take back control of your situation. The great news is, help is always on hand to set you on the right path.
How to take control
You can tackle the issue yourself, but you could also take advantage of the professional help which is available in the UK.
Tackling the problem yourself
You’ll need a spreadsheet, or a piece of paper, pen, and calculator. It’s also a good idea to dig out a couple of recent bank statements. Start by working out your monthly income. Then write down your essential spending, such as your mortgage or, rent, council tax, and utility bills. Other priority payments include food, travel, and your gas and electricity. It’s vital you set aside enough money each month to make these priority payments. You need enough money to live on and unsecured debt repayments are less important than these essentials.
Subtract your essential spending from your income. What you have left is the amount that you can afford towards your debts each month. Split that amount up between your lenders in proportion to what you owe them.
The final step is to contact your lenders, tell them that you are in financial difficulties and let them know what you can afford to pay them each month. Ask them to stop adding interest and charges to what you owe too.
If you can’t face tackling the problem alone, there are professional services available to offer you help. The Money Advice Service, for instance, offers free and impartial advice and was set up by the government – on its site, you’ll find handy debt test tools, loan calculators, and a budget planner.
You could also get in touch with an FCA regulated debt advisor, who’ll work out your budget with you and they’ll then make a no-obligation recommendation for you to consider. Each debt solution has different advantages and disadvantages, but some of the common benefits are:
- Reducing your monthly payment to an affordable rate
- You may, with some debt solutions, be able to get some, or all, of your debts written off over a fixed term
- Your lenders may be stopped from taking legal action against you
- Your lenders may also be stopped from adding interest and charges to what you owe, but this depends on your solution
Debt solutions also have downsides, which you should consider before deciding if it’s the right fit for your situation. Some of these are:
- Damage to your credit history – you may find it harder and more expensive to borrow money for up to six years after your debt solution ends
- With some debt solutions, the lower payments mean the time it takes you to repay everything you owe will be longer
- There are fees that apply to debt solutions and this could mean the debt solution takes you longer to repay your debts
- If you decide on an insolvency solution, your name and address would be added to the Insolvency Register
Of course, there’s always extra support you can get from the Money Advice Service before making a decision, so weigh up your options carefully before committing to a solution.
Just do it!
We know that talking to somebody about your financial problems is a massive step. It can be a very hard one to make – after all it means admitting that you really do have a problem. But as soon as you have that conversation you’ll actually feel better, because you’ll have a plan in place that could remove a lot of anxiety and stress from your life.
by Christine WalshBack to blog home