Filed under: Debt Advice
Instead of declaring bankruptcy, how about trying these commonly used debt solutions….
1. An IVA. These were introduced by the Government as a way of debt management without resorting to the complex legal process of Bankruptcy. You negotiate a percentage with creditors of how much you can pay back, and if they agree you may end up paying significantly less than before. It’s not an easy option however, so you should seek advice.
2. Debt Consolidation. Instead of paying the huge interest and fees on separate credit, store cards and loans, these firms can give you one loan which means one payment. Although these are advertised heavily on TV, they are rarely suitable as they mean a very long term commitment.
3. Remortgaging. If you have equity in your home, remortgaging can be an easy way of getting some extra cash at a low rate. It does mean however that the length of your mortgage will increase and again, it’s not for everyone. It could be a risky option, given the ups and downs of the mortgage market.
February 26, 2010
The first step is to notice that you have a problem so well down you have completed the first step and hopefully the only way is up! It will take a lot or determination and maybe even some sacrifices however it will be worth it in the end. The second step would be to stop spending. Of course there are always the essentials you need to buy but could you cut down on luxury products and nights out etc. Also it does help to cut the cards up; it means the temptation has been removed.
There are many things that you can do to get you started.
- How about looking at the interest rates on credit cards. Is it possible to switch these over to something that is 0% and stop you wasting money on just paying off the interest which can take years to clear off the balance?
- Earning more money is also a good way to chuck some extra money at the debts to get them paid off quicker. How about extra shifts, a second job or even selling unwanted items on the internet. It can be hard work but remember your aim – to be debt free. It can help setting yourself a goal and give yourself something to work towards.
- Something that is definitely worthwhile doing is drawing up a list of all your incomes and out goings. This way you can pin point areas which may need a bit of work and help to save any money which you can throw at the debt. A budget for food etc can stop any wastage. Also it is a good idea to work out which debts need the most attention, these are usually the ones with the high interest.
December 16, 2009
Two weeks ago I got an email from someone in financial problems asking for specific advice in regards to their relationship. She explained to me that she has been keeping her debt from her partner as they have separate credit cards and asked my advice.
I’m very flattered for the email, but would like to recommend anyone with debt problems to seek professional advice. I’d like to offer you this response, however, which is my personal view.
I would never lie to my partner about debt, as sooner or later he would find out anyway. We share the post, share the bills and share the cost – so lying wouldn’t solve anything. However, it is more of an issue when we lie to our families about how we feel about the debt. Many of us cover the situation up by claiming the debt is manageable or you have it ”all worked out”. In reality, we’re hurting deep down and anxious to find a way of gaining money we haven’t got. Covering such problems up really doesn’t help, as those who care for you cannot help you if they aren’t aware of your troubles. There is a potential for strained family relationships when your debts force you to borrow money from those around you, even though you’re not sure when or if you can pay them back on time. Therefore, debt can harm family relationships if the problem is covered up or hidden.
I hope my perspective has been helpful, and if you do have debt problems, I can’t stress enough, seeking debt advice and communnicating about your debt is the best way forward. I’ve found these debt FAQs really helpful for answering some of my common questions about debt solutions.
November 23, 2009
It seems our post in July about Debt and relationships has sparked a few conversations! Here’s another guest post this week from someone who was inspired to write in after reading a post from another. If you want to write us a post and have your opinion on a debt topic heard, get in contact with MoneyStand.
I would never lie about anything to a partner, as I believe that a relationship should be based on honesty. Fortunately, I was brought up with the attitude that debt is something to be avoided. Sadly, with today’s attitude of instant gratification, debt threatens the relationships of many couples, especially if both partners are not jointly responsible for getting into the situation.
A former partner, however, did have a habit of spending in secret, as they knew that I would be upset to know they were wasting such large amounts when we could not afford it. Finding the credit card bills, and knowing that these had to be paid for, caused numerous arguments, as I was concerned that our budget could not cover this expenditure.
Concealing financial problems is understandable, but secrets have a way of emerging, and a partner may well be more upset if the facts are kept from them. Anyone in debt would be well advised to be honest about it; of course the initial response may be anger, but they may find that the partner is more understanding than they expected, and will work with them to find a solution to the problem.
October 12, 2009
The first and most important step in getting out of debt is to admit that you have a problem, and to realise that it is really nothing to be ashamed of. There are thousands of others in the same boat, many of whom are too ashamed to admit to being in debt.
Websites like MoneySavingExpert.com can be invaluable in helping you to face the truth and start to take steps to turn your finances around, as well as having many members in the same position who can support and advise you on what to do next. The very first thing to do is to draw up a statement of your assets, where you detail your income and every single expenditure each month – not just your mortgage and bills, but things like money you put aside to pay your TV licence, or for holidays and treats etc. Once you have a realistic statement you are in a better position to see where you can make savings and see what spare cash you have each month to put towards reducing your debts.
Speaking to advisors at the Citizens Advice Bureau can also be very useful, as is the Consumer Credit Counselling Service (cccs.co.uk), who can give the best advice on bankruptcy, IVAs (Individual Voluntary Arrangement) and Debt Management Plans and help you to contact your creditors to arrangement affordable payment plans if necessary.
It takes time, effort and a whole lot of commitment, but the hard work is well worth it when you can finally see the light at the end of your debt tunnel.
- Remember to TALK about your debt!
October 6, 2009
Bankruptcy in the UK
Bankruptcy is a very difficult decision, but there are a few alternatives to the procedure.
Firstly, an IVA (Individual Voluntary Arrangement) is an option. This is where you arrange an agreement with your creditor in which they decide to pay all or part of your owings. This is flexible according to the individuals own circumstances. The arranged fee is generally more than the creditors would receive if bankruptcy is filed by the person(s) in debt. Read this article on ‘What is IVA‘ if you’d like more information.
Secondly, an Administration Order can be installed in which a court will decide your payments scheme. The small print is that you must have a regular paying wage and debts that do not exceed 5,000 GBP to be eligible for an Administration Order.
Thirdly, a similar, yet more informal agreement can be attained which is an agreement between an individual and a creditor in which they both agree to a schedule of payment. This is referred to as a Family Arrangement. This however is not legally binding, and the creditor can decide that the arrangement will be scrapped and the full amount should be repaid.
If Bankruptcy is a real possibility for you and your family, it’s not something to go into before you’ve explored every other option first and considered what else is available. Before you go Bankrupt, understand all other debt solutions. Even if you do end up going bankrupt, it won’t be the end of the world. You can start again on a clean slate. THINK positive. CHANGE your spending habits. ASK for help.
September 1, 2009
It’s time for some more debt tips! If you’re at the stage when you know you have to face up to your debt but still find the idea a bit daunting, here’s my FIVE most important Steps:
Step One:
There has to be a lightening strike when you are honest with yourself as to exactly how much trouble you are in. Sit down take a deep breath and open all the bills that are stashed away unopened because you have never dared. Write down a list and work out exactly what you owe and to whom. Read that list and cry, grieve, if you need to, and then decide that you are going to sort it.
Step Two:
Set two is tell you loved ones exactly what a mess you are in. They may be angry, shocked or disapointed to start but they will give you the emotional support you need. Once you’ve told your loved ones you will feel better – a problem shared is a problem halved as they say. Your freinds and family won’t just give you emotional support, they’ll also encorage you and help you in other ways – you just have to ask for their support.
Step Three:
Cut up the plastic and stop spending. I don’t care how hard it is or how much you ‘need’ to buy something – this is about tough love here. No excuses. Start riding your bike to work, walk the kids to school, make lunch before you leave the house, use up your tinned food and freezer food that’s just lying around instead of getting more groceries, change your mobile phone plan, anything you haven’t used for a year – put it on ebay, cancel your gym membership and get fit the old fashioned way – there are no excuses here. You CAN stop spending and you CAN make changes right now to reduce your monthly, weekly and daily budget. It’s the only way things will get better, trust me.
Step Four:
Ring a not for debt advice charity, debt advice line, or debt agency – just make sure it’s free to call first. They will not take a fee but will help you go through the options of how to go forward they will contact your creditors and will help you with a budget suitable for you circumstances. Be cautious if they sound like they are trying to sell you a debt solution – make it clear you are calling for a free intial chat about your options and are calling multiple services to get the best advice and will have to discuss it with your family/partner/friends before you choose what road to go down. When you speak to them do not feel embarrassed – they speak to thousands of people around the UK who are having some money problems.
Step Five:
Remember you are not the only person in this situation. It’s nothing to be ashamed of and now you have taken the first steps your life will seem allot easier with a weight lifted from your shoulders. Take a moment to yourself to congratulate yourself that you’re on your way. Positivity and will power is key to changing your financial situation.
August 3, 2009
This week we have a guest post by a reader who would like to remain anonymous. She contacted Money Stand to tell more people about her personal struggle with debt, which she hid from her partner. She hopes this story will encourage others in debt to face up to their money problems.
Before deciding to take control of our debts, they did worry me to the point that it was affecting my sleep patterns and I did suffer from a lot of stress. I did lie to my husband, mainly by not telling him how bad things were financially, and just letting him think that everything was under control and there were no problems whatsoever. Things really came to a head when I had to go into hospital and had to trust him to handle the finances for a week. There was no option then but to tell the truth and hope for the best.
It was the best thing I had done in ages! Yes he wasn’t pleased, yes he did have a good whinge. But at the end of it all, he was supportive and we have sat down since and worked out how we can afford everything we need and get some extra money together to save up to pay off the smaller debts. We only have 3 debts but they amount to £30,000 but we only have an annual wage of £27000 coming in, and we are a family of 5.
We sat down together and looked at money coming in and money going out. We have seen areas where we could cut back our spending, like on the little luxuries of brand names at the supermarkets. I now shop around instead of getting everything in the one shop. We have changed our suppliers for utility bills, we have letters in to reclaim charges, and I am now not afraid to complain to a company about anything I find unacceptable.
I have to say that the stress of keeping it all in has lifted and I feel so much better for being honest with my husband. We are now working as a team to try and clear our debts as quickly and painlessly as possible. They say that a trouble shared is a trouble halved, and it is true. I don’t have to bear the burden alone and I know there is someone there that I can talk to and be honest with, instead of plastering a false smile on my face every day and lying to everyone about things. I feel better now, and hope that by reading this someone else will have the courage to face their debts head on and will feel like I do now.
If you would like to write a guest post for Money Stand, please get in touch.
July 15, 2009
If you’re in debt, you’re probably familiar with that hopeless, stressed out feeling that seems to go hand in hand. Debt counselling can be a way to talk to some one about your problems and get that burden off your chest if you can’t talk to you friends, families or loved ones about what you’re going through. Main debt advice companies such as Debt Free Direct offer free advice and a push in the right direction. Many other agencies do the same, so it’s just a matter of finding one that services your area.
When you call, a trained counselor will carefully assess your financial problem and then make recommendations on what can be done. You don’t have to take their advice, but it’s always good just to hear the advice of an expert regardless. Some debt advice companies can also help you out with your budget too, so make sure you ask for their advice. If they don’t provide a service that is suitable for your debt, many companies might also suggest where else you could go for those debt solutions. All you have to do is ask.
If you’re worried about being ‘judged’, don’t. You won’t be. Debt advice companies are there to help you, not scare you (and if they do you’ve probably called a bad one!). Millions of people are in debt across the world so remember that you’re not the only one is debt and there is nothing to be ashamed about for asking for debt help!
May 28, 2009
Trying to get to sleep whilst in debt can be a nightmare. Being proactive about debt is a first step on your way to getting debt free. There are many ways to alleviate and get rid of the debt monster but being creative and forward thinking and crucial to success.
There are only two sources to obtain the extra cash to reduce and pay off your debts; spend less money from your current income and find a creative way to bring in some extra much needed cash.
Getting organised is the first thing you should do. Make a spreadsheet on what you get each month and then add all your outgoings and tally it all up, this allows you to see where outgoings can be cut and money saved. See what you have left over after all this then budget for food and other luxuries. Give yourself room in the budget just in case anything unexpected arises and always know how much money you have in your debit account so you don’t go making any silly superfluous purchases.
Avoid eating out, if it’s a special occasion then cook something special at home, even if you use the most expensive ingredients it will still be cheaper than going out. Growing your own vegetables if you have a garden is also a great way of saving some extra money. Always check the local paper for event listings that are free in your area. Free events are worth taking advantage of as they provide a whole day out and means you’re not spending you hard earned cash on going to theme parks or expensive pay events.
Get rid of all your credit cards and store cards apart from one with a low credit limit. Try to only use cash and avoid using credit at all costs, if you can’t pay for it in cash then you can’t afford it. If you do need to borrow money then try asking friends and family instead.
Buy some thermal underwear! This can drastically reduce your heating bills if you wear it around the house and thus turn down your thermostat. Damart sell cheap thermal underwear and have been in the business for over 50 years, spending a little on some Damart thermals will save you a lot in the long run.
Try and get a second income! Be creative it doesn’t have to be an evening job. You could start a blog or sell items on EBay or even do peoples ironing for them. If you own your house or rent a flat that has an extra room then why not consider renting out. Using the money earned from a second income could be used to put solely into a rainy day account or in to savings or used to pay of smaller bills such as credit cards or store card bills.
So come on, get creative and help yourself get out of debt or make that bit of extra cash.
February 10, 2009
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