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Deep in debt
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Article
| Britain is in debt and the amount we owe is increasing significantly. But how do you manage your debt effectively? asks Christina Jordan
Nobody likes to be in debt, but it's become a fact of life in today's buy-now, pay-later society. Whether it's a mortgage or a credit card, there are very few adults left in the UK who are fortunate enough to have no debt whatsoever. |
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On leaving university, for example, many graduates are already saddled with on average, over £10,000-worth of debt, according to the Insolvency Helpline. Then there are credit cards, overdrafts and mortgages to add to the mountain of borrowing that is weighing heavily on the shoulders of the nation. According to money education charity, Credit Action:
At the end of November 2005 the total UK personal debt was £1,148bn and it's growing at a rate of over 10 per cent a year
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Average household debt in the UK is approximately £7,776 (excluding mortgages) and £46,491 including mortgages.
Britain's personal debt is increasing by £1 million every four minutes.
While many people can manage their debts effectively - for example, use their credit card regularly but pay it off each month - for others debt can become a major problem.
If you have got to a stage where your debts are unmanageable the first thing you should do is inform the people that you owe money to - your creditors. Take advice from one of the free services across the country (see box, Make contact) and, most importantly, don't ignore the problem - it won't go away on its own.
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Make contact
It's important that you get help if you are struggling with debt. Below is a list of places you can go to for free advice on debt problems:
• Your local Citizens Advice centre can be found in the telephone directory or by going to citizensadvice.org.uk
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• The addresses and telephone numbers of Money Advice Centres and Law Centres can be found in the telephone directory
• Money Advice Scotland can give details of the nearest adviser for people living in Scotland. The telephone number is: 0141 572 0237 and the website address is moneyadvicescotland.org.uk
• The National Debt Line can give free information to people living in England and Wales. The telephone number is: 0808 808 4000 and the website address is nationaldebtline.co.uk
• AdviceUK is a national network of advice-providing organisations. Contact details are available on its website adviceuk.org.uk or by telephone on 020 7407 4070.
Source: Citizens Advice
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| Dealing with debt
Before you can tackle a debt problem you need to collect information about your money affairs and follow some simple steps.
• Make a complete list of your debts. Remember to divide them into separate headings - priority and non-priority debts. You will have to make offers to pay off your priority debts before you tackle your non-priority debts
• Work out your income and expenditure. Be honest and make sure that the amounts are realistic. Your budget will show you if you have any money left over to divide up between your creditors. If you encounter problems, an agency can give you confidential advice on what to do |
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• Do not ignore creditors' letters or phone calls. Contact your creditors as early as possible and explain to them why you are in debt. Send all the creditors a copy of your budget and the list of your debts. If you do not feel confident to deal with your creditors, contact a free advice agency (see box, Make contact)
• Do not borrow more money to repay your debts. Think about the ways in which you might earn extra money or increase your income instead. If your income is low, you may be able to claim benefits.
Source: Citizens Advice
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