Redundancy, relationship breakdown, a cut in income and poor money management are all reasons why people get into debt. Sometimes it is easy to clear a debt that has accrued, especially if there are only one or two creditors and the amounts are relatively small; but other times the situation can spiral out of control very easily, leaving the debtor wondering what to do and where to turn for help. Many people find themselves sinking into a pit of denial, trying desperately to ignore their increasing money worries – but there is always an opportunity to change things.
In three easy steps, you can take control of your debt problems.
Step 1: Take Action!
Once you realise that you have a debt problem, it is important to take stock of the situation. If possible, write down all of the creditors to whom you owe money, including the amount you owe. Work out what you can realistically afford to repay by creating a budget. Assess the extent of your debt in relation to your income and be realistic about your capability of repaying. This process will give you a really clear picture of how bad your problem is and is the first step to finding a solution.
Once you have done this it is important to keep focussed and take the next step on the road to improving your financial situation by looking for debt help and assistance.
Step 2: Get Some Help!
Sometimes by the time we decide to try and take control of our debt problems the debts are no longer with the original creditors, having instead moved to debt collection companies. This can then become a more difficult situation to deal with. But don’t despair as there are many debt advisory companies who are able to help you start managing your debts and they can offer a variety of services, depending on what your needs are.
Most importantly, these companies can often act as a go-between for you and the debt collection companies, contacting them on your behalf and arranging solutions based upon what you can afford. There are many different debt solutions available and the important aspect to all of this is to find the one that suits you best. Expert debt advisors are dealing with debt problems every day and are fully experienced in the latest options available.
Step 3: Select the most appropriate debt solution
The solution you decide on will depend on the extent of your debt problem and for many people a formal solution is sometimes required in order to clear unaffordable debt. If you find yourself in this situation then an IVA or bankruptcy may be necessary.
Bankruptcy should be considered as a final step if all other paths have been explored and found to insufficient. When considering whether or not this is an option for you, it is important to remember that this would only apply to unsecured debts, such as credit cards and loans, and the amount of unsecured debt has to be higher than your assets.
If you decide that bankruptcy is the way forward, then you also need to bear in mind that there will be costs associated with filing for bankruptcy and that a bankruptcy claim will remain on your credit file for up to six years, even though you are normally discharged after one.
So, don’t let your problems fester and get worse, follow these simple steps and get started now on improving your circumstances.