How to get out of debt

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Being in debt can be frightening, the following advice may help  you to regain control of the situation.
 

Here’s a simple fact for you: Borrow £4500 on an average high street credit card, with a minimum payment of 3% and an APR of 15.9%, then try to pay off the balance using minimum payments only, you’ll be finally finish repaying the debt in 19 years time. For seven years you’ll just be paying interest and in total you’ll repay £7511, providing interest rates don’t increase during that time.  Of course, the APR cited here is generous, and on a store card is more likely to be between 24.9% and 29.9%.

Being in debt can be frightening and for many people it’s all too easy. A simple change in circumstances and what seems like a convenient way to pay can turn your life into a total nightmare.  For many, what makes it all the more stressful is the fact that the whole situation seems very threatening and it’s difficult to know what is going to happen next.  That’s why many people tend to bury their heads in the sand once their debt starts going out of control. This is the worst thing to do; the earlier you take control the better.  It might seem impossible, especially if you’re constantly getting a barrage of phone calls and threatening letters, but it is possible;  you just need to know the best course of action and your legal rights.

Guidance provided by Tony Carter, Debt Dr.

Debt Dr. is a growing group of professionals who have set up together to provide a real solution for people with debt problems.  Unlike 'Debt Management' companies Debt Dr do not charge you a monthly fee and extend the period you are in debt for.  We are not a free service, we do charge for the services we provide but our principle aim is to assist you.  We aim to get you out of debt as quickly and painlessly as possible and then help you stay out.

For free, friendly and confidential review of your debt problems contact Tony Carter,

Tony can be contacted by email;  tc@ debtdr.co.uk

or by telephone

Mobile;  07 773 909 981
Local;      01202 802350
head office; 0845 123 4000  or 0870 755 7699

Dealing with debt can be complicated and the right professional guidance at the right time can save you a great deal of time, stress and money. It is important that you consider your options carefully before borrowing any more money in an attempt to get yourself out of debt. It is also important that you understand all of the costs and implications before committing yourself to any legally binding agreement.

Here are 4 recommendations to help you take control

1) Know your problem

Acknowledge where you are in the life of a debt problem. Are you at the beginning and just becoming aware that you might not be able to keep up repayments? If so, great, now is the time to act.  Have you started to miss payments and beginning to receive letters or calls from your creditors prompting you to get back on track? There is still time to take action and you’ll probably be able to negotiate something without damaging your credit rating too badly.  Are you starting to get solicitors letters or has the debt been passed to a credit collection agency? If you ignore things at this stage it begins to get more complicated and the courts can get involved.  Have you received a court summons or a County Court Judgment?  You need to start talking quickly because soon after this the bailiffs get involved.

Don’t worry, wherever you are in this process you can still find a way out.  Your first step is to do some maths.

2) Know your numbers

So you can take control, you must get a clear picture of your financial position.  This is what you will use to negotiate with your creditors.  You need to put together an income and expenditure document listing out your monthly income and all your monthly outgoings.  At this stage do not include the repayments you are making to your creditors; that will follow.  Work out your disposable income by subtracting the amount of money you have to spend each month to live from the amount of money you bring in and add up the minimum monthly payment required for each of the outstanding debts. Finally, take this figure away from the disposable income you’ve calculated: if your disposable income doesn’t cover your minimum repayments then you need to take action as soon as possible.

3) Know your options

It’s very easy to let worry cloud your judgment.  Be reassured, whatever situation you’re in there is a way out.  Your objective is to get out of debt as quickly as possible so be careful before you commit to consolidating your debts or taking out a loan secured against your house.  As a general rule if you owe less than £12,000 you should be able to negotiate with creditors yourself and arrange lower repayments over a longer period.  If you are very lucky and can prove with your income and expenditure calculations that the repayment period is unreasonable you may be able to get the interest frozen on your accounts.  With debts above £12,000 there are a number of additional options, some of which could enable you to write off on average between 30%-60% of the value of your debt, and also a solution, which depending on your situation, may make it possible to write off the entire debt.  The truth is, being in debt is complicated and getting yourself out of debt can be even more so.  It is advisable that you get professional advice before making any decisions.

4) Know your rights

In the short term it’s important you know your rights.  It can be easy to find yourself in a position where you are scared to answer the phone in case it’s someone asking for money, or where you feel sick when the post drops through the letterbox.  There are guidelines produced by the Office of Fair Trading and laws such as the Consumer Credit Act 1974, the County Courts Act 1984 and the Administration of Justice Act 1970 which are set up to provide you, as the consumer, with protection.  All of them are relevant but the one that protects you most if you are being unduly pressured by your creditors is the law that relates to harassment.

SECTION 40 OF THE ADMINISTRATION OF JUSTICE ACT 1970
S40 Punishment for the unlawful harassment of Debtors.

(1)   A person commits an offence if, with the object of coercing another person to pay money claimed from the other as a debt due under a contract s/he;

(a) Harasses the other with demands for payment which in respect of their frequency of the manner or occasion of making any such demand, or of any threat or publicly by which any demand is accompanied, are calculated to subject him or members his family or household to alarm, distress or humiliation;

(b) falsely represents, in relation to the money claimed, that criminal proceedings lie for failing to pay it;

(c) falsely represents himself to be authorised in some official capacity to claim or enforce payment; or

(d) utters a document falsely represented by him to have some official character or purporting to have some official character which he knows it has not.

(2)   A person may be guilty of an offence by virtue of subsection (1)(a) above if he consorts with others in taking such actions as is described in that paragraph, not withstanding that his own course of conduct does not by itself amount to harassment.

Many activities could count as harassment.  It is important to note that “anything done by a person which is reasonable” when trying to recover a debt, is not considered to be harassment. 

With the guidance outlined above you can begin to take control.  There is a solution to any debt problem and you can find a way through, the most important thing to remember is that you do not need to take out a secured loan to cover your unsecured debts: there are other options.


 

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