If you are unfortunate enough to have got yourself into so much debt that you are struggling to meet your mortgage repayments, pay the rent, cover your loan repayments or maintain the minimum payment on your credit card then what should you do?
Let us say at the outset that you are not alone if you are in this situation. There are many people that are struggling financially through no fault of their own. This could be due to the fact that you have been made redundant or lost your job through ill health. Both of these examples could have a significant negative effect on your finances.
There are many people that have got into debt by overspending with this having an adverse impact on their credit rating.
However, let’s get back to answering the question!
If you have got into debt then you must not ignore the situation by leaving letters from your creditors unopened and unanswered. Nor should you ignore the messages left on your mobile answerphone from such companies. Lenders do not like it if you refuse to communicate with them either by contacting them yourself or through someone that is providing you with debt advice. There are a number of organisations that can provide you with debt advice with some happy to talk with you on the telephone, online or you may even be able to arrange an appointment to discuss maters face to face. One of those is the Citizens Advice Bureau.
By contacting your creditors you may be able to come to a financial arrangement that is acceptable to both you and the finance company. For instance, if you have exceeded your credit card limit and cannot meet the minimum payment on the card they may be prepared to freeze any interest and charges and agree to accept a significantly reduced monthly repayment. They would no doubt require the completion of a monthly income and expenditure statement as part of the assessment process and they would probably cancel your credit card. They would also possibly notify one or more of the credit reference agencies so this would result in you getting a poor credit history. However, by taking this action, it may mean that you can start to get yourself back on your feet financially. They will want to review things on a regular basis.
There are many people that get into serious debt with the banks and try to avoid the situation. Don’t ignore them, as it may only get worse. If you are above your overdraft limit you could find yourself in a situation whereby your bank stops your debit card and returns your direct debits unpaid. They may even request that you make alternative banking arrangements. In which case you may be faced with having to find out how to get a bank account with bad credit.
If this is the case, do not become too concerned as many companies offering guaranteed bank accounts provide prepaid debit cards that can be used in the same way as an ordinary debit card i.e. to purchase goods and services in shops, online, over the phone and to take cash out of “hole in the wall” machines.
The message is quite clear. Don’t ignore your creditors. Either contact them yourself or do so through a reputable debt adviser.