When to get debt management help

Nobody likes to admit that they cannot manage their debts any longer. This is, however, the stage that many people get to before they can actually admit that they have debt problems in the first place. Many people get to this point simply because they fail to spot the early warning signs that tell them that they need some help and advice.

Early Signs That Debt Management Help May be Useful

Debt has a nasty habit of creeping up unawares and turning itself from a minor problem into a major crisis. The signs that somebody may be having financial difficulties can manifest themselves early on in the process. Common early warning signs include:

  • Stress and worry: People who know deep down that their finances are teetering on the edge will suffer from low level stress on a virtually constant basis. They may be irritable with those around them, may feel depressed and may have trouble sleeping. They may wake up in the middle of the night, for example, worrying about paying a bill or having enough cash to buy something essential.
  • Ignoring the situation: People with early debt management difficulties may try everything that they can to ignore the situation. They may even have a period of spending more to make them feel like everything is OK. As the situation worsens here they may simply stop opening bills and trying to sort out their financial commitments.
  • Running out of cash: An early sign that help may be necessary comes when an individual starts to run out of cash early every month. The cost of paying their essential bills and their basic debt commitments simply doesn’t leave them enough to live on. They may need to use their credit cards to pay for everyday spending and for cash advances, they may use all of their overdraft every month and they may start to use payday loans.

These signs are an indication that things may be going out of control. If the individual doesn’t take steps to get some debt management advice then their situation could get worse.

Signs That Getting Credit Debt Help May be Essential

There will come a point where it becomes much more obvious that there is a long-term problem here. The warning signs at this stage include:

  • No lines of credit: At this stage the individual may find that they have no more access to credit. They may still be running out of money every month but they have no resources to use any longer to raise the money that they need to live on. They may, for example, not be able to increase overdrafts or credit limits on credit cards any longer. They may also get turned down for new lending products. At this stage many will be unable to cover their minimum debt commitments.
  • Lender pressure: As it becomes harder to service even minimum commitments to debts then lenders may start to make their presence felt. They may start demanding their money back and outlining actions that they will take if repayments are not made. This could start a variety of processes such as home repossession and legal action.

The easiest way to relieve the stress and worry in this situation is to get some help that gives practical solutions on how to get out of debt. There are a variety of debt management solutions and debt consolidation options open to consumers and most people will find at least one way out that suits them. The key thing to remember here is that this will always be easier if the individual can spot the warning signs and take action to get debt help as early in the process as possible.

Misleading Debt Management Advertising

Justice Minister Bridget Prentice said: “Vulnerable people facing debt problems need help and support. We have produced this guidance to protect innocent customers from being misled by businesses advertising easy and quick arrangements for outstanding loan, credit card and other similar debts to be written off…”

Misleading Statements from Some Debt Management Companies

The Ministry have also highlighted a number of statements they consider to be misleading:

  • “80% of credit agreements are unenforceable!”
  • “We’ll get your credit cards written off within 6 weeks!”
  • “We have a 100% success rate!”
  • “A positive outcome is guaranteed!”

This new government guidance follows joint Ministry of Justice and Office of Fair Trading advice for consumers struggling with debt. That advice is clear and unambiguous, consumers should take independent advice before accepting help from the companies who make statements like the ones listed above.

If a person were to Google the search term “help with debt” they would be faced with a staggering 32,200,000 pages. How can anyone with no knowledge of debt management procedure possibly choose an appropriate company to help?

Free and Independent Debt Advice

One of the few pieces of good news for people with large amounts of personal debt is that there is help out there and it’s free and independent. There is a way forward.

Some of the help available:

  • Budgeting advice
  • Debt management plans
  • Debt counselling
  • Individual Voluntary Arrangements (IVA’s)
  • Protected Trust Deed (in Scotland)
  • Bankruptcy

Consumers can also be offered help to identify priority debts, like a mortgage, rent on a house, payments due to the Inland Revenue, utility bills and council tax payments.

There is a range of free legal advice available. For example some of the most common questions asked are:

“Am I liable for my partners debt?”
“If I die does the debt die with me?”
“What do I do if I receive a County Court Claim Form?” (England and Wales )
“When can a creditor take me to court?”

Organisations That Offer Free Independent Debt Advice:

National Debtline (Money Advice Trust)
Citizens Advice Bureau
Consumer Credit Counselling Service (CCCS)
UK Insolvency Helpline
UK Information Commissioner’s Office

Much of the help available can be accessed on-line or on the telephone and many of the initial enquiries can be made anonymously.

For example, an online CCCS Debt Remedy session will only take around 20 minutes to complete. Many people who use this service find that for the first time they can finally see a solution to their personal debt problems.

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Author: knowledge herald

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