Get out of Debt

It was once said that it is easier to get into debt than get out of it.  And, it is always much easier to spend money that is not yours [credit]. Indeed, sometimes people do not even realize that they are slipping into debt…until it is too late. When the red-letter bills begin to arrive, and you find yourself hiding them away in the back of a drawer, [out of sight, out of mind] don’t you think it is time to act? 

This article will show you how you can keep out of the clutches of debt for good.  And it will also tell you about the tell-tale warning signs of debt that you should watch out for and be wary off.  You must be determined in getting out off debt so in saying that, gather all of your bills together, no matter how big or small and work out how much you can reasonably pay back. 

If you have been in debt for some time, companies will very rarely look kindly at you, if you have not responded to their letters  So, with that in mind you must contact them explaining why you have not been in touch, and that you are willing to come to some kind of arrangement to pay off what you owe.

Can you afford to pay most of your bills with the total that is left?  If not it is at this point where you must pluck up courage to get in touch with the said companies you owe money too.  For many people this is the hardest part of facing up to their responsibilities, but this problem can be overcome.  If you are honest and forthcoming, explaining why you can not afford to repay your debt, nine times out of ten, the company will be understanding.

When you contact them you would have already worked out how much you are left with – after food, clothing,and all the utility bills have been paid. How much do you have coming into the house, and how much are you spending – this information they will want to know. So you must have the relevant information to hand.

They will arrange it so that your repayments of the debt will be smaller than what you where paying previous [before you stopped paying].  They will also arrange it so that you will pay over a longer period of time.  Companies to whom you owe money too, do not have to do this.

They could demand the total in full [especially if they had been trying to contact you constantly with no success].  But, if you can prove to them that you are struggling, and will be in deep financial hardship if forced to pay back what you cannot afford, then normally they are understanding about your situation.

Doing this gives you time to sort out the other debts you may have built up. The said company will then make an arrangement with you, over the phone, as to the day and date when you should begin your repayments again. Also, before they offer you a smaller repayment package, over a longer period of time, they will ask for proof of your earnings [ or proof of what money is coming into the house,and what you are spending]. You will send the relevant information in the post, [after making photocopies of everything].

Never send the original document but always photocopy the information at hand and then send it.  Once the said companies read the information you send them, they will then contact you with an official document upon which will be your new payment plan, the length of time you have to pay back the debt, and the amount you both agreed too. Sign the original, and keep the copy, Send the original back to them and they will confirm, either by letter phone, [or now by Internet if you have an E-Mail address].

At this point they will normally stress that any breaking of the agreement that you would have made with them over the phone, will automatically cancel the new agreement that you have agreed to. You will then be liable for the payment of the full debt, plus interest added too.

It is in your own interest to keep up with the repayments, as by not doing so could see the company passing your debt onto a financial debt company.[who specialise in reclaiming back money that is owed]. They will act on behalf of the company and will harass you until you pay back what you owe – finally resorting to you having to face court action.  Losing that case, will see you having to pay court costs, as well as the original debt, plus interest.

You must remember that during the period that you have debt hanging over your head you cannot apply for any type of credit, This includes credit cards,and other things on higher purchase.  You will not be able to put down for a mortgage, and in some cases, you will not be able to apply for a bank account – other than the one you already have.

If the company you ring refuses to listen to your pleas for leniency, because too much time may have past since you last contacted them, then the only other course of action would be to pay a visit to a CAB [Citizens Advice Bureau]. These organisations will speak on your behalf, they are specialists in debt and deal constantly with debt on a daily basis.  What the CAB does is gather all of your bills -after you have given them the information about how much you are left with – after paying for things like, gas,electricity, food, and so on.

They will work from the total you are left with and will ring the company on your behalf. Obviously you must have proof of what money is coming in and out of your home [if you are in receipt of any benefits, these will be checked]. They will then take a photo copy of the documents and pass them onto the said company, along with what you can afford to pay back. 

Again, doing it this way, means that you cannot apply for any of the said items mentioned earlier. Having received the information, the company will then get back in touch with the CAB, and forward on their agreement or disagreement. They might want you to pay a bit more off, and your advisor will tell you about this.

But, if you are in genuine hardship then normally companies will come to some kind of agreement with your CAB Adviser to help you – and them [because it is in their interests too that the debt is paid off].  Once the agreement has been made, it cannot be broken and you are liable for full costs if you break it.

Once the debt is paid, your name – and address will no longer be blacklisted and you will then be free to apply again, for credit cards and such like.  But, many people do not do this and are careful with their money, once they have been touched by debt. The trick to getting out of debt, is knowing when you are losing control. It is you that should be in control of your money, not the other way round. .If you have more than one credit card, cut the rest and get rid of them.

Do you really need more than one credit card? If you have two cars, will not one do? Also, is your car big?  Why?  The bigger the vehicle the more insurance you pay, and gas too [ not forgetting road tax]. Replace your car with a smaller version, and with one whose fuel is as clean as you can get it.

Cut out all unnecessary purchases that you do not need. There is a huge difference between need and want. Do you really want that item?  Or, do you need it?  If you want it, then you will soon spiral into debt, but if you need it, then purchase it because it is something that will pay for itself in the long run. Always be aware of any purchase you make and also be aware of where your money is going. Money is hard to come by – but it is very easily spent.  Always put money aside for the essentials like, food, electricity, gas and water – as well as the rent.

When you are in debt you have to make cuts, in your spending – having only one credit card, one car [instead of two etc etc ].  And as for televisions, and radios, do you really need three or four?  By making simple changes in your life you will soon be debt free.  I am not saying go without treats every now and then, but what you must remember is that austerity has to rule your home now. By paying off what you owe now,and not buying for buying sake, you will save a lot of money in the long run.