Stress and debt cannot be compromised in any way. The two go hand-in-hand and are interconnected in such a way that one affects the other. Chronic debt causes stress, anxiety and even physical and mental health problems leading to depression, strokes and heart attacks. This is why you must take control of your debt, before it takes control of you.
The best way to manage your debt is not to ignore it hoping the problem will disappear. This is more akin to placing your head in the sand and not wanting to see the mounting problem building up. If you cannot see it, then it does not exist, right? Wrong, it is still there. No matter what you do. And it will always be there until you confront it head on. By confronting it and taking back control, you will undoubtedly reduce your stress levels, and therefore your health will improve – as will sleep.
Gather together all of the debt you have, from the biggest to the smallest, and consign to them different levels of importance. Credit cards must be paid, so you need to get them out of the way as quickly as possible. By ringing up the credit agency/bank, make arrangements to pay off your outstanding debt. What you will find that just by ringing up your finance provider, they will appreciate it, and come to some sort of agreement with you.
The trick here is to not allow your debt to get too high. This will only happen if you have ignored letters imploring you to get in touch with the ‘said’ companies/banks. Businesses hate it when customers choose to ignore their letters, instead of ringing them and telling them that there is a problem.
Once you find yourself slipping into debt, contact the relevant company as soon as possible. Explain to them the situation and whether you can come to some kind of agreement as to how to pay off the debt. They will appreciate you contacting them and will offer you terms that you can afford. Of course, this would be over a longer period of time, but at least you will be able to pay off what you owe, without leaving yourself short.
However once a new agreement has been drawn up by the company/bank, and signed by you, then it is your duty to meet the new payments. Failure to do so could lead to you being taken to court, and the full costs of the court -plus the cost of the original debt, with VAT added, will be yours to pay.
If you have outstanding debts then you could consolidate them. This would mean putting all of your debt into one big lump sum and paying off small amounts each month. There are quite a number of financial companies that offer you the chance to consolidate all of your debts into one.
As explained, this would mean combining all of your debt into one monthly payment. There are Debt Consolidation Advisors that will help you do this – if this is the route you would wish to go down. This would mean paying smaller monthly payments, even though the debt will take longer to pay off, as explained above.
You will have to weigh up the pros and cons of such a decision. Obviously, the advantages are that you are paying off your debt at a rate you can afford, than you would be normally, and your stress levels are markedly decreased because you know you are getting it sorted out and the debt is getting paid.
By consolidating your debt you will halt creditors letters, freeze interest on the debt, and put the control of the debt back in your own hands. The relief this can bring knowing you are back in control again cannot be measured. With debt consolidation, normally the debt is paid back within five years. You must agree to pay back the debt within that time frame. Obviously, this will be at a lower rate than you would normally pay.
A Debt Management Plan is a plan in which you agree, along with your creditors – to pay back your debt at a level/rate, which would be affordable to you. This is not a consolidation, but rather, it is you coming to an arrangement with your creditor about your debt, and what you can and cannot afford to pay back.
The both of you will come to an agreed total of what you can afford if you are struggling to meet your repayments on the debt. This will mean signing a new contract and sticking to it. Failure to do so could see you having to meet the full cost of the debt,plus interest, and/or court action taken against you. However, a DMP [Debt Management Plan] is one in which many people and creditors agree too. Both parties are then satisfied, because the creditor is getting their money back, albeit at a smaller rate, and the debtor, is paying back what he/she can afford.
Declaring yourself bankrupt is the very last resort for those who are in debt. This is a decision that has to be thought through very carefully. Declaring yourself bankrupt would mean all of your debts are cleared in one stroke. However, there are very serious consequences to this. Your home, and other assets – such as your car, and anything else of value, could be sold off – in order to pay off the debt you owe. Your bank account/s will be closed and any credit/debit cards you have will be terminated. Your bankruptcy will be made public, whether you like it or not.
If you happen to own a business then they will be closed [shut down.] Restrictions will be put on the kind of work you take up in the future. Accessing financial services in the future will be doubly-difficult. And you will not be able to serve as a company director – without a court’s permission.
So, as you can see, bankruptcy is the final solution to all of your debt problems. However, think very carefully before you go down this line. If you can handle what is to come, then by all means go ahead. At least then you will be debt free and stress free. Once your assets have been sold to pay your creditors, all of your debts will be written off.
You must weigh all this up though with your health. If your debt is such that is affecting your health, adversely, then there is no other solution than to pay off what you owe, as soon as possible. If you wish to declare yourself bankrupt, and become debt free, be aware – as explained above – that you could end up losing your home and all of your other assets too. Everything, when it comes to debt and health, must be weighed up by yourself. And it is you who must come to a decision, in regards to each.
Whichever road you go down, make sure it is the right one for you – whether it is consolidation, which means lumping all of your debts into one, and paying it off in small amounts – a Debt Management Plan,in which you agree, along with your creditors, to pay a certain amount of money off your debt each month – money that you can afford. Or, bankruptcy, which has the advantage of wiping off all of your debt you owe, but the disadvantage of having to sell your assets – such as your home – in order to do it.