According to new figures released by Credit Action, 331 people are declared insolvent or bankrupt every day. If you’re worried about your level of debt in 2012 you should definitely look at ways that you can reduce your debt before you add to the above statistic.
UK debt
Despite the rising unemployment levels in the final quarter of 201 and the rising cost of living, figures recently released by charity Credit Action have indicated that personal debt levels have improved year-on-year.
In November 2010, UK personal debt was at £1,455 trillion, and this has improved to £1,451 trillion in November 2011. If we’re worried about our levels of debt what can we do?
Try not to add to the problem
If you’re struggling to meet repayment amounts, you should never borrow more money to help you out in the short term. By borrowing more credit to pay off existing debts you will just end up in a worse situation than when you started.
Get a credit report
If you’re worried about your debts, it’s a good idea to request a credit report at least once a year. For a small fee, credit agencies such as Experian will provide you with a detailed credit report.
Your credit report will normally give you a credit score and it will detail all of the credit that you have available to you that is allocated to your name. If you believe any of the credit report to be incorrect then you should query it with the credit reference agency as soon as you can.
If you have a debt problem
If you do have a debt problem, the first step is recognising that you do and your credit report will help you to do so. Once you know your financial situation you can then prioritise your debts in order of importance. By looking at your debts in this much detail, you can identify the high interest debts that may be the most damaging; these are the debts that you should target to pay off first.
Try not to miss payments
By missing credit card payments you risk worsening your credit score as well as damaging your relationship with the creditors. You will also worsen your debt situation as you will most likely be charged a late repayment penalty.
If you continually fail to pay your debt repayments, your creditors may decide to sell your debt to an external debt collection agency.
Don’t suffer in silence
If you think you won’t be able to make a repayment it’s important to remember that you should always let your creditors know. Give them a call and explain your situation and how you find yourself in the situation that you’re in. Ask if there’s a way that you can reduce your repayments to make them more manageable. If you don’t let them know then they won’t be able to help you.
Credit card debts
If the majority of debts that you have are on credit cards, you should look to shift your balances to a 0% interest credit card as soon as possible. You can then pay off your existing credit card balance over time without incurring any extra interest. There are some great credit card deals available at the moment that offer balance transfer interest free periods of up to 24 months.
Debt Consolidation
If your debts are substantial and you think you’ll need more time to pay off your debts than an introductory credit card offer will give you, then you may also consider debt consolidation via a personal loan.
Loans can be a great way to consolidate your debts whilst fixing your repayments over a longer period of time at a more manageable level. However, remember that by taking out a personal loan you will have to pay interest over the term of the loan. You can compare the latest personal loan deals at price comparison sites like MoneySupermarket.com.
If you think your debts are out of control
If you think your debts have reached an unmanageable level you should speak to a dedicated debt advice service. The Credit Consumer Counselling Service (CCCS) or Citizen’s Advice will offer their guidance as to what they think you can do next.