Tag Archives: Debt
These tough economic times we are currently experiencing in the UK have affected us in a number of ways, and have arguably changed the way we live our lives. The majority of us are now much more aware of our spending and are even seeking ways in which we can stretch our income by taking on extra hours or a second job.
Unfortunately though, with households budgets stretched to their limit, any unexpected expenses such as broken down cars or household appliances could break the budget and leave you in financial trouble. Even despite your best efforts, high priority bills and credit commitments can be left unpaid resulting in debt and black marks on your credit file.
Rather than burying your head in the sand and hoping that things miraculously get better; you need to be practical and tackle your debt head-on. We’ve come up with five steps that will help you get debt free quicker than you ever expected:
Step One: Contact your Lender
The first thing to do when you are behind on loan repayments is contact your lender. Failure to do this could result in further late payment fees or charges being attached to your account and in extreme cases; defaulting of the loan.
Be honest with the lender and explain your situation in full. The chances are they’ll be sympathetic and will look to formulate a payment plan in a hope to get your loan back on track. This payment plan may mean breaking your current repayments down into weekly installments or splitting the arrears into future monthly repayments.
It is in the lenders best interest to get their money back; however they’re not going to formulate a payment plan that’s not affordable for you. Often they’ll run through a debt-to-income calculation in order to work out exactly how much you can afford per week/ month.
Step Two: Create a Budget
If you haven’t already done so then now is a great time to create a budget. When creating your budget the first thing to do is to write down all sources of income, this will include your main salary, any benefits you may receive and any additional sources of income such as investment income or student grants. Next you need to write down all outgoings, you may find using an online budget planner such as the one on the Money Advice Service will help, normal outgoings include: mortgage or rental payments, transport, insurance, utilities, food, health costs and subscriptions – be sure to include your scheduled loan repayments in this section too.
If having subtracted your outgoings from your income you are left with a negative figure, or with very little surplus income; you need to make some cutbacks. The first place to look is your non-essential outgoings such as entertainment and leisure. Next, assess your essential outgoings such as energy and insurance costs; by comparing costs using an online comparison tool you could find that you’re paying over the odds and therefore could be saving large amounts of money each month.
Step Three: Put any spare cash towards your loan repayments
Lastly, you need to discipline yourself to put any spare cash you have towards your loan repayments. At first it may be tough not to spend this on leisure purposes such as going out, but the more money you’re able to put towards the repayments, the quicker you’ll be debt free.
While you’re in debt, your number one priority should be getting out of it meaning any going out will need to take a backseat for the foreseeable future. While you may have agreed on a payment plan with your lender, you should always aim to pay off the arrears as quickly as possible to save yourself money in the future.
If you owe someone money and they begin court proceedings against you but you do not respond, you can be issued with a County Court Judgement (CCJ).
A CCJ is a formal acknowledgement authorised by the court that you owe money. This will arrive in the post and will confirm the amount that you owe, how and who you should pay and when the payment deadline is. You need to respond to this within 14 days of receipt; if the judgement is ignored and payment is not received, you can be summoned to court and forced to pay your debt as well as any additional court fees.
The record of your CCJ
If you receive a County Court Judgement, it will stay on the Register of Judgments, Orders and Fines for 6 years.
Banks and loan companies will refer to this information if you apply to them for money, and they may reject your application based on records of CCJs on the register. This can also make it difficult for you to obtain a mortgage, credit card and even a bank account in the future.
To view the record of your CCJ you can access the register of judgements for a small fee – a simple search will incur a cost of £4.
How to remove the record of your CCJ
The easiest way to achieve removal of your CCJ record is to pay the outstanding order within a month of it being received. If you do this, the judgement will be completely removed from the Judgments, Orders and Fines register.
If you pay after the month grace period, you can request for the CCJ to be marked as “satisfied”. The order won’t be removed and will still be visible on the register, but people viewing it will be able to see that you have settled the payment. To do this you will need to contact the court to tell them that you have paid the debt, and provide proof of payment along with a £15 court fee.
However if you have received a County Court Judgement and don’t believe that you should have, you can contact the court to request that the order is “set aside” – this means that the CCJ will be cancelled and no record will be kept. This can be applied in cases where you either believe that you don’t owe the money, or didn’t receive or respond to the original claim forms sent before the CCJ was issued.
To do this, you will need to complete an N244 application form and may also be liable to pay an £80 court fee. You will also have to attend court to explain why you do not owe the money, so therefore why the CCJ should be set aside.
Alternatively, your record will automatically be removed from the register 6 years later.
Beware of companies offering to remove the record for you
The above mentioned methods are the only ways to legally remove a CCJ from the register. Some companies may claim that they can remove the records for you, but they will often charge large fees and can encourage people to commit perjury in the process, which is illegal.
The Office of Fair Trading has warned that the help given by these companies can be incorrect and misleading which can result in getting you into deeper trouble and worse debt. These companies may also operate as a front just to sell loans to vulnerable people.
If you are unsure on how to proceed when you receive a CCJ, seek professional advice before taking action.
Rosie Percy writes for a diverse range of topics and industries including education, health and finance. Rosie has written for the Guardian and other lifestyle blogs, and now lives and works in Brighton.
Sometimes what happens is debt collector tries to collect on debts which you are not aware of or is out of your knowledge. You need to request an authenticity of debt when a bill collector demands a full payment on your debt which you never knew existed.
When you request for an authenticity of debt, it is a proof that the collection agency who is contacting you is the right person that you are dealing on behalf of the original creditor. This also includes a complete payment history starting with the original creditor and a copy of the original signed loan or credit card application. This could possibly be one that you might have to pay or may be it is sent by mistake to you. Either way this collector can be very unpleasant. However it is important to remember that you also have rights.
After the initial communication with a consumer relating with the collection of any debt, a debt collector should send the consumer a written notice containing:
(1) The debt amount.
(2) The creditors name to whom the debt is owed
(3) If the statement is disputed the validity of debt within thirty days after receipt of the notice then the debt will be assumed to be valid by the debt collector.
(4) A statement which consumer notifies that the debt collector has disputed within thirty day period, or any portion thereof then the debt collector would obtain verification of the debt
(5) The statement of the consumer’s written request .within the thirty-day period, the debt collector would provide the consumer with the name and address of the original creditor, if found different from the current creditor.
(6) (c) The failure of a consumer to dispute the validity of a debt under this section may not be construed by any court as an admission of liability by the consumer.
Economic recession has forced people to take necessary steps to manage their financial situation. If you are planning for a debt free life in future then money management becomes a crucial task for you. These following tips can help you to get liberation from debt and prevent you to get into debt trap. The following steps will help in the process of debt management and also prevent you from incurring debt.
Calculate your total income:
First step to manage your financial situation is by tracking your total amount you earn. Include your stable income while calculating your earned amount then you will be able to see whether your income exceeds your expenses or not. The money that you receive as gift or gain by chance should not be calculated in your total income as these incomes are not permanent. Calculating your income will help you to determine the amount you can utilize to pay off your debt.
Analyze your requirements:
Before you plan to buy anything make sure whether you require it or not. If the good is not required then you can drop the idea to buy it. Try to focus on buying things that are essential for your daily life. Do not let your desire control you rather put a bridle your flamboyant lifestyle. Try to identify your needs and requirements before you plan to spend your hard earned money.
Maintain a savings account:
Creating a savings account and analyzing your investment plan is a crucial part of managing your money. You can create a budget and keep aside the extra fund that you manage to save after dealing with your monthly expenses. You should form an emergency fund that will manage to deal with your unexpected expenses. You might get tempted to spend these extra cash in hand but spending the amount can take a toll on your pocket in future. If you can not control your urge of over expenditure then make a list of the things that you require. This will help you to focus your attention on specific requirements that will control your spending spree.
These following steps are simple and easy tricks to manage your finances. While controlling your money you need to find out three things: you desire, your requirements and how much to save. Money management is not a laborious task. If you can track your mode of expenditure then you can save and manage your expenses efficiently.
People suffer from unforeseen factors and events, which can suddenly have debt increase. A job layoff is a good example of how someone can go from being debt free to struggling to pay for groceries. Other individuals might have extraneous spending habits in which poor money management is part of their debt troubles. There are 10 tips we can offer to help you alleviate your debt troubles, including the use of a free payday loan. A free payday loan provides you with the money you need between paychecks, without the interest attached. Often there is still a small processing fee, but as long as you pay the loan off within a certain time frame it is free. It is not the best option, so our 10 tips to alleviate debt should be considered first.
1. Budget your money on a monthly basis. A calendar is a good tool for this since it allows you to see what bills need to be paid when and to put how much. You can also use a spreadsheet to calculate what you need for the month. Any extra income can be saved or sent to your credit cards.
2. Pay the balances on your credit cards that have the highest interest rate, first. If at all possible condense your credit cards down to one payment. However, you should not exceed the 50 percent mark on the credit limit to help your credit scores remain in good standing.
3. Limit yourself on how much you can withdraw from an ATM during the month. For example, you might put a limit of $20 per week for incidentals like eating lunch out at work. Have your paycheck direct deposited also to alleviate the need to get cash when you get your check.
4. Discretionary expenses should be lessened. This means less eating out, not overusing your cell phone, or spending money you do not have on less important items.
5. Try not to borrow money to get out of debt such as consolidation loans. By obtaining another loan you are still not getting rid of the debt, just changing it around.
6. Look at your living situation. Are you renting? Do you have a mortgage, property tax, homeowner’s insurance? You might be able to lessen these burdens in refinancing the mortgage or finding better insurance plans.
7. Instead of using credit cards use cash. Have a credit card only for emergencies such as buying a new fridge because the old one breaks or fixing your car because it has broken down.
8. Look for bargains. Start using coupons again, search the net for better deals, and avoid paying shipping whenever you can.
9. Look for ways to save money such as having a part time job or garage sale to bring in a little extra.
10. Always keep in contact with your creditors to see what deals you might be able to make, especially if they are threatening you with debt collectors. Never let the creditor have the upper hand. Instead, work with them.
If you are in debts, your top priority in life should be to become debt free as quick as possible. You can be in a lot of emotional imbalance with lots of debts over your head. The problems can become so overwhelming after a certain stage, therefore it becomes important to find some form of debt relief and finding an effective way of managing money. The best way is to learn proper ways of money management skills is to visit a professional counselor. He can teach you from managing household expenses to how to pay off your mortgage without getting deeper into the hole. The professional counselor can help you in getting enrolled in a mortgage program as well as take care of your debts in the most efficient manner.
If you have too much debts, you won’t good job opportunities, sometimes, it can even result in a job loss, a house and can even ruin marriages and families. The stress of going too deep in debts can cause health problems such as high blood pressure and the fear of heart attack or stroke. You don’t need to wait until the situation gets far beyond control. You need to consult a professional counselor and find options to become debt free.
You basically need to formulate a plan. Create a unique debt program for yourself. The crux of the matter is that you should be able to control your debts. Don’t allow debts to control you. In order to do this, you need to devise a budget on which you can live and keep it within your reach. If you think you can do this on your own, you have the perfect control, otherwise you need to speak to a money advisor. It can be anyone who has a better control on money management, someone in your family or a trained expert. Discuss about your situation with family members and friends and get referrals. It’s not good to stay isolated when you are unable to make the right decisions with your finance.
Sit down and carefully review all the options regarding budgeting and then you need to be strict with yourself. Don’t spend money unnecessarily. Draw up a weekly or monthly budget and stick to it religiously.
You should be able to find effective methods of cutting unnecessary expenses in your daily life. With the portion of money that you can save from the total, you can put it towards the bigger debts, such as your mortgage. This rightly put you on the debt free path. Resolve in your own ways not to create new debts while you are walking in the positive direction and improving your present situation. If you want to buy something very necessary like a television or new clothes, set money aside from your daily budget for the purchase instead of being hasty and charging it on your credit card.
Always remember that credit cards are to be paid in full every month. If you leave any outstanding balance, it will add up with financial charges and late fees in the next month. Never charge on your credit card for purchasing something that you know is going to take a long time to pay back. Think about the amount of money you will be wasting just by paying interests and in fees. You must work every day and generate that much income so that you can keep your expenses below it. Work diligently to stay within the budget you have worked out for yourself. You won’t see the progress all of a sudden. It will come in small steps over a long period of time.
Use the internet and search for online tips of saving money and exercise them to your everyday life. There are many ways to cut expenses from your everyday budget. You just have to search for it. All these things will pay off in the end if you have the intense goal to become debt free. While you are working hard to resolve your debt issues, don’t be too hard on yourself. Live an easy life and enjoy it. Be disciplined and make the right monetary decisions. You will have the perfect self control over yourself.
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In the present times, the global economy has been badly affected and people need to make good and intelligent decisions when it comes to using credit cards and loans. Here are some tips that will help you in maintaining good credit practices during a recession period or an economic turndown.
The first thing that you need to do to stay out of debts is to pay your bills on time and keep a good credit record. This will help you to qualify for lower interest rates when you are looking for any new credit in the future. Don’t wait until the last minute to pay your monthly bills. If you are not paying your bills in time, the credit card companies will charge you high interest rates and late fees. The late remarks will be reported on your credit report and the future lenders will find you as a high potential risk to their finance if they have to offer you any new credit.
Credit report is a very prestigious financial document of an individual. It shows a list of all your revolving accounts and how you had been paying your credit card bills, loans, rent and selected other debts and bills. A credit score is a three digit number generated on the basis of how you have been using your credit and reflects your financial responsibilities. Based on your credit ratings, the credit grantors will determine the interest rates to be offered on any new credit.
In order to keep your credit in good standing, it is always recommended to pay your bills on time. While missing one or two payments over a long period of time may not significantly damage your credit history, if you are constantly missing your monthly payments, it will have a devastating effect on your credit ratings. You will face tremendous problems in getting approved for any new credit or loans. Lenders will look into your recent payment history to make sure whether you qualify for their loans or credit. Be particular in your payment activities if you are applying for a loan.
Having too many credit cards and not able to manage it is certainly not a good sign. There are people who collect a stack of cards, including those from stores and oil companies, several of which are rarely used. If you have too many credit cards out of which some of them are not used at all, creditors will think that you might use those cards sometime in the near future and get into debts. Even if you’ve proven in the past to be a responsible user of credit these “extra” cards could come back to haunt you the next time you apply for a mortgage or other loan.
If you find yourself in excessive amount of debt and having a hard time in paying it back, consult a debt settlement company to negotiate with your creditors for payment arrangements. They will analyze your present financial situation and work out a suitable payment plan with your creditors and walk you towards a debt free life.
When it is about controlling debt related problems, there are many options but only a few gets implemented since they are quite easier than others. One of the great options is switching from credit card to a debit card. This will prevent you from building any new additional debts because your spending habits will be limited to the balance available in your account.
One of the main reasons of being in overwhelming debts is impulsive buying. One should have a perfect control on his spending habits. Although it may sound difficult, but it’s important to limit your spending habits to necessary expenses only.
There are other options to control your overwhelming debts. For example, if you are a home owner, you can refinance your home or use the equity to get a home loan or a new line of credit. This will be a great monetary help to pay off the existing debts that are added with very high interests and fees. This new loan or line of credit on your home can be attained at very low interest rates. Be aware that your home will be at risk if you default in your loan repayments.
Credit cards are often the root cause of debts because many people find plastic to be a lot easier and convenient to make purchases than carrying cash. This is a dangerous situation because you have borrowed the money from the credit card company at higher interest rates for this kind of credit offered. The interest rates will keep on adding up if you are just paying the minimum amount each month.
If you are shopping for a credit card, look for the ones that are offered are lower interest rates. A good idea will be to transfer all the balances from your current cards to a new card at a lower interest rate. Make sure that you are able to pay back the full amount within the lower interest rate introductory offer.
Some people opt for debt consolidation loans to control the debt situation. By taking a debt consolidation loan, you will combine all your multiple bills under one monthly payment and pay lower interest rates on the debt consolidation loan. This is certainly a good option because instead of paying to different credit card companies at higher interest rates, you will consolidate everything under one monthly payment at lower interest rate, thus helping to eliminate debts quicker.
There are other meaningful ways to come out of debts. For example, if you have some unwanted or unnecessary assets, you may sell off those items in order to pay off the debts. There are many items that can create emergency funds. For example, unneeded jewelry, used car or furniture that can be sold for cash. Some also have leased out any extra property they may own. These options will definitely speed up the process and walk you towards a debt free life.
Try to stick to the following plan if you are trying to get out of debt and at the same time stay away from it.
It is important that you should not deal with all kinds of debts at the same time. Focus on those debts that need immediate attention while rest of the debts can wait for some time. Once you know which debt needs the immediate attention, put all your energy and extra income towards it and paying off that particular item. The advantage of concentrating on one particular debt will reap the psychological rewards and you will see progress.
Do not cancel your credit cards if it has some balance on it. Try to pay off the outstanding balance in full before you go ahead and cancel it. In case, if you close the account before paying the full balance, they will not see you as their existing customer and hence, can forward your account to some outside collection agencies. You might fall under adverse circumstances.
While you are formulating your debt reduction plan, it is important that you don’t build in unrealistic expectations. Create a realistic plan. If you have been used to a strict budgeting, you will have to give some time to change your behaviors, attitudes and habits and see results.
Don’t put your hands on to your emergency funds to take care of other things. You might have kept that fund separate for some other unexpected situation. If you use those funds towards repaying your debts, you will have nothing left in case any unavoidable emergency arises.
It is not good to discuss your plans of action with everyone. You will always hear from different people having different opinions. Even if you discuss with some close people, make sure that you are careful about whom to listen. You are the one person who can best understand your situation. In my case, I tried to follow Dave Ramsey’s snowball method and started paying the smallest debts first to the largest balance. There are people who pay off those debts first that have the highest interest rates. And there are still a few who use a combination of these two methods. Whichever plan you adopt, be faithful to yourself and understand your plan of actions. Don’t mess up things by making rash decisions.
Don’t give your checking / saving account access to the credit card companies. While most companies are reputed, but you might find a company making unauthorized debits from your account and doing illegal business. It is better to be safe and make online payments provided by your bank or write a paper check.
Do not use a second mortgage to consolidate automobile or credit card debt. If you are considering to sign up with any debt reduction company, make sure that you have gone through the fine prints and understood it thoroughly. I have seen so many people who shift their debts from credit card to mortgage, but because of their reckless spending habits, they end up with mortgage debt and additional credit card debts. And you definitely do not want to risk your home just because of some unsecured credit card debts.
Don’t make any major purchases while you are trying to be debt free. You can reward yourself happily when you are completely debt free. It does not make sense that you have paid off two different accounts and now you are looking to buy a television set that could have waited for some more time. Reward yourself when you are completely debt free.
Don’t fall into arguments with your family members. They are the ones who will stay with you for the rest of your life. Monetary problems are temporary and you don’t want to ruin your personal relations just because of some financial problems.
I have been in debts and I have given my best while I was on my way of coming out of it. These were some of the important things I kept in mind. I thought it will be a good idea to bring these points in front of you so that you can also share it with others.
If your total debt repayments exceed 20% of your income after paying mortgage or rent, then you may be in a serious financial problem and you need immediate help. There are different ways by which you can take care of the existing situation and become debt free.
To get out of debts caused by excessive credit card usage or unexpected expenses, consider the following alternatives.
- You may seek credit counseling
- You can opt for a do it yourself method.
- You can enroll in some online debt consolidation program
- Or consider filing bankruptcy.
Many people think that credit counseling works on the same principals like debt consolidation or debt management program, but actually it is much more than that. Credit counseling is about educating consumers, making informed decisions, do a proper planning of your future keeping your present situation in mind. Putting everything under one umbrella, you get a perfect debt relief program.
The DIY or “Do it yourself” is a self designed program where you negotiate with your creditors on your own, paying off the debts with the highest interest rates first. Many people get a second job to have an extra source of income and contribute towards paying existing debts. While this may certainly be the most effective step to boost your credit ratings, one requires a lot of strong will and self discipline to follow this approach to the completion.
When you enroll in an online debt consolidation program, you are able to combine all your existing debts under one repayment plan with your creditors through the debt consolidation company. The basic advantage of this type of program is that your debt consolidation company will be able to reduce the interest rates with your creditors and set up a lower repayment plan. You make one monthly payment to the debt consolidation company and they disburse the payment to all your creditors in the program. When you are enrolled in the online debt consolidation plan, make sure that you do everything to stick to the repayment plan set by the debt consolidation company. Just in case, if you miss a single payment, your creditors will no chance and they will raise the interest rates back to where it was. You should be mentally set up before opting for this debt relief program. Otherwise the next best option will be to go the debt settlement route or file for bankruptcy.