How to Defeat your Debt
When every waking moment is taken up with trying to deal with debt, it’s easy to feel you’re in a hopeless spiral. But take heart, you’re not the only one and it’s quite possible to recover if you manage your finances sensibly and take the right steps. So read on for the most important issues you need to consider for taking charge of your debt.
Face the Issue
The number one mistake to make when you’re in debt is to pretend it’s going to somehow magically disappear. If anything, ignoring the situation only makes it worse. Instead, you need to grab the bull by the horns and tot up exactly how much you owe, and to whom. Once you’ve done this, you can start to take steps to clearing your debt and keeping creditors from your door.
Draw up a Priority and Non Priority Debt List
Debts are always either priority or non priority, so you should always deal with priority debts first. These include rent or mortgage arrears, utility bills, loans secured against your home, council tax, TV licence payments, child support and maintenance payments. The consequences of not paying these debts are severe. Non priority debts include: credit card debt, unsecured bank loans, water bills and HP agreements. These types of debts do not result in imprisonment, but could result in bailiffs seizing your goods or making you bankrupt. So if money is tight, always keep your focus on priority debts first.
Draw up a Budget
Once you know how much you owe, you can start to draw up a budget to see how much you have left after essential expenses for paying off your creditors. You can then either approach them yourself with offers to pay however much you can afford. It’s also a good idea to include an income and expenditure sheet showing your current financial circumstances. Try not to favour one debtor over another and don’t offer more to one than another, unless it is classified as a priority debt. Alternatively, approach a free debt advice agency who will help you with your budget and approach your creditors on your behalf.
Your Credit Score
You’re probably well aware by now that not only is being in debt a worry, but that it also makes it very hard to borrow any more. In some ways this can be a good thing, but having a poor credit score will badly impact not only your ability to borrow, but even to rent a home. It is possible to repair your score even when you’re in debt, but don’t expect overnight results. Joining http://www.credit-cleaner.co.uk/ will help you understand your report so you can put into action the advice you’re given on giving your credit score a makeover. Personalised information on how credit agencies and lenders score you will help you not only rebuild your credit, but help you with any credit applications in the future. Provided you have no CCJ’s you can repair your record within two years.
Wendy Lin is a successful entrepreneur and activist. She has worked very hard to make successful gender equality campaigns in the states.