Approaching the Debt Dragons

By: Chris Tapp, Credit Action

20 Jan 2010 Tell a Friend

People react in all kinds of different ways to having a debt problem. Some people panic, some people carry on as if everything is fine, some people get angry and some people get very stressed. That almost everybody does however, is get very quiet.

People don't like to talk about the fact they've got money problems. In fact by the time someone seeks help it is often months since they first got into difficulty but people would rather struggle on in silence rather than admit to someone that they've got financial issues.

Even if people do talk it's often to friends, family or a debt advice agency. Now I cannot emphasise enough that these are all wonderful things to do - it's absolutely vital that if you do run into cash difficulties that you're sharing that so that people can provide you with the kind of emotional and practical support you need. (N.B. Always make sure you go to a truly free and independent source of debt advice - the easiest way to do this is only go to a registered charity.)   

Often the last people that those with debt want to talk to are the very people who should probably be first on the list; the people they owe the money too. For most people the idea of fronting up and telling a lender that they are struggling to make payments is like the real life, financial equivalent of running headlong into the dragons cave and taunting it with a big stick. People assume that the response is going to fiery, hot and painful.

In reality though most lenders are much more like a noisy dog than a terrifying dragon; perfectly harmless if you know how to handle them. There are three key points to remember here;

1)    Lenders will listen. The people who run and work for banks, credit card companies, etc are all people too. They do understand that life doesn't always work out the way we hope and, hard though most people find it to believe, they do genuinely want to help where people are trying to sort things out. It's actually when people don't make contact and simply miss payments that lenders tend to become more aggressive because they think are simply trying to avoid paying what they owe.

2)    Be clear what you can afford. Before contacting a lender make sure you've put together a thorough budget or financial statement so that you know how much you can afford to make in reduced repayments and can demonstrate this with the figures. When you contact the lender tell them (don't ask them) what you can afford and begin to make repayments at that amount.