jonesy1
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When does debt consolidation make sense?
- jonesy1 asked 1 year ago in Debt
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Expert Financial Adviser Answer
Dr David Carter FPFS
answered 1 year ago
Credit card debt is very expensive, and debt consolidation, where you roll these debts up into a single one at a lower interest rate, could well save you money in the end, as well as reducing your monthly outgoings. However, be careful where you get such a loan from, using a high street bank if possible, and check the details very clearly. Incidentally, the way many people run up high credit card debt is to use their cards for lots of little purchases, or to take cash out (perhaps in small amounts) as and when they want some. If this is you, maybe you could decide to take the week's money out on the same day, not using the card until the next week.
The danger is that, once you have consolidated your cards into a single loan, you will start running up your card debts again - so ending up in a worse state than you are at the moment. A way to reduce the likelihood is to cancel your card arrangement (don't just cut up your card).
Thinking about your spending patterns so far and designing a budget (contact me if you would like me to send you a budget planner that runs on Excel) will help you manage your finances. And do take a long-term view; managing your finances effectively is like overeating: losing weight slowly by changing your diet permanently is far better than going ON a diet. Your financial diet needs to be sensible and gradual and controlled, with enough slack and enough enjoyment money to make it acceptable for you.
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The danger is that, once you have consolidated your cards into a single loan, you will start running up your card debts again - so ending up in a worse state than you are at the moment. A way to reduce the likelihood is to cancel your card arrangement (don't just cut up your card).
Thinking about your spending patterns so far and designing a budget (contact me if you would like me to send you a budget planner that runs on Excel) will help you manage your finances. And do take a long-term view; managing your finances effectively is like overeating: losing weight slowly by changing your diet permanently is far better than going ON a diet. Your financial diet needs to be sensible and gradual and controlled, with enough slack and enough enjoyment money to make it acceptable for you.
I am currently in a lot of debt. Anyone have any advice on how best to handle this?
- jonesy1 asked 1 year ago in Debt
- See all 1 answers | report abuse
Expert Financial Adviser Answer
Darren Smith
answered 1 year ago
the very first step you need to undertake is a thorough budget planner to analyse your income and "essential" outgoings. you need to be ruthless about what is essential and what is optional - this might involve tv subscriptions or high level mobile phone contracts. you might be still paying for last year's new year resolution of a gym membership that you havent used since Feb 2010!
if there is no clear option here to help, including switching providers for utilities etc. you should contact your loan company and explain your difficulties, they are now obliged to be more considerate of your position but their obligation will start to fade if you can be seen as negligent (ie you should have contacted them 6 months ago).
if its early days they might be able to reschedule the loan term or might even offer better rates today than when you first applied.
if all this fails, you could consider speaking to a local citizens advice bureau or the consumer credit counselling service, both of which offer a degree of free assistance to people in financial difficulty - they might be able to help you present a stronger case to your current lender(s).
i do urge you though to take swift action before it starts to impair your credit worthiness as this will make current remedial action more difficult and in the future (when you are back on your feet) it will come back to haunt you.
dont panic, but do make contact with someone soon.
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if there is no clear option here to help, including switching providers for utilities etc. you should contact your loan company and explain your difficulties, they are now obliged to be more considerate of your position but their obligation will start to fade if you can be seen as negligent (ie you should have contacted them 6 months ago).
if its early days they might be able to reschedule the loan term or might even offer better rates today than when you first applied.
if all this fails, you could consider speaking to a local citizens advice bureau or the consumer credit counselling service, both of which offer a degree of free assistance to people in financial difficulty - they might be able to help you present a stronger case to your current lender(s).
i do urge you though to take swift action before it starts to impair your credit worthiness as this will make current remedial action more difficult and in the future (when you are back on your feet) it will come back to haunt you.
dont panic, but do make contact with someone soon.
How do I become bankrupt?
- jonesy1 asked 1 year ago in Debt
- See all 1 answers | report abuse
Expert Financial Adviser Answer
Darren Smith
answered 1 year ago
it can be relatively straightforward to declare bankruptcy, once you have allowed for the court fees - there are companies that can assist you with the entire process but they will of course expect to be paid.
having said that, before you go too far i would strongly suggest that you speak with someone from the citizens advice bureaux or consumer credit counselling service.
bankruptcy isnt a quick fix and shouldnt be entered into lightly.
it may prevent you from owning your own home in the future if you rely on needing a mortgage, will certainly make it difficult to obtain a bank account after you are discharged (as well as other unsecured credit). it could even impact on your ability to take out car insurance if you might rely on being able to pay monthly.
there are alternative options such as IVAs that might help to reduce your burden and although these too can have side effects in the future, they are not always as severe as the stigma attached to bankruptcy.
bankruptcy is very much a one-way street and once you have entered you can only go forward - never back and change your mind.
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having said that, before you go too far i would strongly suggest that you speak with someone from the citizens advice bureaux or consumer credit counselling service.
bankruptcy isnt a quick fix and shouldnt be entered into lightly.
it may prevent you from owning your own home in the future if you rely on needing a mortgage, will certainly make it difficult to obtain a bank account after you are discharged (as well as other unsecured credit). it could even impact on your ability to take out car insurance if you might rely on being able to pay monthly.
there are alternative options such as IVAs that might help to reduce your burden and although these too can have side effects in the future, they are not always as severe as the stigma attached to bankruptcy.
bankruptcy is very much a one-way street and once you have entered you can only go forward - never back and change your mind.
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