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Debt

Introduction

It's fairly easy to get credit and some people are persuaded to buy things they can't really afford. But most people who get into debt do so because of an unexpected drop in income due to illness, redundancy or marital breakdown. If you are in debt, don't ignore it or your debts will get worse. The sooner you face the problem the easier it will be to solve it.

What the law says

Lenders have a right to get back what you owe them - but you have rights as well. Debt collectors should not threaten you by phoning you late at night or too frequently at home or work. They must not use violence or harass you. They can't prosecute you in a criminal court so don't let them intimidate you with this threat. If you are being harassed, you can complain to Consumerline on 0300 123 6262 or the police.

Useful information

GUARANTOR

Did you know that if you act as a guarantor for somebody else's loan you must pay back all they owe if they stop paying? Don't be a guarantor unless you can afford the risk. If you agree to be one make sure that you see all the papers.

SECURED LOAN

You might be able to get a loan cheaper if you put your house up as security. But if you can't keep up the payments the loan company can sell your home to pay what you owe. Be sure you can afford this risk.

If you find yourself in debt don't ignore it. Work out exactly how much you owe, who you owe it to and what you can pay back. Tell your creditors (the people you owe money to) as soon as you have a problem. Don't ignore letters or demands. If you can, warn creditors of a change in your circumstances which will affect your ability to keep to your credit agreement. The earlier they know about the problem the more sympathetic they are likely to be.

Creditors may add the cost of phone calls and written reminders to the interest you are already paying. Sort things out quickly to stop costs piling up. Write out a list of all the money you have coming in each week or month. Next, for the same period, write down all the things you spend money on and how much you spend. Don't forget bills that come once every 3 months or even once a year.

Once you've done that, you should be able to see whether you need to look at ways of increasing your income. For example, are you sure you're getting all the social security benefits you're entitled to, or could you take on a part-time job until you've cleared your debt?

The next step is to see whether you could cut down on your spending. Be prepared to make sacrifices and cut down on things which aren't essential.

Some debts can cause more trouble than others. These are priority debts. You must deal with these first. These include electricity, rates and fines or other court orders. You can then decide how much you can afford to give any other creditors. Contact the lender but don't make offers you can't afford to repay.

If you can't tackle your debt problems yourself or if you feel you would like help, contact advice4debtNI or ask at your local Advice Centre or Citizens Advice. Some of these have specially trained Money Advisers and if necessary they will contact your lenders on your behalf.  You can also access advice and information online through websites such as the Consumer Credit Counselling Service and MoneyExpertise.

What to do if you have a complaint

If you think that you're paying 'sky high' interest charges, it might be worth while to go to court and ask for the agreement to be changed in order for you to pay less. This is tricky though and you'll need expert advice. Contact Consumerline for advice or ask for help from your local Advice Centre or Citizens Advice.

If at any stage you feel that the lender is generally trading unfairly, you should contact Consumerline. The matter may be referred to the Office of Fair Trading which issues credit licenses to all authorised lenders.

From category: Money Matters