Overcoming Debt
If your debts become unmanageable and you begin to fall behind on your repayments, there are several things you can do. The first is to contact your existing lenders as soon as you realise that you may no longer be able to meet your repayments and ask whether you might be able to negotiate a short-term repayment reduction; there may even be the option of taking a repayment holiday. Be aware however that both of these options will increase the overall cost of your loan.
If repayment negotiation is not an option, consider whether there is anyone you know, a close friend or relative perhaps, who may be able to lend you the money. There may also be other credit options available to you, such as overdrafts or credit cards, although it is not advisable to take out further credit to pay for existing debts because you will actually be increasing the amount you owe. Instead, it may be more effective to look at ways of increasing your income whilst decreasing your monthly expenditure. It may be helpful to begin by making a note of everything you spend every day for one month, and analysing which of these expenses are necessary and which are luxuries or treats. This way, you can more easily pinpoint areas where you can cut your spending and put this money towards paying off your debts.
Try not to solve your debt problems by taking out additional loans; you will almost always end up worse off in the end. The best thing to do if you are unsure how to manage your current financial situation is to get advice from a debt counsellor, and remember that help is always available. Financial tools which can be used to ease your debt problems include debt consolidation via a loan or a remortgage. It is also possible to go to a Debt Management Company or charity, who will temporarily manage your finances for you, negotiating repayments and providing a structured plan to solve your debt problems.
If you fall into debt due to unforeseen circumstances, consider opening a savings account when you are more financially secure, and contribute a small amount to it each month after meeting your other financial commitments. This money acts as a contingency fund if you find yourself short on funds another month, and helps you to avoid repayment negotiations and missed repayment fines.
If you are feeling panicked or depressed by your situation, support will be available from your local Citizens Advice Bureau and your GP. Do not suffer in silence!
