The good news that even when you're in the deepest of debt, there are things you can do to ensure your situation does not go from bad to worse… or from worse to horrendous!
1) Be Assertive and take control
You may feel like you want to crawl under the bed and stay there for the next year but the consequences of being debt will happen whether you’re with it or not. The red letters will keep on coming, the debt collection agencies will keep on ringing and the interest and late-payment charges will keep on rising.
Everyone gets stressed at this point, everyone gets irritable and everyone has a good cry. There’s no shame in it. As long as you’re also taking the action you need to get yourself out of this situation you’re doing well.
a) Make sure you’ve contacted an advisory service (see below for a brief list or ‘Who Ya Gonna Call? for a more comprehensive rundown of where to get impartial, independent legal and financial advice). In my experience they’re lovely. You’ll feel a lot better once you’ve spoken to them and feel like you’re being pro-active.
b) Don’t take hassle from debt collection agency workers. They can be utterly charmless and sometimes they can be downright aggressive. Listening to them giving you gip isn’t going to make their payment suddenly materialise from ether. It’s more likely to leave you frightened, panicky and unable to think straight. You aren’t a criminal so don’t you dare be treated like one. If they’re being offensive or disrespectful in any way, just put the phone down. If you’re doing your best to find a solution to your problem then that’s the best you can do.
c) Don’t be afraid to say ‘no’. If something doesn’t feel right or if you’re unsure about something then for goodness sake say no! For instance, if you get a salesperson coming round to your house offering you debt miracles for ‘only’ a few thousand pounds tell them to clear off. The only advice you need is the advice you’ve asked for, anyone canvassing for business should be told where to go.
2) Take free independent, impartial advice.
I say this so much I may well be repeating it in my sleep—your first port of call should be one of these three companies:
Consumer Credit Counselling Service (0800 138 1111),
National Debtline (0808 808 4000)
If you need legal, as well as financial, advice, then you can also speak to Community Legal Advice on 0845 345 4 345
3) Beware the debt solution firms
Some companies who provide IVAs are responsible, reliable companies and Insolvency Practitioners; however, some companies who provide IVAs are sharks who make profit from other people’s misfortune. It’s up to you to check their advice to find out which one you’re dealing with (see below for The firms who advertise on TV, radio, online and the newspapers, who offer to exploit a “little known piece of government legislation” that will slash your debts by 75% are actually selling IVAs (Individual Voluntary Arrangements). Steer clear of these companies as if they have the plague. I particularly enjoy the small print at the bottom of the screen when these adverts are being shown, which reads “Your credit rating may be affected”. What clowns! If you take out an IVA your credit rating WILL be affected. If the people who’re advising you aren’t upfront and honest about this then give them the push.
As Peter Tutton, national debt policy adviser for Citizens Advice comments, 'We have seen evidence of people being poorly advised and persuaded that an IVA is right for them in circumstances where it clearly isn't… some of them are so badly mis-sold it is almost unbelievable.'
The CCCS recently said that IVAs are only suitable for 3% of the clients they have advised, yet the IVA industry has enjoyed a tremendous boom over the last few years, which has only recently started to wane.
If an IVA is the best route for you to take, one of the debt advisory services I’ve mentioned above will tell you.
Someone who is paying for their new bathroom or kitchen off the back of your debt ‘solution’ cannot possibly offer you impartial advice.
Make sure you know exactly what you’re getting into before you commit yourself to anything.
You’ve been warned.
Which leads me onto to my next point….
4) Get a second opinion
If you aren’t sure of something that you’re being advised to do then go home and research it.
Whatever you do DO NOT just go ahead anyway because you think that you’re dealing with experts.
My mail box is full to bursting with emails from people who’ve been given unsuitable advice from people they’ve considered to be experts, have acted on it without researching it first, and then, too late, have discovered that the advice was not right for them.
There are plenty of good forums (try the Debt Questions Forum, MoneySavingExpert’s ‘Bankruptcy and Living with it’ Forum and the Bankruptcy Supporters Club Forum, and, of course, the Ladies in the Red Forum) where you can research any information, suggestions, advice you been given before you commit yourself.
Bear in mind that if it all goes wrong because you’ve been ill-advised only you will pay the price.