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Debt advice
If you are struggling with your finances and finding it difficult to make the monthly payments on your loans and credit cards, don't panic – debt help is available.
 
The first thing to do is accept you have a problem and address it. There is no need to punish yourself and there is nothing to be ashamed of – there are literally millions of people with debt worries just like you.
 
However, the problem won't go away by itself and the longer you delay taking action, the worse it will get. No matter how big or small your debts, there will be a solution. And the best way to find it is to get free, impartial debt advice from a debt help charity such as the StepChange.
 
Debt advice
 
How serious is your debt problem? Perhaps your problem could be solved by better money management rather than by using a specific debt solution. For example, some financial issues can be resolved by:
Budgeting and economising
 
Work out your total monthly income and all your outgoings. See if you can trim your spending to give you as much available surplus as possible. If you are struggling to cover all of your essential living expenditure try to cut out any unnecessary expenditure and sacrifice those things that are not essential.
 
If you’re worried about your finances, StepChange’s online Debt Remedy service will help you find a solution. Just answer some straightforward questions about your household, income and outgoings and we will provide you with a personalised budget as well as practical advice on making the most of your money.
 
Maximising income
 
Make sure you are taking advantage of all the state benefits and tax allowances you are eligible for. If money is short, consider overtime or extra work where it is available. If you own your property, perhaps taking in a lodger would help.
 
Switching service providers
 
By using internet comparison websites you can get a better deal on your utilities or insurance and save yourself money. Do your research and be sure to read the small print to make sure it really is a better deal before committing
 
Debt solutions
 
Debt problems become more serious when there is no way of covering all your essential living expenses as well as not being able to meet your payments to all your other debts. That's when a more structured course of action is needed. Depending on the severity of the situation, examples of some debt solutions are as follows:

Debt management plans

Debt relief orders

Individual voluntary arrangements

Bankruptcy

These solutions are discussed in greater depth below. But regardless of the severity of your debt problem, it is highly recommended you seek professional debt help. And in the meantime:

Don't take out any more loans.

Stop using your credit cards immediately.

Don't increase your overdraft.

Don't consolidate your debts into one loan.

Don't secure any of your debts against your home.

Debt management plans
 
A debt management plan (DMP) is a programme of reduced payments towards your debts usually arranged by a third party (such as a debt charity like StepChange). They negotiate with your creditors and you pay a monthly total towards the third party, which divides it between your various debts. Charitable organisations like StepChange arrange DMPs completely free of charge.
 
Beware, most profit-making debt management companies will deduct their fees from your monthly total and you will end up paying a smaller amount back to your creditors. The debt will take longer to pay off.
 
Debt relief orders
 
A debt relief order (DRO) is a legal process available to people who do not own their home and have assets totalling no more than £300. To be eligible you must have debts of less than £15,000 in total and have no more than £50 left over each month after paying household bills and living costs. A DRO will freeze debts for 12 months, during which time creditors will be unable to pursue payments or add interest and charges. At the end of this period, if you situation is unchanged, your debts will be written off.
 
Individual voluntary arrangement
 
An individual voluntary arrangement (IVA) is a legal process available to people with unsecured debts of £15,000 or more and is an alternative to bankruptcy. An insolvency practitioner puts forward a proposal to your creditors where your available income goes towards paying a monthly amount towards your debts over five years, after which the remaining debt is written off. If creditors representing at least 75% of your total debts vote in favour of the arrangement then it can go ahead.
 
Bankruptcy
 
Bankruptcy is a legal process for people who cannot pay their debts within a reasonable time. Your unsecured debts must outweigh your assets, including property and vehicles. If you make yourself bankrupt, creditors write off your unsecured debts. However, bankruptcy should not be taken lightly as you will be subject to various financial and business restrictions and you might have to give up your assets. It is essential to get expert advice before making such a decision.
 
Get debt counselling
 
It’s important that you seek help as soon as possible so that you can regain control over your finances and save yourself any added stress or anxiety.
 
If you need debt advice, make sure you turn to a free debt help provider. It’s the only way you can be sure of getting impartial, trustworthy advice at absolutely no cost to you.
 
For free, confidential online debt counselling visit StepChange Debt Remedy, which gives instant access to free debt advice at any time of the day. This service is free of charge and anonymous.
 
For more free debt advice, visit www.StepChange.org.

      Office :  14 Cumberland Street Devonport Plymouth PL1 4DX  t :  01752 201329 or 01752 310698  e :   office@cpcu.co.uk