Many of us see debt as something shameful, something to be swept under carpet and forgotten in the hopes that it will disappear forever. Unfortunately if you have ever been in debt you will know that instead of a magical disappearing act, what usually happens is that you end up with a very lumpy carpet.
Debt is more common than you think!
What most people who are in debt don’t realise is that:
- It is a lot more common than you think, and many people all around you have the same problem.
- There are many options when it comes to getting help with your debt problems.
- There is great relief in having someone who knows what to do help you get out of your situation.
The economic recession felt more like an economic holocaust for the United Kingdom. We were hit hard and unemployment, insolvency and poverty were breaking records left right and center. Everybody felt the punch. In 2009 Scotland saw an eye watering number of insolvencies. 22998 people filed for personal bankruptcy. Jobs were scarce and inflation so high that personal debt was inevitable for a large section of the population. To everyone’s relief the economy is bouncing back and Scotland in particular is doing very well. Inflation is down, employment up and entrepreneurship flourishing. In 2013/14 only 13793 people filed for personal insolvency.
Make a plan to pay off your debts
So you have some debt, and you are tired of hiding your head in the sand. You owe on a credit card, overdraft, short loan, payday loan or you simply haven’t paid your rent. There are several different ways to approach solving your debt. The first choice you will need to make is between a formal or informal debt solution plan. Of course if you choose an informal plan you will not be as protected from your creditors as you would with a formal debt solution plan. One thing you should start with is changing your bank account. If you owe your bank money you don’t want your money to be coming into the account that you owe money on.
Here are some of your options:
- Speak to each of your creditors and agree to pay a token amount to them each week/month
- Debt Arrangement Scheme (DAS) – this is conducted by a debt manager. You pay a sum each month and the manager distributes it to the people you owe.
- When entering into a DAS in Scotland, all fees and interest is automatically frozen as long as you pay your monthly installment. A default will affect your credit rating.
- If you are in serious debt you can consider a Protected Trust Deed. This is a form of insolvency. You can’t take out credit for 3 years and any debt left over will be written off. Default on payment will affect your credit rating.
There are also several debt advice charities that can advise and help you choose the plan best suited to you. You can also engage the help of a professional debt management company, but they usually take a fee for their services.
Needless to say, it will bode you well to address your problem before it spirals out of control and you need to rob Peter to pay Paul.