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Personal
debt is becoming a major problem for all age
groups but for young people in particular.
With all forms of personal
credit extremely easy to obtain, many people are
finding themselves saddled with five figure
debts - and that's excluding mortgage
commitments.
Furthermore, the number of
people who will face serious debt problems this
year is expected to rise dramatically.
To take control of your
finances, the first thing to do is to prioritise
your debts. Bills for mortgage or rent arrears,
council tax, and Inland Revenue or Customs &
Excise demands should take precedence.
Failure to pay rent or a
mortgage can result in you being evicted or
having your home repossessed and you can be sent
to prison or bankrupted for failing to pay
council tax or bills from the tax or VAT men.
Seek help as soon as
possible
If you are in difficulties
over mortgage payments, you should inform your
mortgage lender immediately as there are various
ways in which you can reduce monthly payments
rather than ceasing to make payments altogether.
For instance, you may be able
to switch to a different and cheaper form of
mortgage or extend the number of years over
which you repay the capital and interest.
If you have difficulty in
paying council tax, check that you are claiming
any discounts you may be entitled to. Tax bills
should be paid as soon as possible as late
payment will incur automatic fines and interest.
Most other debt repayments,
such as personal loans, credit card bills and
hire purchase agreements can be renegotiated.
Most lenders will agree to you paying off a
smaller amount of money owed each month
providing you stick to an agreed schedule of
payments. If you don't feel comfortable about
negotiating this yourself, seek help from a
Citizens Advice Bureau or the Consumer Credit
Counselling Service.
Beware of 'frighteners'
Resist heavy handed tactics
often employed by debt collection agencies.
These may include 'frighteners' such as sending
you fake county court papers and threats of
sending in the bailiffs.
If you are sent county court
paperwork, check whether it has been stamped. If
it hasn't been, it means the papers have not
been presented to the court yet. Bailiffs are
generally only used as a last resort.
Debt consolidation and debt
management companies, which advertise in some
national newspapers, and which claim to help
people with large debts, should generally be
avoided. Many of these companies simply turn
"unsecured" debts into "secured" loans and can
compound debtors' money problems.
Another source of help is
www.creditaction.com - an educational charity
which explains how to budget, in order to avoid
getting into debt again.
If you need legal advice
because you are being threatened with legal
action, try the Community Legal Service on
www.justask.org.uk or you can seek advice from
an IFA, the CAB or the National Debtline which
will overview your financial situation and
advise you accordingly.
CCCS helpline: freephone 0800
138 1111 (England and Wales), 0800 138 3328
(Scotland) National Debt helpline: 0808 808 4000
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