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People these days have messy lives - divorce, high levels of stress, low levels of job security, a growing pressure to define yourself by the products you consume - all these conspire to make you spend money. And if you're spending more than you earn, it means you're in the mire. Debt tends to snowball relentlessly and, before you know it, nasty letters from bank and credit cards start to litter your hallway. Grit your teeth, make sacrifices and don't let it happen to you.
Here's the Personal Finance 10-step debt recovery plan:
- Stay calm. The first thing to assess is your income. Check you're paying the right amount of tax and investigate any benefits you can claim.
- Don't cut your essential spending: insurance, for example, is pretty essential.
- Put your debts in order. Prioritise which debts you need to pay first and rank them in order of necessity.
- It's good to talk. Most legitimate creditors will view your circumstances with far greater sympathy if you are honest with them.
- Get cheaper credit. Sometimes easier said than done, but surfing debt on a store card to a balance transfer deal on a credit card is a start.
- Seek Advice. Swallow any feelings of shame, embarrassment or ignorance, and get help. The Consumer Credit Counselling Service (0800 138 1111) is waiting for your call
- Don't be bullied. A written reminder is legal, but harassment by your creditors is not. If your creditors inform your employers, they have broken the law and you can sue.
- County Court actions. Don't mistake these for arrest warrants - but respond to them quickly, as failure to do so will go against you in any final judgement.
- The last resort. If your creditors take a bankruptcy action against you, set up an Individual Voluntary Arrangement (IVA) - a solicitor will come in handy here.
- Mend your ways. Easier said than done, but do you really want to go through all this again?
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