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How to Control Debt

With the average consumer owing a total of £30,000 to various payees, debt is a worry for many people in the UK. Whether it’s credit card debts, utility bills, mortgage arrears, or store cards, the total debt in the UK amounts to a record £1.5 trillion.

According to the Wealth and Assets Survey in Great Britain, the majority of this is mortgage and equity release debt. Total household debt has increased by £12 billion in the past two years: this has been caused mainly by student loans, which have seen an increase of £7 billion, and an additional £6 billion hire purchase debts.

Accounting for around 50% of households, the poorest sectors of the community had 36% of the UK’s total household debt, according to the survey. Their debts represented a large percentage of their total income, with the poorest households being the most likely to have big debts, in comparison to their income.


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Household debts have been increasing steadily since 2012. According to the Office for National Statistics, more people are taking out loans and credit cards for everyday spending. Most students will never be able to get out of debt, and £2 billion is owed to mail order firms and in bill arrears.

The study revealed 44% of the population view their borrowing as a burden which is detrimentally impacting on their life. As people struggle to make their salary or benefits stretch to the end of the month, they are getting into debt just for normal household essentials.

While your debts may seem insurmountable, there are always methods to solve the problem. Managing your debts, even if it’s taking small steps to sorting them out, can take some of the stress out of your life. Never bury your head in the sand, throw the demands in a drawer and try to forget about them, as it will just get worse.

Calculate your debts

This may be something you’ve avoided doing, but sit down and calculate your total debts. The best way of doing this is to write down each individual debt on a separate piece of paper. Include everything from utility bills and council tax, to credit cards, store cards and loans. Then, add them all up and start prioritising!

Mortgage or rent, loans secured on your home, electricity and gas bills, court fines, council tax, child maintenance, TV licence, hire purchase agreements for essential items and your VAT, and income tax and national insurance if you run your own business should all be cleared as soon as possible. If you don’t pay these or contact the organisations to set up a payment plan, this can have serious consequences, such as a visit from the bailiffs, your home being repossessed, or even jail.

Non-priority debts are overdrafts, credit cards, payday loans, unsecured building society or bank loans, store card debts and catalogue debts. The water rates are classed as non-priority, as unlike gas and electricity, your supply won’t be cut off, for public health reasons.

Prioritise the most urgent

Practical steps can be taken, such as working out a budget you can afford and contacting the organisations you owe money to as soon as possible, to negotiate a reduced payment rate you can afford. Most companies are open to offering you a reduced rate if you’re suffering financial hardship.

Although TV Licensing does not offer reduced rates, it will reset your payment plan, so you can start afresh, without having huge arrears building up. If you’re seriously in debt with the gas and electricity bills, you may be offered a pre-payment meter, so you can pay the debt off gradually, when you top up.

In the case of non-priority debts, pay off the ones with the highest interest rate first and work your way through the list over time. Sometimes, you have to accept you can’t do everything at once, so gradually break down the debt as quickly as you can.

Communicate with lenders

Keeping in touch with your lenders is the most important thing you can do. If the debt isn’t being repaid and you’re not keeping in touch with them, they could take further action, such as taking you to court. Once you have a County Court Judgement against you, your credit rating will slide quickly, making it harder to get credit products later.

If you have acted fast and still have a fairly decent credit score, shift as many debts as you can on to a low-interest credit card. It can be easier to pay to just one source, instead of trying to pay several at once. You could also consider taking out a consolidation loan, so you’re making only one affordable payment every month.

Selling things

If your debt is at least partly due to overspending on items such as clothing, jewellery, shoes, electricals or other consumer products, consider selling the ones that you don’t use, or no longer need.

Try Facebook, eBay or Gumtree online auction sites. There are lots of new mobile selling apps popping up all the time. Look into the ones that charge sellers fees. For example, eBay charges fees for a sale, Gumtree doesn’t.

Severe debt

If you’re in severe debt and you can’t see a way forward, there are organisations that can help you, such as Citizens’ Advice, the National Debtline, or the Money Advice Service, for free and impartial debt advice.

You can get professional advice on taking steps, such as Individual Voluntary Arrangements (known as IVAs) and debt management plans. Never sit back and do nothing, as there are always ways in which you can recover from your situation, no matter how bad it may seem.

When you’re looking to consolidate debts, ensure you choose a responsible lender, who will assess whether you can afford repayments – so you don’t get in any deeper!