TAKING CONTROL OF YOUR DEBT IN 2015
Written by Tom Maplethorpe on 31 December 2014
Now the dust’s settled on your Christmas spending, it’s most likely that like many other people you want to start the New Year in a positive frame of mind. We take 30% more calls in January than we do in November, as people look to make a fresh start with their finances. What better time to start managing your debt than right now?
We calculate that if an average-income family borrowed £685 over Christmas it would take between six months and a year for them to repay it (based on different budgets and circumstances.)
The start of the year is our busiest time and clients entering our debt management in January 2014 had an average debt of £16,789, requiring 8.4 years of repayment with interest and charges and 7.1 years without.
Follow our simple three-step guide for invaluable assistance on how to set up an informal arrangement with the people you owe. Our simple guide will help you review your income, prepare your financial statement and show you how to make offers of repayment to your creditors.
Reviewing your income
By examining in closer detail what money you have coming in you are more likely to be able to do one or more of the following; maximise, boost or save to increase your income. You might also want to set up a new bank account that isn’t already linked to any creditors, giving you full control of your outgoings.
Preparing your financial statement
Start by identifying your priority debts (those that can have serious repercussions if you don’t pay) and those that are non-priority, unsecured debts such as credit cards and store cards. By detailing all your creditors you will be able to work out exactly what you owe, giving you a target to work towards. Don’t worry if you are unsure exactly how much you owe each company. They will readily provide an up-to-date balance if you phone or write to them with a request for information.
Write to your creditors
Send your creditors a letter outlining your situation using the financial statement you have prepared and make them an offer of repayment. Advising them to freeze any planned future interest charges is a positive step if you are unable to fund an increase.
Follow this link to useful tools such as letter templates and calculation aids that we have produced to help you through the process www.payplan.com/advice/managing-your-debt/.
Once you’ve completed the steps, you’re managing your debt. Keep your creditors regularly updated and don’t be pressured into meeting their requests for increased payments if they cannot be met. Respond to any letters for higher repayments by sharing your financial statement again and explain why you cannot meet the additional demands. This should lead to compromise on your creditors part as you are demonstrating a measured approach to managing your debt.
Don’t forget, for further advice, you can always call our helpline on 0800 280 2816
Filed under Money Saving Ideas