Bad Credit History – don’t bury your head in the sand

It’s a terrible situation when you are too scared to open your post in case it contains a bank or credit card statement. Many people leave their post unopened once they start getting into trouble, but this won’t help, it will just make things worse. If you have a debt problem and you feel that it is spiralling out of control, you need to help yourself and fast. This article explains a number of ways in which you can improve the situation. Choose the right credit cardsToo many people stick with the same credit card and pay monthly interest charges on a huge balance that mean the debt just won’t go down. There are plenty of good introductory offers out there which will save you a lot of money.What most of the introductory offers do is give you a very low rate on a balance transfer. This used to be free but now they have wised up and the majority put a 2 balance transfer charge on. In any case, if you can transfer your balance over to a 0 offer then you have a bit of breathing space and a number of months to really start making inroads on the debt. Mint have a 10 months 0 balance transfer offer but it does involve a 2 charge. Marks and Spencer are the best at the moment, 6 months at 0 on balance transfers and no extra charges. It’s also important to have a card that has a lowish rate on new purchases. However you would be doing yourself a favour if you stopped using your card altogether for the meantime. If that’s just not possible, something like the HSBC card could be your best bet, at 0 for 9 months on balance transfers and purchases it could make you big savings, however you will have to pay 2 of your balance to facilitate the transfer.The industry likes to call people that play the credit card game ‘rate tarts’ – as if that’s going to put them off! It’s the only way to make the best of the money you borrow, and it really is worth it as it could save you a lot of money. Make sure that you start looking to get a new credit card approximately a month before the introductory offer on your car comes to an end. Consolidate your debts into a single monthly payment Debt consolidation loans are a relatively new breed and they are a good way of making complicated debts seem a lot more manageable. Paying a number of creditors different amounts at different times of the month often leads to problems, so instead you can take out a debt consolidation loan. They pay off all your debts and you pay them a single monthly payment. It’s taken out over a longer period of time and the interest rate is more favourable so it makes it a lot easier to keep up with the repayments. A word of warning, depending on the size of the debt, this kind of loan will probably be secured on your home. If you fail to keep up then it will be your home on the line. You must keep up the repayments and you must not get into any more debt using other means.Get some professional helpThere’s no need to worry on your own, there are a number of professional bodies that are there to help:The Citizens Advice Bureau – are situated in most towns throughout the UK and you can go in person or talk on the phone. They will be able to fill you in on all the options.The Consumer Credit Counselling Service – they have a free national phone service and they can offer you in-depth, personalised advice to help you through your difficulties. Whether your debt problem is big or small, they will help you manage the situation and give you all the advice you need. Their website www.cccs.co.uk has a lot of information, and their freephone telephone number is 0800 138 1111.The National Debtline – again they are committed to helping you face your problems before it’s too late. Their website www.nationaldebtline.co.uk contains a lot of useful information including fact sheets which are excellent for spelling out the options in a clear way. Tel: 0808 808 4000.Also don’t forget that it doesn’t hurt to tell your creditors that you’re having problems repaying, they might be able to make some adjustments for you. Managing your debt with a professional planThe debt management plan is another way to get your debts paid off. It’s worth considering if you owe over £5,000 and have a number of creditors all snapping at your heels. Debt management companies run these schemes and basically, they begin by negotiating with your creditors to freeze your outstanding balance so no more interest or charges can be piled on. Then you pay the company a set amount every month, and using that money they will share it out between your creditors. This kind of scheme usually requires you to be able to pay at least £100 or more a month into it.The National Debtline or Consumer Credit Counselling Service are the best people to approach about these schemes. Private debt management companies that offer the services will expect you to pay for it. Go through one of the advisory services and charges will be waived, the creditors will have to cover the costs. IVAs – making an agreement through the county courtIVA stands for ‘Individual Voluntary Agreement’ and is an option for people that have a high income. The creditors agree to write off some of your debt when you sign a legal agreement taken through the country court that requires you to pay off the agreed remaining debt in three to five years. You can also pay it off more quickly with lump sum payments, and if you are deemed to be able to pay more each month, they will put the payments up. A specialist Insolvency Practitioner administers the agreement.It’s probably the best option for people with high incomes that also find it difficult not to spend all their money straight away. Failure to meet the terms of the agreement will normally result in bankruptcy.The dreaded word - BankruptcyLast year, the amount of people succumbing to bankruptcy increased by 33, and although it has strong connotations, it’s not necessarily as bad as it might appear. It’s a chance to make a clean break of things and start again. It’s true that you may well lose your home, and for at least 12 months then there will be no hope of getting any credit from any of the mainstream lenders, but after that 12 months then your debts will at least be written off and you can move on again.Your credit history will show that you were a bankrupt for seven years following. Held by the big agencies like Experian and Equifax, if you make an application for credit then the lenders will see immediately. It means that for a while, you will have to go to ‘sub-prime’ lenders if you want to borrow, but after a few years then things will start to get easier.

Comments? Questions? Email Here

© HowtoAdvice.com