Credit Card Debt
Debts hit a record high last year...
The number of people unable to repay their debts hit a record high last year, as over 100,000 people contacting The UK Insolvency Helpline last year with credit card debt. In this new section we will look into the causes and cures for credit card debt.
The UK Insolvency Helpline is a free telephone helpline for people with debt problems. The average level of debt for our clients is £25,000 which is generally on credit cards. Debt collectors have usually got involved in the recovery of some of the debt and court action is pending. We always provide each caller with dedicated case counsellor will start by looking at the clients debt situation as a whole.
Credit card debt is easy to get into and sometimes very difficult to free yourself out of. If this is you, don't panic - credit card debt help is available from The UK Insolvency Helpline IVA team.
We explain to clients that they must treat all of their credit card debt and unsecured debt the same. We start by creating a budget, listing all income and expenditure. This budget should exclude payments you are supposed to make on any unsecured credit such as personal loans, overdrafts and credit cards at this stage.
We want clients to get back on their feet as quickly as possible. To this end it is a good idea for clients to open an new basic bank account with no overdraft or cheque facility. A list of these can be found our site website. The overdraft can be included with your other credit debts when offers of payment are made.
The credit card debt problem in the UK has left a real debt footprint with clients needing advice on the following areas:
Bankruptcy for dealing with credit card debt - Declaring bankruptcy is a major step, and is often seen as a last resort taken by those who can no longer repay their debts. It is likely to mean the loss of all an individuals major assets.
Individual Voluntary Arrangements or IVAs for dealing with credit card debt - Individual Voluntary Arrangements or IVAs are another form of insolvency.
The numbers of IVAs have grown so much in recent years, that they are approaching parity with bankruptcies. Setting up an IVA with creditors is a popular option and has less effect on a debtors credit report compared to bankruptcy, which makes is easier to gain credit in the future.
Let our credit card debt help counsellors put you back in control of your life.
Free debt management plans - you may be able to get a free debt management plan which enables you to make one payment a month which is divided up amongst your creditors for you. Make sure you pay all your essential outgoings first, and avoid any debt management company that charges you fees to set up a debt management plan.
You cannot force a creditor to accept an offer of payment. But if they can see that you have worked out a reasonable budget plan, and each creditor is getting a fair share of the money available, they are likely to accept. Ask them to freeze any interest to stop the debt growing even bigger.
Credit card debt consolidation loans - Loans are a last resort. Secured loans are cheaper and you should be aware that a loan secured on your property puts is at risk.
Informal credit card debt arrangements - These are free to arrange with your debtors and can make you credit card debt free. There are many private companies offering these plans. They should be avoided. Call 0800 074 6918 for confidential credit card debt help or get credit card debt advice online at www.insolvencyhelpline.co.uk
Clients are given best advice so they avoid court action
If the creditor takes a client to county court, they can offer to pay the debt off - in instalments you can afford - by filling in the forms the court will send you.
All creditors and debt collection agencies have to follow the Office of Fair Trading (OFT) debt collection guidance. Clients can complain to the debt collection agency and their local trading standards department and to the OFT. The guidance is on the OFT's website.
Credit Card Card Debt Helpline
The social policy and research team at The UK Insolvency Helpline carries out ongoing research. Many of studies are the causes and effect of credit card debt. The results show that in 98% all credit card debt help is needed. Our ongoing studies and surveys tell us that the problems with credit cards is that people do not budget and fall victim to the high interest charges associated with credit card debt and so soon need credit card debt help is oversubscribed.
Commons reasons for credit card debt:-
- Missing payments - To avoid this clients with constant credit card debt are advised to set up a direct debit.
- General overspending - To avoid this only use credit card when you are sure you can pay the balance off at the end of the month.
- Clients being loyal to credit card providers - Always change your credit card provider once the low or interest free period is over. Remember credit card companies have no loyalty to you so don't be loyal to them.
- Having too many credit cards - The more credit cards a person has the more likely they are to use them. To avoid this only use one or two at a time.
- Expensive payment protection insurance - Most premiums are high with payment protection insurance and the payout conditions are very questionable.
- Not prioritising debts - Credit card debt is built up by not paying expensive credit card debt first.
- Get advice too late - Clients bury their heads in the sand. We call this the ostrich debt condition.
- Getting advice from the wrong places - Avoid getting advice from credit card debt advice firms who advertise on TV, Radio or in the tabloids.
The UK Insolvency Helpline is the UK's largest credit counselling service and can find the best advice to deal with credit card debt and is open to the public all year round on 0800 074 6918. The trained counsellors help can help you free yourself out of credit card debt. Our advice is free and completely confidential. We only give best advice at all times.
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