10 signs of debt problems

It is amazing how quickly minor debt problems can escalate if they are not dealt with immediately. It is vitally important to monitor your level of debt to prevent plunging into a quagmire of money problems in the future. It is easy to overspend when store cards are thrust at you in the supermarket, and you are tempted to apply for more credit cards, but borrowing more money when you are already seeking debt help is the last thing you should do. Never borrow more than you can afford to pay back and make sure you are on top of repayments before applying for more credit. Early warning signs that you are getting yourself into serious debt may include:

1. Where does the money go?

Even when you know you should have enough money to get by every month, you always run sort by the last day. Work out a budget at home and write down everything you spend in a month, including food, drink, treats, make up, clothes, bills etc., Also include utility bills, TV licence, car tax and any extras which you may have to pay every month. See where you can cut back and make savings where possible. You may be able to save on utility bills, switch mortgage lenders or buy own brands at the supermarket, but there will always be some way of cutting back.

2. Minimum credit card payments

If you only make minimum payments on your credit cards, you need to work out your debts, and put them in order of priority. If you have multiple cards, pay off the most from the ones with the highest interest rate, and up the payments on the others wherever possible. If you carry on making only minimum payments, you could end up with debt around your neck for many years to come.

3. Credit refused

You may have been refused credit or refused an increase on your borrowing limit, which leaves you short of money. Your lenders may have checked your credit report and decided you were too much of a risk to lend more money to, and you may have bad debt problems, and be unable to pay back the amount you have already borrowed. If this is the case, and you are already seeking free debt advice, you should cut back on the spending immediately, pay back what you can and check out a 0% balance transfer with a new credit provider. This could give you some breathing space and allow you to pay back your debts with a higher monthly sum over a set time period.

4. Never borrow more money to pay existing debts

If you borrow more money to pay existing debts you will find yourself in more financial trouble than when you started. By building up more debt over time you will suffer debt problems for years to come. Take a long, hard look at your credit report and wake up to how much you owe and how you plan to pay it off. Look at things from a lenders point of view, and if you wouldn´t lend yourself any more, it´s unlikely a lender will either.

5. Savings and emergencies

It may make good financial sense to use your savings to pay off debts, but always try to keep some back for emergencies. If you have no safety net at all, it can be worrying, so even if it is a small amount, keep some back for a rainy day. If you are already seeking debt help and free debt advice in the UK, ask about a debt management plan.

6. Debt problems and payday

If you have debt problems and always have to wait until payday to pay for groceries, rent or mortgage, make some small cutbacks at home to save money. Have friends round for dinner instead of going out, use the library instead of buying new books and rent DVDs instead of going to the cinema. By making small cutbacks you will be amazed how much you can save over the course of a month. Also check out e-bay for buying and selling clothes, bric-a-brac and toys.

7. Late repayments and debt solutions

If you often make late repayments and are looking for debt solutions, you should contact a specialist company in the UK who can give you free debt advice and arrange an action plan for you. Remember, if you are late with repayments, it can register on your credit report for over 3 years, so always contact your lender if you are struggling to make a payment, and talk to a specialist debt management company in the UK. Offer to pay what you can afford and never ignore letters or statements from your lenders.

8. An agreement with your creditors

If you are falling behind with repayments you need to come to an agreement with your creditors. If you don´t want to contact your creditors, ask for help from a regulated debt management company who will help you eliminate debt and avoid creditor harassment. You may be able to arrange a new payment plan which will be more affordable for you, and keep your creditors off your back at the same time.

9. Don´t walk away from your debts

Never walk away from your debts as they won´t disappear on their own, and by ignoring them you will only make matters worse. If you have mortgage arrears you could end up having your house repossessed if you don´t contact a debt help company in the UK, who can speak to your creditors. If you arrange a debt management plan, an individual voluntary arrangement or bankruptcy, you could be debt free within 12 months (depending on the agreement), but the fact that you missed repayments in the first place could stay on your credit report for at least 6 years. Bankruptcy is serious, and your chances of getting a good job in the future, applying for more credit, opening a bank account or even renting a home could be affected in the future if you are declared bankrupt.

10. How much do you owe?

If you don´t know how much money you owe to your creditors, the answer is probably ´too much.´ Hiding from your debts won´t make them go away, it will only make them worse. Look at your credit report, which will list your credit cards, store cards, loans and mortgages and an up to date payment record. This report can help you solve your debt problems, as you will be able to see easily where you are missing payments. Lenders always check credit reports before lending money, so keep tabs on yours and always check for mistakes, as this could affect your ability to borrow in the future.If you need professional and free debt help and advice, you need to contact a specialist debt company in the UK who will help you to start afresh. Small debt problems can quickly escalate into major money problems, so if you feel you are out of your depth, speak to a regulated company who can put your finances back on track. A debt counsellor will even talk to your creditors for you to help you achieve a firm financial footing.

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Adrian Vultur writes articles about get out of debt

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