Hi and welcome to Solution Loans. This
short video covers a guide to managing your debt. Life throws curveballs at us
all sometimes and it can be easy to get into debt when circumstances change
unexpectedly. You may have made mistakes in the past and these have snowballed
making your debts seem unmanageable and causing you stress and anxiety
unnecessarily. However bad it seems it’s important to remember that there is no
shame in debt. Millions of Britons have at one time or
another been in the same position. There are many people struggling with exactly
the same issues that you might have right now. So you’re not alone. Far from
it and by taking a realistic look at your financial situation facing up to your
debts and taking control it is perfectly possible for you to overcome your debt
burden. The most important thing is to develop and implement a plan to deal
with your debt. Without one you could end up floundering around and find
yourself overwhelmed by your debt instead of managing it. Be honest with
yourself and your financial situation. Don’t try to avoid reality by not
opening letters, hiding bills and generally ignoring your burden. List all
of your outstanding debts so that you are fully aware of your own situation.
Make your partner if you have one fully aware as well. Make a budget. List your
income and expenses and look at where you might be able to cut back.
You want to try and divert money to your debt repayment. It’s common to start
overspending in an effort to cheer yourself up when you’re faced with a
stress and anxiety caused by unmanaged debt. Stop buying expensive coffees
snacks and things that aren’t essential or don’t have long lifespans. Investigate
switching utility suppliers for better deals and close non-essential accounts
that you can live without such as mobile phones and satellite television packages
for example. Prioritise your debt. Missing any payments are to be avoided but doing
so with some it’s more likely to have serious consequences than with others. If
you have a mortgage or a homeowner loan make them your absolute priorities and
pay them regularly. Not doing so could see you losing your home. Likewise any
finance packages secured on a vehicle like hire purchase agreements or
personal contract plans. If you need your vehicle for work make paying these your
second priority after your home. These are called your priority debts. Pay your
non priority debts using the available income you have and any other you have
saved up. Be absolutely fair about this and share out what you can afford
between all of your non priority creditors. By offering each of them a
percentage of your available income. This would be based on the amount you owe
them. These are called your pro rata offers. To work out your pro rata offers
first of all multiply each individual debt by your available income then
divide this sum by the total amount you owe to all of your non priority
creditors. Don’t avoid your creditors. It is stressful when a company you own
money to or have missed a payment with starts pursuing you with letters and
telephone calls but not speaking to them or not contacting them will only make
the matter worse. If your creditors don’t know you’re having difficulties they
will assume that you are choosing not to pay them and will start taking action to
start recovering the money you owe. Be honest with your creditors if you know
that you’re struggling tried to preempt stressful cause by contacting your
creditors first. Have a list of income and expenses ready because some will ask
you to come up with a plan to pay what you owe and the more proactive that you
appear the more likely that it is that will give you a little more time to get
back on track. Consider a debt management plan if you
have some money left over after paying your priority creditors. This is an
informal arrangement with your creditors to repay them with regular instalments.
Instead of you speaking to your creditors yourself to arrange a plan a
debt management company, also known as a DMP provider, can do it for you. Some
providers charge for the service although there are several out there who
will do it for free. The advantage of this is that you only
make one payment to the provider which then divides it fairly between all of
your creditors and will also contact them on your behalf. Apply for an
administration order from the county court if you have debts of less than
£5000. This is a legally binding agreement between you and your
creditors to pay back your debts over a set period of time that the court
decides is reasonable for you based upon your pay and income. It may sound
difficult but try to stay positive you are much more likely to be able to
manage by being realistic and realising that debt is not the end of the world
and can certainly be overcome. Take regular exercise and try to eat and
sleep well. You’ll feel more positive and work will be much better and you’ll be
able to cope with things that you previously found more difficult. It may
take some time to implement the plan and to gradually deal with your debt but the
fact that you do will be noted by the credit reference agencies and the impact
on your credit score will be positive. Once you’ve got things under control and
have a balanced budget then you may be able to consider moderate amounts of
borrowing in the future.

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