Getting Into Debt

Always keep a check on your borrowing and on your changing circumstances. If you start to get into difficulties with your borrowing, act fast it's easier to solve a small debt problem than a larger one. Here are some guidelines on what - and what not - to do.

Tell lenders what's happening

Don't just miss payments. Many lenders will try to sort out a new arrangement to help you over a temporary crisis - for example, you might be able to make just interest-only payments on your mortgage, or spread your borrowing over a slightly longer period.

Get professional help

Money Advice Centres and many Citizens Advice Bureaux employ professional debt counsellors who are experienced in dealing with debts of all kinds. They will give you advice, help you re-organise your finances and contact lenders on your behalf. The address and phone number of your local CAB is in the phone book. You can also get help and advice about dealing with debts from:

Housing Debtline

Don't borrow more to pay off your debts

You'll have seen newspaper advertisements suggesting that you take out just one loan to pay off all your others - and even leave you cash to spare ). Don't be tempted. Such loans either have very high interest rates or they would be secured against your home. If you're already having problems with your borrowing, these loans are likely to make the situation worse, and you certainly shouldn't add to your problems by putting your home at risk.

Read up on Keeping Things Confidential now

Borrowing Case History

A twenty-year-old shop assistant living with her parents was earning under £400 per week. In under a year she ran up debts of nearly £4,000 with three e-mail order firms, two banks and a credit card company. She decided to borrow part of that sum from a finance company to help pay off her existing debts, but at an APR of well over 300 per cent she was clearly making her problems worse.

In the end she went to her local Citizens Advice Bureau, who took up her case with the local Trading Standards Office. They advised that the APR set by the finance house wasn't likely to be... see: Borrowing Case History

More money