Getting Out Of Debt, Part II

When debts become unmanageable, the temptation is to ignore the problem in the hopes that it will go away. It won't, so be brave and tackle your creditors.

In Part 1, I wrote about what I call 'manageable debt.' Now I'm turning to 'unmanageable debt.' This is where debts have become rather more than irritating payments you have to make each month. Instead they have become something quite terrifying.Robbing Peter to pay Paul in effort to pay the bills and being too frightened to open letters from the bank or to answer the phone in case is someone chasing you yet again for money is not a pleasant way to live. And yet people often endure months and years of constant fear rather than facing up to the situation because it all seems too much to deal with. The trouble is, the longer you leave it the worse it gets so it's best to take the bull by the horns as soon as possible.Start by using our Statement of Affairs calculator, which will help you to establish your levels of income, your outgoings and the extent of your debts. Work out how much money you have left over to put towards your debts and if there isn't enough to go around, visit our Dealing with Debt discussion board and check out the sample letters you can use to contact your creditors.The idea is that you write to tell them you're in financial trouble and could they please freeze their interest rates for the time being and accept a lower payment until you're back on your feet. Enclose a copy of your Statement of Affairs so they can see exactly what your financial situation is, how much you owe to other people, how much you've got to dish out between your creditors and make a pro rata offer of monthly payments. Pro rata simply means that you are paying a proportionate amount of money towards the value of each debt. So, if you have a debt of £1,000 and a debt of £500 and you've got £150 to put towards them, the £100 goes to the £1,000 creditor and £50 goes towards the £500 creditor. Lenders like to see that they're being fairly treated!Creditors have a responsibility to treat you fairly so if any of them aren't prepared to consider your offer, keep persisting. Ignore any threats of debt collectors, legal action, bailiffs etc. If a creditor decides to take you to court, let them. A judge is not going to force you to pay what you can't afford, particularly if you've behaved perfectly reasonably and politely in your discussions with your creditors.If you need help and support then contact one of the free debt-help organisations such as the Consumer Credit Counselling Service, PayPlan or your local Citizens Advice office who will help you sort things out.They will also tell you if your debts are so serious that you really ought to consider an Individual Voluntary Arrangement or bankruptcy.Learn more about how to Get Out Of Debt

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