What To Do When Your Debts Get Serious

Neil Faulkner looks to The Motley Fool's Dealing with Debt community to find answers to two common debt queries.

The Motley Fool's extraordinary Dealing with Debt community helps anyone regardless of their level of debt and how it came about, and they do it without judging you. Visit the board, explain your debt problem, and kind Fools will likely give you some good advice.

Here are a couple of common questions that debtors often ask:

I don't want to tell my wife/husband/parents, but should I? And how?

Frequent poster tonyreptiles summarises the broad view of the Dealing with Debt community. He says, when it comes to telling your family and friends, in particular your partner, 'General consensus is to fess up. Of course that is down to individual circumstances but i generally agree with the truth is best foundations concept'.

Regular poster and one of the most recommended Fool's, Tortoise1000, responded to a message from hgmc, who was worried about telling his wife:

"Dear hgmc

"Has it occurred to you that she might already sense that something is wrong? She might be worrying about what it could be. The truth might actually be better than what she fears.

"There been a series recently called 'Your money or your wife'. Did you see any of it? Each week a debtor admitted to their partner the scale of their debts and, with their help, started to sort them out. One thing that was noticeable on the programmes was how very kind and supportive the various partners (of both sexes) were in the face of these difficult revelations.

"What can we learn from this that might make telling her not too stressful? Two things.

"1. Have things laid out clearly and a good intention to take prompt action to sort things from now on...

"2. Pick a good time and ask her for a proper sit down meeting about something that is worrying you...For example, you could get up on a Sunday morning and make the kitchen and sitting room clean and tidy (this will prepare the ground - she'll know something is up!) cook her a nice breakfast, and then with you both rested and fed, ask for help. Or something along those lines.

"These are just some ideas I am putting forward for you to consider, and you will decide whether they are useful in your circumstances."

Read the whole discussion and find out what happened when hgmc told his wife in struggling and getting worse.

You can read more on telling your family:

• It's not fun telling your family, but Smudge0973 bit the bullet in FAO Smudge0973. StrawberrySundae tells her husband: Debts are now out of control.
• topboy100 felt awful about telling his pregnant wife about £59k of gambling debts and was sure she would leave him. Indeed, it did rock the relationship. However, after a few days and a good cry, his wife gave him a chance, and they discussed how they could sort out the finances together. Read this post from Is this the end?
• Sassybird writes about why she wishes her husband had been as forthcoming about his debts in the same discussion: Is this the end?

Should I get a consolidation loan?

Old Fool research found that 5/6 people who consolidate debt go on to rack up more. (Admittedly it was a small survey, but other research has found similar results.) The Consumer Credit Counselling Service reckons that just 3% of people with debt issues should consolidate. Raven111 wrote about her experiences consolidating debt:

"I should be the poster girl for why you should never consolidate, and heres why:

"(Gulp!)

"In early 2002 after I had finished Uni, I took out a consolidation loan for £8,000. This was to pay off the majority of my credit cards and overdraft. However, having been a poor student, I thought I deserved a little treat or rather, lots of treats, so I paid off about £7500 and blew the rest. Then I thought that I should keep my credit cards for emergencies. Would anyone like to guess what I did next?

"Why of course I started using my nice clear credit cards.

"Fast forward a year and a half to the summer of 2003. By now, I had my loan and all my credit cards, so decided it would be just the best idea ever to consolidate again. So this time I got a loan for £15,000 which included the outstanding original loan, but was not enough to cover all my cards, but it was the most I could get. So by now I have about £20k of loans and credit cards, plus my overdraft and student loans.

"Guess what happened next? After not cancelling my cards once again, having not at all learned my lesson the last time I went shopping again.

"Fast forward to January 2005.

"I decided to take out yet another loan to consolidate all my credit cards, but again it was not enough, so my nearly cleared credit cards and I went to the shops just as before (will this girl never learn I hear you ask?)

"Here we are in June.

"I now have 2 loans, 2 credit cards, an overdraft and my student loans, totalling over £50k of debt, and finally, FINALLY, I have had my lightbulb moment.

"I used to read all the stories of people consolidating their debts, and then running them up again, and laugh at their stupidity. How could people be so stupid!

"I'm not laughing now.

"Raven"

Read the discussion this message prompted: Why you should not consolidate.

For another discussion from the community, read this post, described as compulsory reading by regular poster and superstar Manzanilla: Consolidation Loans.

Read more discussions on these loans in Consolidation Loan? Good idea and loan or transfer to new card?

Despite all this, consolidation loans are sometimes the right solution. If you want independent and friendly guidance on what is the best solution for you, ask for assistance from the experts, debtors and former debtors in our Dealing with Debt community.