The Debt Samaritans

How National Debtline helped one Fool take the first steps from chaos to control.

If your finances are in such bad shape that denial seems like the only option, if you don't know what your monthly outgoings are but suspect they wildly exceed your income, or if you're secretly preparing to sell everything you own, take heart. There are some excellent alternatives to avoidance and panic. For a good idea of the lay of serious debtland, read this.

But here's my story.....

In August 2006 I hit a wall. A spate of unemployment triggered by injury had got me into the habit of using credit cards to pay all my bills except what was covered by my Jobseeker's Allowance. This led to another bad habit -- leaving post unopened for months at a time. Avoidance and Denial were my middle names, my first name was Debt and my surname was Crisis. Which I realised when I came to the end of my credit.

Overnight my life became a nightmare. Suddenly I was getting calls five times a day on my mobile pressurising me to make huge payments immediately. I had no idea what to do. Then a friend who'd also been in financial difficulty told me that National Debtline could help.

National Debtline is a charity which gives free and independent advice to people living in England, Scotland and Wales. As soon as I was in arm's reach of a phone, I called (free on 0800 808 4000). That call changed my life.

What I got from National Debtline:

1. A friendly voice

If you're feeling isolated by debt and intimidated by large organisations, it's immensely helpful to talk to someone calm, informed and on your side. As I spoke to the debtline my self esteem went up a curve so steep it was practically vertical and I felt I'd changed from the world's worst idiot into a citizen who knew her rights and was going to exercise them.

2. Words of one syll (able)

The debtline explained everything I always wanted to know about debt but was too afraid to ask as if to an eight year-old child. Ironically, this made me feel like an adult.

3. Education, education, education

The key things I learned were:

If you fill in the debtline's Personal Budget Sheet (or The Fool's Statement of Affairs) you can work out the difference between your income and your outgoings. Then you can calculate what is left, if anything, for your creditors. If you are a personal budget virgin and are resisting this process because it feels like too much work or too much truth, know that:

It should take you under an hour to fill one in.
The feeling of control you get once you've done it is wildly exhilarating.
It is the key to negotiating with your creditors.

There's a big difference between priority and non-priority payments. If you don't pay the former, you stand to lose something -- your freedom, for example, since you can get thrown in jail for not paying your Council Tax or TV licence -- your home if you don't keep up with mortgage payments. The trick is to make your priority payments first (obviously) and then share out any remaining income between the non-priority creditors.
There's also a major difference between secured and unsecured loans. One is attached to something which, again, you stand to lose and the other isn't. Companies with secured loans have much more power over you and no reason to hassle you with nasty letters and calls. `A credit card company is like a small dog yapping around your heels,' said National Debtline. `The smaller the teeth, the louder the bark.'
Feel no loyalty to your bank, however long you've been with it. It feels none to you. So treat an overdraft just like a credit card loan. It's just another non-priority payment.
It's in the creditors' interest to do a deal with you. Debt collection is an expensive business. If you can show financial difficulty, creditors will usually be amenable but there's no guarantee. Once the deal is done, they can change their minds at any time. On the other hand their avenues for debt collection are limited and they know it.
It's in your interest to communicate with creditors. When you reach an agreement the scary phone calls and letters will stop. When negotiating the repayment of my overdraft, for example, the fact that I replied to the bank's letters within the 28-day limits meant that my credit rating was unaffected when I cleared the debt with a partial payment.

I learned much more, but the editor won't give me any more space to tell you the rest....

Where I am now

Nine months on I'm in work again but still living on a very tight budget. I also feel that I'm gradually getting on top of my debt.

Thanks to National Debtline, I've gained a vital breathing space and, crucially, the knowledge and confidence to keep fighting.

Other reputable organisations offering free debt advice services:

- Consumer Credit Counselling Service -- http://www.cccs.co.uk/

- Payplan -- http://www.payplan.com/

- Business Debtline -- http://www.bdl.org.uk/

- Citizens Advice -- http://www.nacab.org.uk/

- Citizens Advice Scotland -- http://www.cas.org.uk/

- Northern Ireland Association of Citizens Advice Bureaux -- www. Citizensadvice.co.uk

Or why not visit our outstanding Dealing With Debt discussion board? You'll find plenty of Fools who can give you advice and emotional support to help you get on top of your debts.

More: 100,001 Tips To Reduce Your Debts | Money Talk Podcast: Getting To Grips With Your Debts