Debt Advice Line

Good debt. Bad debt

If you have borrowed money for a material item or general purchase then you are in debt. Debt isn’t necessarily a bad thing in today's society. We often choose to go into debt to get those things we can’t afford at the time, such as houses or shares. As long as you remain in control of your debt - that is - are able to make the repayments, debt isn’t viewed as a problem. However, it is when that debt starts to control you, such as when you have trouble making the repayments, that you need to take action.

Debt Checklist

While there are a number of options to help you out of debt if you get into trouble with your repayments, it is a much better idea to follow some simple rules when looking around for the right credit provider that may prevent you getting into debt in the first place.

Before taking out a loan check:

*What type of security is required. For example, if you obtain a property mortgage the financial institution will require title over the property. Many people forget this point when it comes to finally selling their property.;

*The interest rate that will be charged, and how often the payments must be made: ie  weekly, monthly;
how the rate is charged, ie is it a flexible or fixed interest rate. More often than not, the interest will be extremely high making possible repayments un-affordable;

*The actual amount, in pound terms, that will be paid over the term of the loan. Again, this is sometimes overlooked;

*Whether there are fees that increase the amount you pay over and above the interest payments, such as a maintenance fee;

*The term the loan runs;

*The likely scenario if you are unable to repay the loan, or if you experience short-term financial difficulties;

*Whether you can repay the loan over a shorter period, and whether penalty rates are incurred if you do;

and

*Whether the contract is covered by the Consumer Credit Code.

Is your debt out of control?

If you find you've run up a lot of debt, the first thing to do is to advise your lenders of your situation. Please don't put your head in the sand. Go to the credit card company, the department store, the finance company or the bank and explain your problem so that between you, you can work out a repayment plan that suits both parties.

Burying your head in the sand won't make the money you need miraculously appear. If it all has become too much, with a seemingly endless string of creditors, there are a number of options.