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Debt Problems

Hopefully, you'll never get so seriously into debt that you are dealing with credit management agencies. In case you ever do, though, you need to know how to manage the situation.

Most of us have been strapped for cash from time to time. Generally we are able to dig ourselves out of trouble with a bit of financial belt-tightening or some creative use of credit cards. It's not always that easy.

KNOW WHAT YOU'RE SIGNING UP TO

If you should fall into serious debt, here are a few tips on how to handle the situation:

Don't panic or ignore the problem: unopened bills won't go away.
Decide which debts take priority - like mortgage or rent - and which cost you the most through penalties or higher interest rates.
Only agree to pay off debts at a rate you can keep up. Don't offer more than you can afford.
Contact those who you owe money to as soon as possible to let them know you're having problems.
Remember that's it's better to make a small payment than send nothing at all.
Keep copies of all correspondence. You will need them if you want to seek help and advice from a third party.
Seek advice if organisations won't accept your repayment offers.

LENDERS HAVE RESPONSIBILITIES TOO

Lenders and debt management companies have to behave properly. Examples of their (illegal) deficiencies include:

Failing to investigate or provide proper details/records when a debt is queried or disputed.
Failing to deal with appointed third parties such as Citizens' Advice Bureaux or independent advice centres.
Pursuing third parties for payment when they are not liable.
Falsely implying or claiming authority - such as claiming to be working on court authority.
Contacting debtors at unreasonable times and/or intervals.
Claiming a right of entry when no court order has been obtained.
Misleading debtors by the use of official looking documents such as letters made to resemble court claims.

Lenders aren't allowed to ignore the dodgy practices of debt collectors acting on their behalf. If they do, their fitness to hold a credit licence can be called into question. Generally though, according to the Office of Fair Trading (OFT), complaints about debt management companies have dropped substantially in recent years.

So if you do get into debt, at least you shouldn't be unreasonably treated by the people you owe money to. Which leaves you free to concentrate on the task in hand, namely rebuilding your financial reputation.


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