Struggling to pay your Credit Card Debts – Debt Help

According to Credit Action almost sixty-six percent of Britons had seen their finances stretched by the current recession. It seems that 31% of households are now so worried about the state of their finances that they are considering missing essential repayments on credit cards, loans and mortgages.  Research by Mintel has shown that over five million adults had already been ‘hit hard’ by the current economic downturn and are struggling to make ends meet. So it is understandable that people are seeking money saving experts for advice and help with their rising debt problems.

Struggling to pay your Credit Card Debts – Debt Help

The Consumer Credit Counselling Service (CCCS) has said that fewer people are in a position to repay their debts: in 2008 only around 35% of clients were able to commit to a Debt Management Plan compared with 42% of clients in 2007 and 46% in 2006. They also suggested that clients seeking their help are becoming more affluent: twelve percent have a net household income of more than £30,000 a year and 47% of those seeking help were homeowners. Homeowners seemed to owe on average 83% more than clients renting their homes. The vast majority of CCCS clients owed money on credit cards and personal loans, with the average client owing £14,000 on each of these items.

Given that we have so much debt ( loan, mortgage, credit card debt ) and despair around today, it seems that a whole industry has grown up around helping people in debt to control their obligations to their providers by offering them debt solutions like Debt Management Plan, Individual Voluntary Arrangement and Bankruptcy. There are debt companies that charge an upfront fee and a monthly charge for providing their services and there are charitable debt organisations that are profit free and offer the client a free service. Before approaching any of these companies you should first speak with your credit card and loan providers to see if a deal can be arranged.

Recently a client of mine explained that he and his wife had spoken to their credit company about their £25,000 balance that was outstanding and their sudden drop in income. Their credit card provider asked them to submit a ’statement of their income and expenditure’ and then they agreed to a monthly payment of £50 with the interest being frozen. They had originally been paying £500 a month. What a result!

I have since spoken to a number of people in similar circumstances who have found that their credit card providers were willing to talk to them in order to find a solution. One credit card provider offered to freeze the interest rate and to reduce the payments down for a period of eight months initially. Whilst another provider was willing to freeze the interest rate and to divide the debt by 120 months (ten years) as long as the client agreed to continue paying the debt off. Other finance providers were willing to talk as long as you were honest and open about your circumstances.

This advice is only worth following if you are able to pay a reasonable amount towards your debt each month. If you are unable to make a reasonable payment then you should consider approaching a debt management company or organisation for help and guidance. What ever you do don’t stop making a payment to everybody you owe money to and do talk to your creditors first. If you just stop paying them they will hound you with phone calls all day long and then they will sell your debt to a company that will now start knocking at your front door to retrieve their money. What ever you do don’t stop paying your mortgage or any secured loans as this will result in you losing your home through a repossession

I have purposely not included the names of the credit card companies as they all offer different solutions and just because they offered one person a solution does not mean that you may qualify for the same solution due to your circumstances. Be cautious of any debt help where you are advised or cajoled to go down the bankruptcy or the Individual Voluntary Arrangement (IVA) route as a quick solution. A debt solution should be a structured way to get out of debt and it needs to be right for your circumstances.

Your thoughts, experiences and comments are welcome. You can join the discussion below and leave your thoughts and experiences.