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Handling debt

Updated on January 17, 2012

Dealing with Debt

Denial is the last thing you should do when it comes to debt. It’s hard to be in it, I’ve been there. The darkest time of my life. You have to face it dead on because the fact is, if you acknowledge it, you can and will get out of it.

There are many reasons people fall into debt. I went through a divorce and was left with it all. I found it too exhausting trying to get money from my ex to help me with it. I had to own my part in the debt and get out of it. I remember some friends telling me not to let him off the hook. It wasn’t about that. The fact was, I was in debt and I had to own it regardless. I had to take responsibility in the part I played to get into that debt and deal with it and get it under control. This is a list of what I did to finally get it under control.

Source

Stop spending.

I had to just stop spending and by that I mean I had to do some serious cutting down. You might think there is no money to even spend, I thought that but then I realised a few things. Money was going out in so many forms and there were some things I could do without. The first thing I did was hand back the keys to the HP Vehicle. This cut down on insurance, tax, MOT and servicing. I cancelled the television subscription and went back to free view. I didn’t need it. It was an unnecessary expense. My mobile phone contract was coming to an end so I didn’t upgrade and instead went on to pay as you go. I even cut down on the food bill by shopping at Aldi and Liddle and also by getting the supermarkets own brand, I also cut down on luxuries. This had to be done. Always remember that this is not forever so don’t be disheartened if it comes to this. Things do change; I’m living proof of this.

Ring all creditors

I rang all the creditors and told them the truth about my finances. This helped me for six months. If they are regulated they should offer you an option to pay what you can afford. They will often send you an income and expenditure form so you can work out how much you can afford to pay. Sometimes you might not even be able to pay much, but anything makes a difference even if you offer as little as £5. This shows you are making an effort and not ignoring the debt. If you have a mortgage, depending on the type of mortgage you have, you can ask to be put onto an interest only plan for a while. This will lower the payment amounts and might make things a little easier.

Speak to a debtline service or Citizens bureau

This was extremely helpful to me as they gave good advice on how to handle creditors and they will make you aware of your rights. If you really can’t pay the debt and you are considering bankruptcy they can help you before you make this decision. Bankruptcy should only be the last resort and should not be taken lightly.

Hold your hands up and surrender

Sometimes you get to the point where the debt is just too overwhelming and you have to surrender. The banks were closing in on me, threatening me with legal action and my home was under threat for repossession. I had done everything in my power to keep on top of things. I answered the phone, responded to letters but it wasn’t enough. I remember the bank saying they wanted a large chunk of the money that I just couldn’t pay. Their response was that they were taking me to court. At that point I surrendered and accepted, because no matter what I did, I just didn’t have the money.


Going to court

Going to court twice, first for the house and second for a bank loan was the best thing that happened to me. I had evidence that I was paying what I could. I showed the judged that I was willing to pay the debt but didn’t have enough money to cover it all. I showed him statements, letters and agreements that had gone between me and the creditors. The judge took all this into consideration and ruled in my favour.

The house was to remain in my name and the overdue amount was consolidated into the property. This way it brought me out of the red. It will take me an extra two years than the original time to clear the mortgage. This was better than loosing my home and being chased by the bank.

As for the bank loan, the judge removed all court and solicitors fees from the debt. He froze the interest on the debt, meaning they could no longer charge interest on the outstanding amount. I only had to pay what I owed and I was to come up with an affordable monthly payment plan and the bank was to accept it. I was so relieved. This was five and half years ago and things are so different now.

The bottom line is this; no matter how hard it is don’t ignore the debt, because like in my case, if you ever go to court, a fair judge will take into consideration everything you did to try and clear the debt.

All the best.

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    • AudreyHowitt profile image

      Audrey Howitt 5 years ago from California

      Debt is a sad reality for many of us--great advice here---

    • Deborah-Diane profile image

      Deborah-Diane 5 years ago from Orange County, California

      Excellent advice about dealing with debt!

    • Perspycacious profile image

      Demas W Jasper 5 years ago from Today's America and The World Beyond

      Perhaps that bright light at the other end of the tunnel isn't an oncoming Express after all! Glad to read it worked out. Once burned, twice cautious?

    • nanospeck profile image

      Akhil Anil 5 years ago

      Very insightful article on debt management. It's always essential to invest early to get maximum output when we need it most urgently! Thanks. Votes up!

    • lin8t profile image
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      lin8t 5 years ago from United Kingdom

      Yes it is AudreyHowitt, it can managed and dealt with. Thanks for your comment

    • lin8t profile image
      Author

      lin8t 5 years ago from United Kingdom

      Hi Deborah-Diane, thank you for your comment.

    • lin8t profile image
      Author

      lin8t 5 years ago from United Kingdom

      No it isn't an on coming express lol! It can work out it did for me and yes, once burned twice cautious! Absolutely!

    • lin8t profile image
      Author

      lin8t 5 years ago from United Kingdom

      Thanks for your comment perspycacious

    • lin8t profile image
      Author

      lin8t 5 years ago from United Kingdom

      Thanks for your comment and for voting up nanospeck. I agree it is important to invest early. I've certainly learnt my lesson :-)

    • Angela Blair profile image

      Angela Blair 5 years ago from Central Texas

      lin8t -- been there/done that just like you described. I didn't wind up in court but definitely felt the wolf breatheing down my neck during the whole mess -- a divorce just as you said. During the whole debacle my brother made the funniest, most uplifting comment of all when he said "My sister is the only one I know who can live on a church mouse's budget!" Well, me and the church mouse made it -- as apparently so have you -- and strangely enough when one comes out on the other side it's rather uplifting for one's own self-worth? Great Hub. Best, Sis

    • lin8t profile image
      Author

      lin8t 5 years ago from United Kingdom

      Hi Angela, good on you for not wind up in court, it's an awful experince and yet an empowering one, hard to explain. I understand what you mean by a church mouse's budget. I remember doing a budget and someone was quite shocked by how little my daughter and I could live on. Thank God we made it! Thanks for your comment.

    • alocsin profile image

      alocsin 5 years ago from Orange County, CA

      Common sense advice for reducing debt, very useful in these economic times. Voting this Up and Useful.

    • lin8t profile image
      Author

      lin8t 5 years ago from United Kingdom

      Thanks for voiting up alocsin and for your comment. It's been good for me and I've learnt a lot.

    • ripplemaker profile image

      Michelle Simtoco 5 years ago from Cebu, Philippines

      One of the things I found out during our financial workshop was exactly what you wrote here. Talk to your creditors and tell them your financial status. Don't run and hide. True, true!

      NEWS FLASH: Congratulations on your Hubnuggets Nomination! You are one of the Personal Finance Nominees! Hurry and see for yourself right here: http://koffeeklatchgals.hubpages.com/hubnuggets6/h... Now remember to read, vote and promote! Love and blessings in behalf of the Hubnuggets Team and ME as the Hubnuggets official cheerleader! Enjoy the Hubnuggets and wishing you a year of financial abundance!

    • lin8t profile image
      Author

      lin8t 5 years ago from United Kingdom

      Thank you for your comment, when it comes to debt you really can't hide. It's something anyone can overcome. Yes I'm one of the Personal finance Nominees, I'm over the moon! This is one of the reasons I write! This is very exciting for me. Thanks again for your lovely comment.

    • DougBerry profile image

      DougBerry 5 years ago from Abilene, TX

      Hey, contratulations on your HubNuggets nomination. Good luck!

      Debt is a heavy albatross. It took me years to get debt free and then we bought a house and car. Luckily we're not on exactly the same treadmill again.

    • lin8t profile image
      Author

      lin8t 5 years ago from United Kingdom

      Thank you DougBerry, it was unexpected and I'm honoured to have been one of the contestants. Yes debt is a heavy burden and it's a dark place to be in. I'm glad you are out of it! All the best for the New Year.

    • E Padro profile image

      E Padro 5 years ago from United States

      Many people are dealing with debts these days. Thanks for this informative hub that entices people to do the right thing when dealing with their debt problems.

    • lin8t profile image
      Author

      lin8t 5 years ago from United Kingdom

      Thanks for the comment EPadro, I'm glad tthat you have found the hub informative. No matter how bad debt may seem there is a way out.

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