A recent article on The Guardian newspaper’s website has stated that Britain currently has personal debt of over £1.4 trillion, which is almost as high as the economic output!
If you are having some debt problems, then you are probably feeling like you are in a very dark and desperate place right now, full of all sorts of emotions, and not really sure whether there is going to be a light at the end of the tunnel, so to speak.
But the good news is that there is a good support network out there and that support network is only too happy to help you get out of financial hell. If you are living in Scotland, here is some helpful advice on what you can do, as well as the various options available to you.
Prioritising your debt
The first thing to do is look at your outgoings and determine which debts are high-priority debts, and which ones are low-priority debts. Examples of high-priority debts include:
Rent or mortgage payment arrears;
Gas, electricity and water payment arrears;
Council tax payment arrears.
If you have some money spare, you should look to paying off those debts first. Failure to pay any arrears you may owe on them could potentially result in you losing your home or in the case of council tax arrears, face possible jail term in extreme circumstances!
You will need to choose from one or more options in order to take control of your debts and be able to live within your means:
Deal with creditors directly;
Instruct a debt management company to deal with creditors on your behalf;
Apply for a debt consolidation loan;
Get a trust deed.
Here is a little more information on these four options:
Option 1: dealing with creditors directly
This option involves contacting each of your creditors directly, explaining to them that you are unable to afford the current monthly payment amounts, and asking for reduced payment terms.
You may need to provide them with evidence on what your current financial commitments are, as well as explain when you are likely to be able to make normal payments again.
Option 2: instructing a debt management company to act on your behalf
There is a plethora of debt management companies out there that will be able to speak to your creditors on your behalf, and negotiate payment terms with them through the use of a debt management plan.
Most will charge a small fee per month for handling your debt management plan, but some do it for free (these tend to be registered charities).
Option 3: Apply for a debt consolidation loan
In a nutshell, a debt consolidation loan is a large loan that you could apply for from a financial institution such as your bank for the purposes of paying off all of your other debts. If many of your debts have high interest rates, this can be a good way of making your outgoings more affordable and result in your having to pay back less money.
Option 4: Get a trust deed
Finally, one option would be to get a trust deed. Jubilee trust deeds, for example, are an alternative form of bankruptcy designed specifically for Scottish residents and results in a fixed period of monthly payments being made to creditors, which are typically much lower than the original monthly payment amounts.
It is important that you consult with a debt management specialist before making any decision on your debts, as you want to be sure that you are making the right decision.