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How to deal with debt problems

Debt can happen to anyone - there are hundreds of reasons why you could be facing financial difficulty and debt problems. However, there are also hundreds of ways to deal with your problems and get out of debt. This guide can be a useful starting point for anyone struggling to pay bills and loan repayments.

What is bad credit?

Bad credit can occur of you fail to meet a loan repayment, miss a payment on your mortgage, have a County Court Judgement (CCJ) or Default against you, or for a number of other reasons.

How to counter bad credit

Establishing a basic set of good financial habits can restore your credit and gradually help to bring you back into the black. The best way to deal with debt problems are:

  • Don't rush into any borrowing decisions. Do your sums to make sure that you can afford loan or mortgage repayments, even if interest rates go up
  • Put away an emergency savings fund with three or four month's worth of repayments in it in case your circumstances change unexpectedly
  • Keep written records of your spending and identify areas where you can cut back

Monitoring your credit rating

You can get credit reports directly from the agencies that compile them. There is a small fee involved, but it is a quick and relatively simple process. Equifax (equifax.co.uk) and Experian (experian.co.uk) are the two major credit agencies.

Coping with CCJs

Most people don't know that if they pay off the debt within one month of the judgement, the CCJ can be cancelled. If you can't pay it back within one month, it is still possible to request that the CCJ be marked "satisfied" once it has been paid.

Debt management companies

There are dozens of companies that offer to solve your debt problems in a flash - but be very cautious. There are reputable companies that will negotiate with your creditors, aim to reduce your monthly repayments and consolidate your debts into a single payment. Check their credentials carefully before signing up.

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