Financial Difficulties

Do you ever feel as though you are steadily sinking in terms of your debts?

There’s no doubt we now live in a credit driven society where it’s never been easier to obtain credit. With loans and credit cards being thrown at us from every angle, it’s easy to see why the number of personal debt problems and bankruptcies are rapidly increasing.

The No1 rule if you have Debt Problems is
Don’t ‘Bury your head in the sand’ talk to your creditors, professional advisers or debt advisory services like the Citizen Advice Bureau. As the saying goes ‘a problem shared is a problem halved’.

Dealing with debt problems can often manifest further into emotional, health and stress elated problems causing a lot of despair and frustration.

Unfortunately, a common tendency amongst people with debt problems is to ‘bury their head in the sand’ and hope it goes away. This is just basic human nature mainly due to the perceived embarrassment of having debt problems.

Having debt problems is nothing to be ashamed about (can happen to anybody), if you do find yourself in this predicament, you’re not alone, every year several million UK adults experience financial difficulties and debt repayment problems.

Do's and Don'ts

• DO take action immediately, the longer you leave it, the worse it gets.
• DO try to stay calm and try not to feel guilty or afraid - even if threats are being made.
• DO seek professional help for any health, emotional or family problems that may arise from the stress of having financial problems.
• DO consider telling your family and friends as they may be able to help you – a problem shared is a problem halved. Letting your partner know (if they don’t already) the entire situation can be very difficult but is essential, you need their support.
• DO make sure that you are claiming all the allowances and benefits to which you are entitled. Millions of pounds in allowances and benefits go unclaimed every year and creditors will expect you to have considered all the options.
• DON’T bury your head in the sand, the problem won’t solve itself
• DON'T borrow more money to pay off existing debts without taking professional advice (preferably independent).
• DON'T spend money on non-essential things.

Obtaining Your Credit File

Your credit file contains important information that shows how you have conducted your financial affairs over the previous 6 years. It’s this information that companies use to assess any applications you make for credit.

Under the data protection act you are entitled to see a copy at anytime (for a small fee) and take action if you discover incorrect information on your file.

Had credit problems or been refused?

It is certainly worth checking your file if you have ever been refused credit or you live at the same address as someone (even a previous occupant) who has bad credit, as this can be linked to you.

Obtaining Your File

If you wish to obtain a copy of your credit file, there are three main credit reference agencies you can get it from. For a fee, you can either request a copy of your credit file be sent to you or you can access it online. The contact details are as follows -

How to Correct any Errors/Inaccuracies on your Credit Report

Contact the appropriate creditor to dispute the incorrect item, as long as you have proof that the item in question is incorrect, it should be resolved quickly. If the creditor finds that the disputed information is indeed incorrect, the creditor is required by law to update its records both internally and with the credit reference agencies it deals with, usually within 28 days.

If you find an inaccuracy with one credit agency, you may want to get your credit report from the other two agencies to see if their reports contain the same error. After you've corrected an error with one agency, the other agencies should eventually receive the corrected information. But for prompt correction, it's best to contact each of the three agencies yourself.

If You Cannot Resolve a Disputed Item

You have the right to attach a 200-word statement, free of charge, explaining the nature of your disagreement. Your statement will become part of your credit file, and will be included each time your credit file is accessed.

Adverse Credit Terminology

If a borrower has a history of poor credit, this is often referred to as Adverse Credit, the common terminology is explained below ~

• Arrears - this describes the amount the borrower is behind in his mortgage repayments schedule. The amount is usually measured in either pounds or months.
• Bankruptcy - a corporation, firm or individual, who, via a court proceeding, is relieved from paying all debts once assets have been surrendered to an appointed third party designated by the court.
• County Court Judgments (CCJ) - is an adverse ruling by a County Court against a person who has not satisfied their debt payments with their creditors. Once the ruling has taken place it will be recorded against the person’s credit history and will appear every time a credit search is done for the next six years making it more difficult to obtain credit.
• Default - this is a failure of an individual to make payments on a mortgage at the correct time or to not comply with the mortgage companies requirements.
• Individual Voluntary Arrangement (IVA) - is a means of protecting yourself from your creditors by entering into a legally binding agreement supervised by an Insolvency Practitioner. Usually a monthly instalment is paid over 3 to 5 years with the remainder of the debt then written off although in some cases a lump sum payment is made or a mixture of both.
• Repossession - is where the Lender takes over ownership of the property, usually for non-payment of the mortgage and is accompanied by legal eviction of the occupants.