CAUSES
OF DEBT
According
to Bank of England figures, if you divide the population into
the
amount of consumer debt every one of us owes £18,000.
The
total amount of consumer credit, leaving out mortgages, stands
at a staggering 150 billion pounds. That’s three
times higher than when current records began just a decade
ago in 1993.
Many low-income households carry a heavy debt burden through the
year. Sometimes they pay extremely high interest rates. So how do
we defuse the debt timebomb?
On Your Behalf we try to answer that question and have some sound
advice on what you can do to help yourself. Anyone can get into debt for reasons which are many and varied and not usually
due to irresponsibility, as is commonly assumed.
Most debt problems arise when people experience changes in circumstances which
leave them unable to meet their commitments. This can be due to the loss of
a job, a birth, ill health, a bereavement, etc.
The effects of debt can be devastating to people and their families. On a practical
level, clients' liberty, their home, goods and services may be lost or at risk.
Emotionally, indebtedness can cause people to feel ashamed, guilty, frustrated,
and angry and can seriously affect both their mental and physical health. It
can also be the cause of a relationship breaking down amongst other things.
The difficulties cover a wide spectrum. One person could owe money to the
local authority, the Electricity Board and a money lender, another could have
a highly
complex combination of debts such as a mortgage, maintenance arrears, personal
loans, a car lease, court fines and a hire purchase agreement.
Do's and Don'ts
- Do
not ignore the problem. It will not go away. Take action
now. Seek advice if necessary. Advice is free.
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- Work
out a budget. Calculate your total income and expenditure
on a weekly or monthly basis. Check social welfare payments
and seek advice on entitlements. Be careful not to exclude
any debts, arrears or credit payments. Do not forget
about occasional items such as school expenses, Christmas
etc.
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- Be
realistic about your basic needs for food, fuel, clothing
etc. Examine your expenses and see if economies can be
made.
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- List
everything that you owe including all arrears and work
out how much you can afford to pay your creditors.
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- Inform
your creditors that you are in difficulty. Show them
your budget. Reputable lenders will have a reasonable
view if they know the circumstances.
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- If
you have come to an agreement with creditors, maintain
it without fail. If a creditor does not accept a reasonable
offer of repayment, seek advice from your local advice
centre
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- Do
not ignore letters, reminders or default notices.
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- Always
attend court hearings and bring a copy of your budget.
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- As
a general rule, do not borrow more money to pay off existing
debts. It increases your outgoings and just delays dealing
with the problem.
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- Your
mortgage or rent is a priority debt. Problems with mortgage
repayments can occur all too easily and arrears can grow
very quickly. If in difficulty, contact your mortgage
provider immediately. Remember that your home may be
at risk.
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- Your
home cannot be repossessed except by an order of the
court. Lenders prefer not to repossess: it costs them
time and money but in some circumstances have very few
other options left open to them. Before legal proceedings
are considered your lender will write asking you to make
arrangements to bring your payments up to date. Be realistic
with your lender and try to put a plan of action in place
which is practical to you.
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If
you have a problem with debt you can contact your local Citizens
Advice Bureau. The CAB money
and debt advice service aims to provide a free, confidential,
impartial, independent and non-judgemental service to the public.
Organisations who
can help:
The Northern Ireland Association of Citizens Advice Bureau can be contacted
at:
11 Upper Crescent
Belfast BT7 1NT
Tel. No: (028) 9023 1120
or
211, Antrim
Road
Belfast
BT
15
Tel No: (028) 9075 2114
East Belfast
Independent Advice Centre
85 Castlereagh Street
Belfast
BT5 4NF
Tel: 028 9096 3003
Fax: 028 9096 3004
Consumer
Credit Counselling Service/Debtline NI
Tel: 0800 138 1111
National
Debt Line
Tel: 0808 808 4000
Financial
Services Authority
Tel: 0845 606 1234
Fax: 0207 676 1099
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