Coping With Debt: How Others Find Their Feet
If you are struggling with debt you are far from alone, there are manageable solutions to most debt problems, and many people have been in your situation before. Find out how they solved their debt problems below.
All names and some details have been changed to protect the identity of customers.
Alice: “Budgeting helps”
Alice is a 34-year-old mother of four from the North East. After a separation, she struggled to make ends meet and turned to credit to bridge the gap.
When she received free advice from a charity, she owed over £ 24,000 to five different creditors, which meant she had to pay around £ 500 per month just to meet her obligations to her lenders.
Although she gets along on her own with such a large family, she also manages a part-time job. Her income, along with child support and tax credits, gives her a take-home pay of just over £ 2,000 a month while she lives in social housing which charges her a reasonable rent.
How Alice got out of debt
Alice just needed a little help with her budgeting. A charity showed her how to better manage her money by setting a monthly budget to take care of all the essentials: rent, food, heat, light, school fees and clothing, etc.
Taking into account bills that may be billed quarterly or annually, such as utilities or the television license, she found that she had enough money to live for herself and her children and to pay off her creditors without unnecessarily harming her. his credit rating.
The charity advisor remarked: “It can be very difficult for people with busy lives to buy the time to properly assess their financial situation, but it often takes a few simple budgeting tips to make a difference. between being locked in financial problems or having the key to financial freedom.
Catherine: ‘I am now on top of my situation’
Catherine lives in South Wales. Her problems started when she transitioned from a part-time job to a full-time job.
Until then used to being paid by the week, she had to adapt to being paid by the month. She therefore took out a small loan to cover the current month. Then she applied for a credit card which she used to fund nightlife as well as to buy new clothes.
After a few years, Catherine had acquired several store cards as well as other credit cards. Feeling anxious that many of them were nearing their limits, she took out a loan of £ 4,000 which she intended to use to pay off her debts.
Unfortunately, the urge to splurge was too strong, and she continued to use her cards to purchase goods that she wouldn’t have otherwise been able to afford.
Consciousness struck again a few years later. This time she borrowed £ 8,000 to clear the old loan and consolidate all the cards. It worked for a while before Catherine reverted to her old ways and started using her cards again.
Once again, she consolidated, intending to use the loan to settle her finances. This time the amount was £ 15,000. At 27, she owed £ 28,000.
Surprisingly, Catherine had never missed any payments, but she had now come to a situation where she was paying far more than she was earning in minimum payments, with nothing left to live on.
Lucky for her, she had good friends who prompted her to seek help from a debt counseling charity who recommended the most affordable route. Debt Management Plan (DMP). That way, she would be able to get help to settle her debts over a longer period.
Catherine said: “Debt is such an easy trap to take and very difficult to get out. I have such regrets and I always wonder why? .
“I am now on top of the situation. Seeing the sales go down was wonderful and a real help in trying to curb my urge to spend by staying away from the stores. It is difficult but I can do it.”
A debt-free end
Catherine completed her debt management plan a few years ago and is now completely debt free after paying off all of her creditors. She can now begin the next stage of her life.
Jack: “Sometimes bankruptcy is the only option”
Jack is a blue-collar worker in his 30s who earns around £ 1,000 a month when he works – which unfortunately is not always the case when moving from project to project. He rents an apartment which he now shares with his girlfriend.
A few years ago, in between jobs, Jack began borrowing heavily by credit card. By the time he sought help from a charity, he owed over £ 14,000 to 20 different creditors with rent arrears and water bills.
After living expenses, Jack didn’t even have enough to make the minimum contractual payments to unsecured creditors, so bankruptcy was recommended.
Why Jack Was Recommended Bankruptcy:
Looking forward to
While it was difficult for Jack to deal with the idea of bankruptcy initially, he was able to be supported throughout the process by the charity (as well as emotional support from his partner) and is now of the other side.
It is very difficult for him to get extra credit, but he and his partner are now doing a great job living within their means and are able to look ahead, rather than over their shoulders all the time.