Facing Up to Debt Fears

By: Garry Crystal - Updated: 22 Jul 2010 | *Discuss

 

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Acknowledging that your debts have become uncontrollable is the first step in facing your debt fears. Studies show that many people wait at least a year before confronting the problem, and even then it usually takes harassment from debt collectors to kick start people into actually taking action. If you have finally decided to take control of your financial obligations then confronting your debt problems will be the first point of call.

Don’t hide from Debt

There are many reasons why people put off dealing with debt until the last minute. Some hope that the problem will simply disappear and debt collectors will stop calling if they are ignored for long enough. Others simply cannot face the prospect of asking for financial advice and help when it comes to their personal finances. The humiliation factor is also an issue for some people; they are not able to control their debts and are under the impression that people will think badly of them.

Debt collectors will not stop calling if you do not answer the phone, they will simply use other methods to contact you. Asking for help with a debt problem is not a sign of weakness and is the best way to tackle growing debt problems. With household debts in the UK now reaching over £1 trillion, and debt counselling services receiving thousands of calls per week, you are definitely not alone with regards to this problem and there is no need to feel embarrassed.

Slipping into Debt

It has never been easier for people to slide into debt. Credit cards, loans, hire purchase and overdrafts are seen as a way of simply surviving in today’s society. But it only takes a few missed payments for interest to start building up at a frightening pace. It does not take long to get to the point where you are simply paying interest and not making a dent in the original loan.

Taking out other credit cards or loans to pay for the original ones will only add to your debts in the long run, and the debt cycle will continue.

Make a Plan

Making a plan may seem like too little too late but it is the best way of actually seeing where your money is going. Facing your debt fears means being completely honest about your spending habits, listing all your incomings and all of your outgoings. Denial and excuses are no longer an option, and only by being honest can you take responsibility for your debts.

Don’t Hide from the Phone

Do not hide from phone calls from creditors or debt collectors. Creditors and collectors only have so many rights; they cannot legally threaten you or simply turn up at your door without your permission. At this point there may be a solution to your debt problems via payment instalments at a reduced rate or with the interest stopped. Explain realistically how much you can afford to pay each month, if they accept then make sure you stick to these payments.

Take Responsibility for your Problems

It may not be an appealing idea, but contacting your creditors before they start calling you is a wise move. Make them aware you are taking your debt problems seriously and are tackling the problem. If it gets to the point of debt collectors then you will also have additional collector’s fees to pay. There is nothing to be lost by contacting your creditors first to sort out the problem; it may mean the difference between another sleepless night or a weight lifted from your shoulders.

Seeking Debt Help

Each year thousands of people seek help from credit counselling agencies. Agencies will be able to offer a personal plan and discuss your options. They will also be able to contact creditors on your behalf or arrange consolidation, if this is an option. Some agencies may charge a fee for their services and some government run agencies will be free. Always avoid agencies that offer large loans with high interest rates to pay off your debts.

Cutting Back

If you are facing your debt fears and seriously want to change your spending habits then a change in your lifestyle may be needed. Take a look at ways to cut back on household purchases and luxury spending. Consider maximising your income with extra work. Spend with cash instead of credit cards, and if you can, pay off credit cards by paying more than the minimum amount each month. Do not try and maintain a lifestyle that is beyond your means, persisting in this will simply drag you deeper into debt.

Facing your debt fears and admitting there is a problem will take courage and a reduction in your spending. But it is the first step towards becoming debt free and placing financial control back in your own hands rather than the lenders.

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