Credit Card Debt Help & Advice
Credit Card Debt Help
Contact your lender(s) as soon as possible, preferably before you default on your minimum repayment. Explain your situation and stress your willingness to pay whatever you can. You should be able to negotiate an achievable repayment plan or payment holiday. However, do not agree to any specific deal without consulting independent help.
Where can I go for free, independent advice?
The CCCS advice line (0800 1381111) refers complex cases for face-to-face sessions. Credit Action, a sister charity, offers guides and resources at CreditAction.org.uk. An alternative telephone service is the National Debt Helpline on 0808 8084000. Alternatively, contact your local Citizens Advice Bureau (see Citizensadvice.org.uk)
What if I have several debts?
Tackle those that threaten your home, energy supplies or liberty first, but keep all creditors up-to-date. These priority debts might be mortgage payments, utility bills and council tax arrears.
What else can I do?
You may be able to supplement your pay or pension with part-time work. Also, consider the Government’s Rent-a-Room scheme, which allows you to receive up to £4,250 a year from a lodger tax-free. Trading on eBay, or similar websites, is a another popular way to boost funds.
Billions of pounds in tax credits go unclaimed. Research from Citizens Advice found that many of those entitled to the working tax credit and the child tax credit do not claim.
If you do manage to raise extra income, it is a good idea to pay more than the minimum repayment on your credit cards. Research by uSwitch.com, the comparison website, indicates that paying 3 per cent, rather than 2 per cent, can more than halve both the interest paid, and the repayment time.
What else can I do?
You may be able to supplement your pay or pension with part-time work. Also, consider the Government’s Rent-a-Room scheme, which allows you to receive up to £4,250 a year from a lodger tax-free. Trading on eBay, or similar websites, is a another popular way to boost funds.
Billions of pounds in tax credits go unclaimed. Research from Citizens Advice found that many of those entitled to the working tax credit and the child tax credit do not claim.
If you do manage to raise extra income, it is a good idea to pay more than the minimum repayment on your credit cards. Research by uSwitch.com, the comparison website, indicates that paying 3 per cent, rather than 2 per cent, can more than halve both the interest paid, and the repayment time.
Should I transfer to a cheaper card deal?
It may be a good idea to transfer the outstanding balances on all your credit cards to one card with a 0 per cent rate on balance transfers, and a good subsequent interest rate. You can shop around for the best deals at comparison websites, such as uSwitch.com and moneysupermarket.com. Take independent advice on this before going ahead.
How about borrowing to repay debt?
Unless you are told otherwise by an independent adviser, this is likely to increase your burden in the long run.
What about consolidation loans?
Consolidation loans are secured on your home, unlike many of the debts that they wrap up. Chris Tapp, of Credit Action, says: “In most cases, these loans are more expensive than negotiating with your creditors.”
Can debt-management companies help?
These charge for advice that is available free from charities. Mr Tapp says that most take a fee upfront, plus 10 per cent on payment plans — so £20 of a £200 monthly repayment goes to the middleman.
What is the last resort?
There are times when debts run out of control and bankruptcy or an individual voluntary arrangement (IVA) becomes the neatest solution. “That’s something a debt charity would be able to advise on,” Mr Tapp says. “Just don’t be sold an ‘easy way out’ by a private company.”
In the meantime, you should reply to all creditors’ letters, obey any court summonses and abide by county court judgments (CCJs). Lenders and courts will be more sympathetic, and lenient, where your good intentions are clear.