Dealing with Bad Credit
It is estimated that 1 in 3 people in the UK have some form of bad credit, and everything that we have seen in the news and press over the last 12 months suggests that the majority of people aren't managing their situation or dealing with their bad credit issues very well. We hope to give you an insight into how you can manage your bad credit and what options are available to you.
What causes bad credit?
Whilst no two situations are ever the same, there are normally similarities in the events that brought on the adverse or bad credit and normally comes about due to an event or situation out of your control, a one off event which had enough impact on your family life that it interfered in your ability to sustain your current credit agreements.
When situations like that occur, at the time there is usually little that can be done (for instance if you have to take forced redundancy or a drop in salary) - dealing with the event that occurred usually takes first priority and everything else, including normal payments to your creditors take a back seat. Thankfully there are things that can be done after the event in order to repair or help rectify or stabilise your financial position and we hope to cover the main ones here.
Speak to your creditors to help deal with bad credit
Your creditors should be open to you making reasonable offers of payment, after all they just want their monies back and the sooner they can agree new payment arrangements with you the better.
At first glance that seems obvious - but when payments start getting missed and your creditors call you and send reminder letters through the post its easy to get overwhelmed and, unless your creditor is sympathetic to your situation and acts in a way that is positive to your situation things can quickly get out of hand. Phone calls can get ignored and letters are either unopened, put to one side or simply put in the bin, this ultimately leads to more letters and phone calls culminating in defaults, CCJ's or worse.
Even if you feel your creditor is not being as helpful as they could be its important you speak to them in a calm professional manner and do not lose your temper (many people have confessed to hurling abuse down the phone to their creditors which will not get anyone anywhere).
Be open and honest and explain your situation fully - even if they can not help directly they may be willing to give you a little more time to get things in order.
Speak to a professional about dealing with bad credit
Professional debt councilors can be a huge help, especially if you do not want to deal with your creditors directly. They will normally be able to help you put together an income and expenditure form which will show how much monies you have at the end of each month to repay your creditors - this is what is classed as your disposable income.
These organisations are typically called debt management companies and will charge a fee for their services but they will normally get better results than you will alone, this is partially due to the fact that, if an offer of payment is made by yourself it is very easy for the lender to pressure for more, using a third party such as a debt management company to deal with your creditors for you will effectively mean your creditors will find it much more difficult to ask for a payment you can not afford - the debt management company will (if they are good at what they do) work out your disposable income the same way the courts would so it is less likely the creditor will decide to take court action as they know it is very unlikely they will get any more than what is already being offered.
Make fair payments based on the amount you owe each creditor
We have spoken to many people who have tried to pro-rata the payments to their creditors only to have the creditor demand more money but if the client pays more to one lender than they can then payments will no longer be paid pro-rata and, if the payments were worked out from your disposable income its unlikely the higher payments will be affordable long term. your disposable income should be the maximum you can afford if it was worked out honestly and correctly.
Again a debt management company will work all payments on a pro-rata basis (the creditor you owe the most money to will get the largest share of your disposable income) which will be detailed to all the creditors in the communications sent by the company, the creditor will be more likely to accept any offers made as they were worked out by a professional debt management company.
You can do all this yourself if you are confident you can deal with the creditors on an ongoing basis and negotiate you payments in line with what is genuinely affordable to you. The last thing you would want to do is to agree to a payment arrangement that you are unable to stick with as this will lead the lender to think you are purposely withholding monies or making short payments. There are a number of government charities set up to help people with bad debt, they include the Consumer Credit Counselling Service (CCCS) and you local Citizens Advice Bureau. They do a good job in advising what you should do but you will normally have to deal with the creditors yourself and do the majority of the paperwork yourself - and if you have CCJ's it's unlikely they can help at all.
I need professional bad credit debt help now
If you want to speak to a debt professional simply complete the quick enquiry form at the top of this page and we will call you back to discuss your needs in person. There are lots of other ways to help with your debt problems, if they are really serious it may be worth considering an IVA or, if you are a homeowner a debt consolidation remortgage may be best. After we have discussed all your requirements, needs and budget we will hopefully be in a position to make some recommendations which you can then think over and discuss with your family. Once you have all the information you will be able to make an informed decision as to what's best for you.
