Are you one of the millions of people who’ve put a debt reminder letter in a drawer – hoping that the problem will go away?
If you are, you’re most definitely not alone.
Lots people ignore their debt – some for a few days – but many for weeks or even months, trying to forget about it, hoping it will go away.
The problem is, debt doesn’t go away – and actually, ignoring it can make things worse. We’ll walk you through what happens to debt when it’s ignored – and the steps you can take that will get you back on track.
Pretending debt doesn’t exist
People refer to ignoring debt as ‘burying your head in the sand’ – and, true to the phrase, the world goes on around you – even if you’re ignoring it.
And, unfortunately, your creditors are part of that world. They don’t stop their process just because you’ve stopped replying or answering their phone calls. What’s worse – ignoring calls often ups the intensity of how they contact you – and often adds additional charges.
As a result – the final amount you’re expected to pay can add up to a lot more than the initial debt – and in a lot of cases, the amount of money becomes expected as a one-off, rather than being payable in instalments as it had been previously.
How does debt catch up with you?
You may have heard rumours or hearsay that there are ways to avoid paying your debt if you hold out long enough – and while there’s some technical truth to how companies track their debt and for how long – this is an extremely damaging misconception – and can lead you into an incredible amount of financial trouble.
6 years is the amount of time that most people say it takes for debt to be written off. This figure actually comes from a person’s credit report – that’s to say, resolved financial issues are removed from your credit report after that amount of time. However, just ignoring phone calls for a few years isn’t the same!
Companies will track you down – it’s that simple. Credit referencing agencies take your information any time you sign up for a mobile phone, insurance, a payment plan for utility bills – and a host of other financial actions. They then share that information with other companies – who will get in touch with you if you owe them money.
Debt recovery and bailiffs
If you continue to ignore your reminders your debt will be passed to an agency or court for further action to be taken – and unfortunately, this is where ignoring the problem comes to an abrupt end. Some bailiffs have the power to enter your property without your permission – even employing the services of locksmiths and the police should they need to.
From there, they can remove property from your home – to contribute to the debt that’s owed. It’s not as simple as knocking on your door and taking things away – but when you reach the point a bailiff is coming to your home, there’s no more hiding from money issues.
What can you do?
If you’re facing debt that, for any reason, feels unmanageable – it’s vitally important that you talk to the companies that are chasing you. This will normally stop them adding admin charges while you’re trying to get a solution in place.
There’s good news too – there’s every chance that you might be able to reduce the amount you owe.
There are a variety of ways to tackle reducing your debt – negotiating with lenders, a debt consolidation loan, a specialist debt management product – and others – but how do you know what’s right for you?
A good place to start is to have a look at some online reviews. Face The Red is a site dedicated to reviewing companies that offer debt management options – you can see one of their reviews here: https://www.facethered.com/accredited-debt-relief-review/. Taking some time to consider your options is a great first step.
Opening a line of communication
Although it might feel like the last thing you want to do – talking to the people you owe money to is important.
You’re not the only person they’re chasing for money – in fact, most companies have full departments dedicated to debt recovery – meaning they expect tens of thousands of people to fall behind with their payments at some stage.
People often put off talking to their lenders because they think they’ll be angry or abrupt – and actually, the opposite is more likely to be true. Companies want you to repay the money you owe, and you’ve not likely to do that and continue to communicate if someone is unpleasant to you over the telephone. Generally speaking, you’ll find the people you talk to professional and courteous – and often really understanding of the situation you’ve found yourself in.
Working out how much you can repay
Whether you talk to the company directly or us a specialist service to reduce your debt, you’re going to need to know how much you can afford to pay. To do this you’ll need to put together a quick household budget – but don’t worry, it won’t take you long.
The first thing to do is to list any household income. After this, list all your essential outgoings – mortgage, rent, bills, food, clothing – and so forth. You can take this figure away from your ‘incomings’ figure to work out what you have left over beyond your living expenses.
Putting a budget together like this is important for two reasons:
- It will give you an indication of how much it costs you to live – and how much you can look at paying back to the companies you owe.
- This exercise shows the companies you’re talking to that you’re seriously considering how to work your way out of debt.
Although it might mean tightening the financial belt for a period of time, starting to pay back the money you owe can come with a huge sense of relief. You know that those letters in the drawer aren’t going to go away – nor are the phone calls or knocks at the door. Working toward reducing or handling your debt now is likely to save you from lots of sleepless nights and debt related stress further down the line.