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Take action and feel better about your debt

Published 29 December 2011 by

The statistics surrounding debt today confirm that it is an everyday problem for many people. Recent figures put the average unsecured debt of British families at around £10,000. If you're living on a limited income, it isn't difficult to see how this level of debt could cause some real distress.

Stress, depression and anxiety have been reported among people in debt. According to the mental health charity MIND, one in 11 people in the UK has some sort of debt or is in arrears with payments, but that goes up to one in four people with mental health problems - including anxiety and depression. Looking at these statistics, it's clear that there is a definite connection between debt and mental health issues. If you feel debt has affected your mental health, it's worth remembering that it's not unusual to feel this way. 

That's not to say everyone in debt is having a really bad time. Debt is an integral part of the modern financial world. Many of us couldn't own a home, a new car, perhaps certain pieces of furniture, without borrowing money.

However, debt can be a problem when it becomes unmanageable. We will recommend some of the steps you can take to get back in control of some situations that might be distressing.

If you get into debt problems

Read the thinkmoney comprehensive guide to debt solutions here . In the meantime, here are a few practical steps you could take when you're having debt problems. 

  • It's advisable to continue making payments of an amount you can afford, if you can't afford the payments you originally agreed to.
  • Do not ignore letters or phone calls from your lenders.
  • If you don't feel comfortable speaking to your lenders yourself, ask a representative (such as a debt expert at a debt management company) to speak to them for you.
  • Draw up a budget as soon as possible including your income and expenses and work out how much money you have available once you have paid all your essential expenses. This will give you your disposable income. If you can't afford the payments you originally agreed to make, your 'disposable income' must then be divided fairly between your lenders for repayments. A debt expert or debt management company can help you to arrange this. If you like, you can find more tips on budgeting here.

Lenders and debt collectors must obey the Office of Fair Trading's debt collection guidance and you can make a complaint if they are behaving unfairly. You should follow the lender's own complaints procedure first. Then you could approach Consumer Direct to make a complaint or seek further advice. Finally, you could make a complaint to the Financial Ombudsman.

Court appearances

If you fall into arrears or stop making payments altogether, your lenders may decide to involve the court. If you go bankrupt, this will also involve a court appearance.

Even the threat of having to attend court to discuss your debt can be intimidating. However, lenders wouldn't normally go to a court unless you have been in arrears for some time. They also have to issue certain notices by law before they can take you to court. The court is seen as a last resort and it's likely you could settle the matter before it got to that stage anyway.

However, if you are concerned about a future court appearance because of debt, remember that the court simply wants to work out a repayment plan that is fair to the lenders and at a level that you can afford. You are not there to be 'judged'; the court wants to move things forward. Once a new payment plan has been determined, you can begin repaying at a rate that is affordable to you, which can help you move forwards with your life.

Bailiffs visiting your home

In some situations, bailiffs can come to your home to collect goods in lieu of payment on behalf of a lender who has a County Court Judgment (CCJ) against you, or for Council Tax or HM Revenue and Customs arrears.

As long as you make the payments that have been requested, bailiffs shouldn't ever visit your home. If the amount the court has ordered you to pay is unaffordable, you can attempt to stop bailiffs visiting your home by completing an N245 form, which is available from any county court office.

If you have a complaint about a bailiff, you must complain to the company that sent them first of all and follow their complaints procedure. If you are unhappy with the outcome, you could take it further to Consumer Direct, or the Financial Ombudsman.

In most cases, bailiffs cannot enter your home without an invitation. However, they can enter through an open window or unlocked door. They cannot take anything from inside your home if you don't let them in.

If you have let bailiffs into your home, they can forcibly enter next time they visit. In this case, you should treat this debt as a priority and begin paying what you can afford as soon as possible.

Knowledge is power

While it is undeniable that debt problems can have a serious effect on your emotional wellbeing, there are still things that anyone in debt can do to feel more empowered. If, for instance, the bailiffs are going to come knocking at your door, you should definitely read up on your rights beforehand.

They cannot threaten you with physical violence, or enter your home without being invited, and they must, of course, obey the law. You can take steps to stop them visiting your home and you can follow the complaints procedure we recommend if you feel you have been treated unfairly.

Similarly, if your debt is getting out of control, facing up to the situation by taking an honest look at your finances and how much you can realistically afford to repay, as well as staying in contact with your lenders and asking for help from debt experts, are all things that you can do to regain some control over the situation.

This article is only a guide to how to deal with some debt problems that cause distress. Below you'll find a list of helpful contacts in case you have been affected by anything mentioned in this article.

Useful contacts

Financial Ombudsman Service

An independent service for settling disputes.

0845 080 1800

Mind - Mental Health Charity

Mind Info Line: 0300 123 3393

Shelter - The Housing and Homelessness Charity

Free Advice Helpline 0808 800 4444

Mind's Legal Advice Service

0300 466 6463