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Take free debt advice to prevent lasting credit problems
With record levels of borrowing in the UK, the Citizens Advice Bureaux are also reporting a sharp rise in the number of people asking for help with serious debt problems.Figures released Read more...

Take free debt advice to prevent lasting credit problems

With record levels of borrowing in the UK, the Citizens Advice Bureaux are also reporting a sharp rise in the number of people asking for help with serious debt problems.

Figures released in 2006 show that the CAB network in England and Wales advised on more than 1.4 million debt problems in 2006, an increase of 11% on the previous year. One in five of all CAB clients needed advice on debt problems. Consumer debt including credit cards, store cards and charge cards, unsecured personal loans, bank and building society overdrafts, catalogue and mail order debt is the biggest source of problem debt.

The number of consumer credit debt enquiries has more than doubled in the last eight years. However, housing debt, including mortgages, secured loans and rent arrears, was one of the fastest growing problem areas, up by 20% on the previous twelve months. Nearly 10,000 housing debt cases concerned the threat of repossession and 2,000 actual repossession or eviction.

These figures reflect the findings of an NOP survey showing that 770,000 people had missed at least one mortgage payment in the previous twelve months. These figures point to a growing number of people getting deeper into unmanageable debt that can be difficult to recover from.

All too often people only take debt advice when they've already reached crisis point or can no longer cope with their problems. By carrying out a regular financial overhaul and taking some preventative measures many problems could be averted before they become crises.

David Harker of the CAB commented... "Our evidence shows a clear need for more responsible lending. There are still too many cases where clients should not have been given the levels of credit they have received. Lenders need to do more to ensure every person’s circumstances and their ability to sustain payments are fully taken on board when lending. We also want to see all creditors taking steps to help people manage their debt problems.”

The charity suggests the following tips for 2007:

Check that you are not missing out on money that you should be getting in benefits or tax credits, tax rebates or allowances. Your local CAB can help you with this.
If you take out a loan, make sure you shop around and get the best deal. Look out for low interest rates.
Be wary of consolidating your debts, get advice and don’t put your home unnecessarily at risk. Defaulting on a loan secured against your home could mean you lose your home.
Plan to build up an emergency savings fund by saving a regular amount each month.
Be wary of low interest credit card transfers. Check the terms and conditions carefully.
You may be losing money by sticking with your existing bank, shop around, it‘s simple to change.

For free and independent debt advice contact your local CAB office via their website at www.citizensadvice.org.uk.

Top Tips

TIP #1:
If you have a credit card balance you can't afford to settle, consider a 0% balance transfer card to save interest for 6, 9 or 12 months. Use the money saved to pay extra off your balance every month.

TIP #2:
Make sure you shop around for credit and don't just go to the bank. High street banks are often one of the most expensive sources of borrowing.

TIP #3:
Get a copy of your credit record before applying for a loan or credit card. You'll be able to correct any errors and know what the lender will see when assessing your application.