I have been rich and I have been poor but nothing in my life prepared me for being deeply in debt.
I had credit card debt, loan debt, mortgage arrears and store card debt. My debt was so bad that I was taking cash out on credit cards to repay other debts.
What I didn’t realise was that the banks and loan companies fall over themselves to offer you loan upon loan and more and more credit until something changes in your life and you are suddenly in the position of having huge outgoings and not enough income. This is when it gets ugly. I got constant telephone calls demanding money, sometimes ten calls per day from the same company. Telling them I didn’t have the money made no difference, they knew exactly how to hound me and chase me.
The banks immediately charge you for late payments and slipping past your overdraft. This in turn gives you a bad credit rating. Missed payments then allow the banks to charge you more interest on the loan or change the terms such as stopping your overdraft and giving you only 30 days to come up with money you simply do not have. The banks then, in their wisdom offer you a consolidator loan to pay off all of your debts in one nice easy payment. What they do not really point out is that the easy payment can take years and years to repay, and instead of helping you they are simply tying you in to a much higher interest rate over a much longer time span.
I though once I was in debt that I could simply move all my debts to interest free credit cards but by the time you realise how bad things are, you have a bad credit rating and no chance of getting preferential rates on credit cards or loans.
My solution was to seek an IVA, or Individual Voluntary Agreement where I found a company online to help me write to my creditors and offer a much smaller payment over a shorter period of time and in return they promised to stop calling and chasing for payments. After the agreed period I was completely debt free and only had to pay back less than 25% of the original debt and I am now starting to get my life back with no more late night telephone calls or demanding letters on my mat every morning.
The best advice I can give you if you are experiencing financial difficulties is to seek help as soon as possible. The longer you leave it the worse it gets. Maybe an IVA can help you reduce your debts and help you have a much less stressful time of dealing with debt.