88,000 more made unemployed this summer

Latest figures from the Office of National Statistics, show the number of people made unemployed has risen to 2.47million this year and with total debt standing at £1,457bn at the end of August means it no surprise individuals are spiralling into debt

The figures make worrying reading, 88,000 more people are back on the job market and the average household debt is £21,355. Debt won’t go away if ignored so if unemployment looms and debt mounts up, getting help quicker can make all the difference between sinking or swimming.

If the recession has done nothing else, it has at least made us reassess our spending habits and made us realise that our obsession with cheap credit has been catching up with us for a while. Putting it off and hoping it will go away is a bad idea, taking action and adjusting your finances will help you get in control of the situation and avoid bankruptcy.

First and foremost, weigh up your income versus your outgoings and generally assess where all your credit is. Once you have an accurate idea of your situation, the better equipped you’ll be to find a solution. If you owe up to 15,000 you may be eligible for a debt management loan however if you owe over 15,000 then you should consider an Individual Voluntary agreement. Both of these are options to think about and sign up for before bankruptcy becomes the only option.

Debt management loans can be implemented if your debt is less than £15,000. Typically, the individual will take out a low interest loan and will use that to pay of their other creditors. Wiping out the number of creditors chasing you to one and greatly easing your mind.  In many cases, debt management loans can cut the amount of interest charges racking up each month as well. Ensure the monthly payment of the loan is affordable for your income, and most importantly, do not view it as a clean slate and start spending again. It is important to remember that the debt has not been cleared, merely reorganised for your benefit.

If you debt totals over £15,000 then you may be considered for an IVA. A legal contract between you and your creditors enables you to reach a compromise to reduce payments into easy to manage portions and to avoid the consequences of bankruptcy. It states that you must contribute as much as possible within your budget, which means that you should always be able to afford to make the single monthly payments your debt could be wiped clean within a matter of years. Once an arrangement is agreed no further interest or charges can be added to the debt and crucially it saves you from having to declare bankruptcy. Remember an IVA will appear on your credit file for 6 years after it finishes which will affect all subsequent applications for credit of any kind. So while under your IVA, it is wise to adjust your spending habit to suit your income so that you won’t be forever dogged by debt.
 

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2009-10-15 11:37:19 © Moneyextra.com