What Causes us to get into Debt?
What are the causes for us going into Debt? The British people’s personal debt exceeds 1.1 trillon pounds. They have surpassed the United States in personal debt.
Mortgage payments are the cause for 82% of this debt. The uncontrolled house price inflation is the main cause for this. Next, an unusually high tax rate and over the top University fees are the main culprits. Some other sources of debt could be divorce, medical expenses, not planning well enough or being made unemployed.
Scottish Trust Deed
A solution for the Scottish people is what is known as a Scottish Trust Deed. This is an alternative to filing for bankruptcy. This is an agreement between you and your creditors for three years. At the end of the time period any remaining balance is written off.This trust deed is legally binding on all of your creditors. The terms of the deed are tailored to fit your situation.
Debt Management.
Another solution for the removal of debt is to consult a debt management agency. There are many offices out there who can give advice tailored for your situation. They can be found online or locally. One solution they can give the British people is like the Scottish Deed.
It is called an Individual Voluntary Arrangement. This is a formal agreement betwen you and your creditors for over sixty months. In that time, you pay them what you can afford. After that period is over, the remaining debt is written off. These arrangements can help reduce your debt by seventy percent. Creditors cannot call you once this arrangement has been put in place.
Another solution they can offer is Debt Management. This is like consolidation in the United States. This involves making one payment to the agency and they take care of the bills. In some cases, you can also freeze interest rates. You will not have any more contact with the creditors, the agency will do that for you. The last solution
they can offer you is receiving a loan or remortgaging your home.
The last resort to debt elimination is filing for bankruptcy.
There are two types: voluntary and involuntary. You go to court yourself to file and the district judge decides whether to grant it or not. This costs four hundred eighty five pounds to do this. The fee may be waived if you are poor or unemployed. Involuntary is when a creditor petitions the court for your bankruptcy if you owe more than seven hundred fifty pounds. The advantages are: you are protected from creditors, your stress levels go down; after a year, the debt left over is written off and you’ll be able to make a fresh start. The disadvantages are: your assests will be sold to pay the debts. This can include your home. The bankruptcy is put in the local paper for everyone to see. This will affect your credit rating for six years and it will prevent you from going into certain lines of work.
The best advice advice any debt manager will give you is try to keep your debt at or below twenty percent of your income level.
Debt Affects Your Health.
Having the burden of too much debt can affect your health in many ways. The signs of this stress can make themselves seen firstly through lack of sleep. You can be kept awake night after night with the thoughts about how you will pay your bills running through your head.
Secondly, you can experience anything from mild to severe depression. The signs of depression range from sleeping too long or not enough, loss of appetite, lack of interest in things you used to do or just plain irratibilty. If you feel that severe depression is a problem ,seek the advice of a physician. Another sign that you might be depressed is a lack of focus at work or at home which can also lead to memory problems.
Stress
Trying to cope with the stress of debt can take the forms of negative coping. Some forms of these are :using drugs or alcohol, gambling to try to erase the debt or finally smoking or overeating.
Your body could also exhibit signs of stress through headaches, backaches or neck and shoulder pain. There could also be weight gain or loss associated with the stress of debt. The long term affects of debt stress on your body include increased risk of diabetes , heart disease or small infections like the cold. It can also restart previous illnesses like cancer or chronic pain. This could lead to an increased number of sick days out from work which will only increase the stress.
Take Action
The first thing you will want to do to reduce your stress from debt is figure out your monthly bills and decide if you will need help resolving your debt problem such as through a management agency. Secondly, implement an excercise program into your life. This will help you lose weight and get rid of the stress. You will also sleep better at night because you will be tired from workng out.
Another solution is get rid of all the extra credit cards you do not need. This will help reduce your spending and help you get a handle on your finances. You will want to get a free credit report so you can see where you stand and make improvements if necesssary.
In some cases, it may be necessary to find ways to make a little extra money such as by selling unwanted stuff on ebay.
Once you get your debt managed, save some money in a bank account or set up IRA”s or investments so you can continue to be debt and stress free.