Not all debt is the same

Ned Hoste Debt

Robert Festenstein

Not all debt is the same.  When you are getting unwanted and upsetting calls or texts this might not be your first thought.  Your first thought is one of wanting to avoid the call, not look at the text, and by extension not open the post or any e-mails.  Sometimes you can feel that your debt is crushing you.  I cannot make your debt go away, but I can help you control it and as a consequence feel less stressed.

Nearly all of us have some form of debt or other.  Those of you who work for a company will probably have credit cards to help you with larger purchases, and many of you will have car loans.  These loans are known as unsecured, in that you just borrow the money by signing a form and getting the money or services.  A secured loan is one where you borrow money and allow the lender to put a charge on your property, usually a house and that secured loan is known as a mortgage. 

The debt I am talking about here is unsecured and that is the debt which often gets you into trouble.  It’s easy to take out a credit card or car loan but sometimes not so easy to pay them back.  When the economy takes a dive as it just has, there is just not enough money at the end of the month to pay everyone.  And that’s when the calls and texts come in, each lender competing for your money and when you have none left to pay, that’s when the stress levels rise.

Now, my advice at this point is to say don’t panic.  Easy enough to say you might think, but it is the best advice.  In 25 years of dealing with debt through my solicitors practice I have learned that not panicking really is the best first step.  Some of you might be attracted by the idea of an Individual Voluntary Arrangement, also known as an IVA.  This arrangement with your lenders can be an ideal solution but not for everyone.  It might be better just to go bankrupt, extreme though that may seem.

So, having decided not to panic what do you do next?  Speak to a qualified lawyer who understands debt, both personal and company.  I am of course of these people.  Why not an accountant or insolvency practitioner?  They may be able to help but they are not the first call you should make, because debt is a legal issue and you need legal advice to guide you, particularly when the pressure is on.  Which takes me back to the beginning where I said that not all debt is the same.

Some debts are more important than others.  The most important debts are known as priority debts which include the mortgage on your home, or the rent, utilities such as gas and electricity and council tax.  Oddly, these are not the people who give you the most grief, that is reserved for credit cards and those loans you took out to buy the car or pay for the holiday.  The credit card companies in particular are really good at making you feel really small and seriously guilty.  The constant calls and texts are bad enough and then the letters which follow them up just make you feel physically sick.

My first piece of advice to clients who have hassle with credit card debt is simple, get a cheap second phone with a new number and give that number out to those making you stressed.  Look at it when you feel able and in the meantime keep your original number for family, friends and work.  Then, create a list of all your regular outgoings and your income.  Work out what you can cut down and when that starts to make you feel out of control, pick up the phone and call me.

I can’t make the debts disappear but I can give you options and from that control.  My advice is based on your personal factors or those of your company.  If plan A doesn’t work I can work out a plan B.  In my experience there are always options, sometimes uncomfortable ones, but always options so you can start to control your own destiny.  So, give me call and I will try to give you that control and you can start to feel better.