It can afflict anyone. It may strike at any time. And you know what they say? You’re only a couple of unlucky events away from being in debt. A misstep here, an unfortunate episode there, and you might find yourself in a position untenable. With this acknowledgement that it could happen to anyone, hopefully comes a lessening in the stigma associated with being broke and needing help. A little light at the end of the tunnel we hope; our 5 IDEAL tips for recovering from a period of bad debt.


The first thing to do is to assess the extent of the problem and seriousness of the situation. The occasional flirt with the minus numbers shouldn’t set the alarm bells ringing with you or your bank, but a long period of time spent in the red, or those negative numbers getting incrementally larger, should signify cause for concern. Sit down with pen, paper, spreadsheet and bank statements and look at how much you owe and to who. Structure the debts in order of size and also take into consideration the minimum repayments you’re required to make and which debts hold the highest (and therefore most pressing) interest rates. From there, you’ll be able to prioritise your pay offs. 


When it feels like you’re labouring under the weight of several debts, you might find you blame yourself for the situation, and accept any charges levelled against you as fact and verbatim. But it’s crucial to ask yourself; Is everything in your account accurate and legal? There are plenty of examples of banks mis-selling products, such as PPI, and charging unfair fees and add ons. Check if everything you owe is genuine, and if you can reclaim any of these extras. 


Everyone is human, in this process. So, talk to the lenders. It’s often a surprise to find how accommodating and helpful they can be; it’s certainly not the first time they will have to have dealt with this kind of problem and for any sizeable lender they will almost certainly have a department on hand to advise and negotiate with customers in this type of situation. You may be able to get a temporary freeze on repayments if it’s a short term issue that may be resolved, such as job loss. Also seek expert advice external to the lending and repayment channels; the government’s National Debtline is a good place to start.


You should also investigate the possibility of transferring debts to a more manageable place. You could look at consolidating the debts into a single loan, as this can make your monthly outgoing less, may save on interest and most importantly, give you a little peace of mind in terms of reorganising and taking back control of your life. There are often ways to transfer credit cards to lower interest ones or even cards that offer an introductory 0% time period to new customers. Check out National Debt Advice for more on consolidating your payments.


Do you have anything you can sell to get rid of or reduce your debts? This may seem drastic but it can be a good way to grant yourself a little breathing room to sort things out. If you’re a homeowner you could even look at equity release to free up some capital. There are plenty of firms who can facilitate this for you, like


If the situation truly is beyond salvaging, then you could consider insolvency options, which are quite severe and will have a really big effect on your credit rating. You can get an IVA (Individual Voluntary Arrangement) where an organization will, on your behalf, negotiate a partial repayment in installments. Or, more severely, you could declare yourself bankrupt, in doing so wiping out all of your debts. Be aware, if your salary is more than your living costs you may be liable to a repayment order for part of the debts.


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