The good people at “Moneywise” magazine have recently published (Jan 2011 edition) a story about bankruptcy, which contains a useful summary of the danger signs that debts might be running out of control.
- You use your credit card to buy groceries or to pay bills, not knowing when you’ll be able to clear the balance.
- Applying for a new credit card, loan or extension on your overdraft is the only way that you can get ready cash for daily expenditure or to service existing debts.
- Your debt is mushrooming because you either only make minimum payments each month or are unable to pay off any money owed.
- If you have started to miss monthly repayments on your credit card or, worse still, you are in arrears on your mortgage, you need to seek immediate help. Contact creditors to see if you can make reduced payments or have a mortgage break while you sort out your finances.
- If you are not opening bills and are screening calls from creditors, seek advice. Ignoring payments will not make them go away and the problem will only get worse.
The article contains some interesting case studies, of three people who had to file for bankruptcy: 32-year old Emma Smith from Milton Keynes; 54-year-old Terry Donaldson from Huddersfield and 27-year-old Michelle Cheston from Newcastle.
I noticed one unusual silver lining to these three clouds. There are costs associated with going bankrupt (typically about £600) but, as the article mentions, Michelle had served in the RAF. Not for long, because she could only have been 24 when she left the service. However, her adviser at Citizens Advice told her she could apply for help to the Royal British Legion. She did; and they paid all her fees. As I mention in my book “Back to the Black”, the Legion’s support is a benefit that is open to anyone who’s served in the UK armed forces, even for a relatively short time.
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