DX6516_2905414b[1]“The amount UK consumers owe on loans and credit cards grew by £1.9bn in March 2016, the highest figure in 11 years, driven by a sharp rise in spending on plastic.”    (The Guardian)

If personal debt really is increasing again at a worrying rate, then a growing number of people could soon be facing the stress of a debt crisis.

For anyone facing this kind of problem, debt advisers might say things like this:

  • Don’t ignore the situation. Open the demand letters, make a list of the balances.
  • Always respond to every communication from a creditor. That shows you’re serious about dealing with the situation.
  • Make an offer. Explain if you can’t offer more.

To those basic steps, I’d add another:

  • Always communicate in writing. You’ll have a record of what was said and agreed; and it’s less stressful than dealing with creditors on the phone.

Avoid the phone

Many years ago I was in that situation, when my small business failed and I owed money to 26 creditors. Negotiating with all of them took a long time but eventually I came through it without permanent scars on my sanity (as far as I know).

I always negotiated in writing, never on the phone.

Dealing with a creditor on the telephone is stressful. My voicemail took a lot of the strain (what a great invention, whether you have an actual machine or a service from your phone provider) but if a creditor left a message I always responded … in writing.


One of the complications that I occasionally encountered was the involvement of intermediaries. Some were bogus law firms which were actually departments of the creditor company, with stationery designed to give the impression of being a genuine law firm, in order to intimidate.

When dealing with intermediaries of any kind, I was always extra-polite, working on the assumption that they hadn’t been fully informed, so I would write things like: “maybe you don’t know, but in the letter of so-and-so from your client …” and I’d enclose or attach a copy of the previous correspondence.

Not keen on writing letters? Help is available!

You might say that writing letters (or emails) is not your strong point. That’s no problem, because lots of debt management organisations can help you. For example, here in the UK, Citizens Advice Bureaux are all over the country and their advice is free and impartial. They helped me greatly. The other major nationwide debt advice charities are StepChange and National Debtline. There are also many local not-for-profit advice providers: for example in Bristol, where I live, there’s Talking Money. There’ll be one near you.

Buying time: it helps your negotiation

The other benefit of working with one of the debt advice charities, or any adviser, is that it creates a little distance between you and the creditor and it buys you some time. So, if a creditor calls you rejecting your offer and gives you a counter-proposal, you can say (politely, of course!) “thank you; but could you put that in writing, please, because I have to refer it to my advisers.”

Letter templates

Templates for standard letters / emails are available from some of the organisations I mentioned above. You can also find templates in my book Back to the Black.

Want to know more?

This article is an extract from my book Back to the Black … how to become debt-free and stay that way.



advice centreOne of the debt charity StepChange’s  advisers moved on earlier this year. His farewell blog post was very informative: a good example of the advice that’s available regularly on their blog. I am sure he – and StepChange – will not object to my quoting it.

“Six truths about debt I’ve found from working at StepChange Debt Charity” (Matthew Cooper)

Truth 1: Creditors will generally accept your best offer of payment

Provided that they are convinced it really is your best offer, I’ve usually thought this to be true. But Matthew’s evidence in support of the theory is amazing: only one proposal rejected … out of 300!

“My job was to give advice on debt solutions and draft the actual individual voluntary arrangement (IVA) documents for clients. I drafted around 300 IVA proposals in about two years. All but one of them were accepted by creditors. I learned that if you make your best offer to creditors they’ll generally be willing to accept.”

Truth 2: Debt can happen to anyone

That’s something I found when researching stories for my book ‘Back to the Black.’ Matthew confirms this:

“While working as an IVA drafter I heard many stories of how people ended up in debt. In most cases debt problems are caused by life-changing events such as unemployment, relationship breakdown, accident or illness.”

Truth 3: Bust out the budget

Here’s the painful part, when you move out of the “denial” phase and start to analyse your financial position. Some humourist once said “A budget is a mathematical confirmation of your suspicions” … but it’s surprisingly true that knowing the worst is less stressful, compared with suspecting the worst but not being sure. Then, when you have an accurate picture of your current situation, you can start to draft a budget (maybe a few versions for different scenarios: see my book) that’ll help you decide what to do next. Matthew says:

“In my time here I’ve helped a lot of clients to put together a budget; as someone who is keen on budgeting I was sometimes amazed that some had never put an accurate budget together before. Over the years I’ve seen the clients who paid careful attention to their budgets be successful in repaying their debts. I now spend at least an hour a week looking over my budget to make sure I stay on track. An emergency fund is also a vital part of a budget, whether you have debts or not.”

Truth 4: Credit isn’t necessarily bad

“I’ve learned that credit isn’t necessarily a bad thing in itself and, like most things in life, it can even be good in moderation. It’s vital not to over-commit yourself though and you should be prepared as your life can change at any time. Despite their bad press creditors aren’t all bad either, as long as you’re honest about your situation. As a charity we want to help the ‘can’t pays’ rather than the ‘won’t pays’; creditors tend to share this attitude.”

That’s an interesting statement right there at the end: the “can’t pays,” as he puts it, are the group that StepChange exists to help; and they are the group with whom creditors are more likely to negotiate reasonably.

Truth 5: Never pay for debt advice

Matthew says:

“I’ve also learnt that there is genuinely no need to EVER pay for debt advice. Our advisors are brilliantly trained and highly knowledgeable and will always strive to give the best advice for your personal situation. We’re not for profit but we are for giving best advice.”

Truth 6: My colleagues are great at helping people in debt

I’ve never spoken to those colleagues personally; my own crisis was back in the ‘90s. However, judging by the quality of the info on their blog, I would support that statement 100%. So I’m sure Matthew won’t mind if I repeat in full his plug for his colleagues:

“I’ve made some great friends while working for the charity and together we’ve served a great common cause – ‘free debt advice’. My colleagues are knowledgeable, committed, ethical, funny and warm and they treat people who contact us with a great deal of empathy and never judge them. It’s time for me to hand over to another person to take on my role now. I hope they enjoy it and learn as much as I did during my time with this great charity.”

Citizens Advice was the charity that helped me with my debt crisis, largely because they had a Bureau near me where I could have face-to-face meetings. However they are a generalist advice charity, whereas StepChange is a debt specialist.

And judging by their blog, an excellent one.


For Stepchange’s “Moneyaware” blog, click HERE.

For info about my book “Back to the Black”, click HERE.


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.

  1. You use your credit card to buy groceries or to pay bills, not knowing when you’ll be able to clear the balance.
  2. 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.
  3. Your debt is mushrooming because you either only make minimum payments each month or are unable to pay off any money owed.
  4. 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.
  5. 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.


Want to know more?

  1. Want a copy of the full Moneywise article? Go to
  2. Want to view, free of charge, the first 20% of my multi-format eBook “Back to the Black: how to become debt-free and stay that way?” Go to:


In my book “Back to the Black: how to become debt-free and stay that way”, I tell the story of my own brush with bankruptcy in 1999. At that time, my then accountant recommended that I should file for voluntary bankruptcy.

Why I didn’t go bankrupt

In the event, I did not take the bankruptcy route, for a variety of reasons. One of those reasons was that I had some occupational pensions (of the “money purchase” type, not final salary) accumulated over the years. If I had become bankrupt those pensions might well have been vulnerable.

How the law has changed to the benefit of debtors

However, the law has changed: pensions are now to a great extent protected in a bankruptcy.

According to HM Government’s Insolvency Service, any private pension fund you have built up cannot generally be claimed as an “asset” if the bankruptcy petition was presented on or after 29 May 2000, as long as the scheme was approved by HM Revenue & Customs.

What to do

If you are considering bankruptcy, first read Chapters 8, 9 and 10 of my book, in order to review the pros and cons of the alternative routes “back to the black”. Chapter 9 deals with bankruptcy and IVAs (Individual Voluntary Arrangements) . Then, if you still plan to consider bankruptcy, take professional advice: either from one of the non-profit advice services (for example Citizens Advice, Consumer Credit Counselling Service or National Debtline) or from an insolvency practitioner. There is a checklist in Chapter 9 of my book about how to go about selecting the right insolvency practitioner for your particular situation.

Want to know more?

My book “Back to the Black: how to become debt-free and stay that way” is available on the Smashwords site. To sample (first 20% free) or to buy at only $3.99, go to

HM Government’s Insolvency Service’s publications can be found at


My book, “Back to the Black: how to become debt-free and stay that way”, is now available as an eBook on the “Smashwords” site.

Ten years ago I ran up heavy debts when my business collapsed. I had started a training business seven years before, after a long career in the chemical industry. When my enterprise ran into difficulties, credit was easy, so I could fund it with loans and credit cards. In the short term this plugged the gap; I thought things would improve. They didn’t.

So I closed the business down, looked for a job, and tried to work out how to solve my debt problem. My first intention was to pay off everything I owed but I knew it would take time. I didn’t think I could get the debts down to a manageable level in less than five to ten years; my creditors would not give me that kind of time.

My financial adviser recommended bankruptcy. I had by then sunk all my assets into the business, so he said that there could never be a better time for me to go bankrupt. For many reasons I didn’t want to do that although after a fairly short period, I would have been debt-free. The advantages and disadvantages of bankruptcy – and its modern alternative, the IVA (Individual Voluntary Arrangement) – are set out in detail in the book; recent developments have taken away some of the former stigma and the practical disadvantages of these solutions.

However, I decided instead that I would negotiate a deal with my creditors myself. This approach I call “Plan C – negotiate a deal” – and you’ll find it in Chapter 10 of the book. I made an offer to all my creditors for full and final settlement. Eventually all of them, apart from the taxman, agreed to the deal.

At the time, I thought my debt problem was insurmountable. It was a very stressful period. However, I was lucky to have the support of a debt advice agency and other professionals and friends.

I came through the experience; I learned a lot.

I was not, and am not, happy with the fact that I was unable to pay my debts in full. After the event, however, I decided to write up what had happened, partly for my own benefit. I even thought that maybe it would make a couple of newspaper articles. If other people with debt problems could benefit from reading about my mistakes and what I’d learned, then something good would have come out of it all.

Those articles eventually grew into a book – “Back to the Black” – which sets out what I call the three main strategies for dealing with debt. It also contains lots of advice for dealing with debt-related stress and with the demands of creditors.

In summary, my book is based not on a theoretical approach to debt, but on painful experience. I hope that you can benefit from reading about that experience. If you have debts, whether they are consumer debts or business debts or both, the principles for dealing with them are the same. The experiences you are going through, though unique to your situation, will have much in common with mine.

Go to if you’d like to know more.