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Are You Having Debt Problems?

If you think debt problems cannot be solved then you need to think again. However, if you delay handling your debts the problem can become increasingly bigger. So, what do you think are the main mistakes people make and what are the consequences of unpaid debts.

Ignoring the debt

Ignoring your debt is, in fact, one of the biggest mistakes people make, burying your head in the sand or pretending it does not exist, not opening bills or leaving them at the bottom of the drawer is not helping anyone, unfortunately this strategy does not make the debt disappear. In reality, it increases your money problems particularly when creditors start charging interest and late payment fees to already impending bills and thus, making your debt higher and much more difficult to pay. Continuous non-payments may lead to creditors suing you which of course is not the best way to deal with your debts.

Taking out further loans to pay off debts

It is not unusual for people to take out further loans on assets, the main asset being your home, in order to pay for outstanding debts however this is another mistake many people make. In this instance you could ultimately find yourself in a position where you have been unsuccessful in making payments on both loans and as a result losing your most valuable asset.

Top tips for paying off debts

1. Set yourself a goal – It is extremely important that you set yourself realistic goals to pay off the loans you have taken out. Unrealistic goals will only make it more difficult and stressful to handle payments.
2. Create a budget – One of the most imperative tasks is to ensure that you have a monthly budget which you are not exceeding in any event. One that will cover all monthly payments which will leave you stress and debt free.
3. Prioritise your debts – Prepare a list prioritising the important payments first ie mortgage, insurance etc leave the payments which can wait to the bottom of the list.
4. Cut down on your expenses – Review your monthly expenditure and look for opportunities to cut down on expenses where possible ie make your coffee at home instead of buying one, you might want to calculate how much you spend on coffee on a daily basis.
5. Avoid unnecessary spending – Try to avoid spending if it is not essential, only spend on items which are absolutely necessary and cannot be avoided.

Is the debt too old to be recovered?

If you are in a position where you have had unpaid debts for a number of years, creditors may not be able to enforce the outstanding debt as this may be statute barred. This is because creditors have a timeframe for collecting debt in accordance with the statute of limitations. The statute limit varies depending on the nature of the debt therefore not all debts have the same time limit.

Failed debt payments

Failed debt payments can lead to creditors sending a default notice or issuing a claim form for a county court judgement to recover the outstanding debt.

A default notice can be issued to default your account as a result of non-payments, the notice will give you a timeframe to catch up with missed payments or non-payments. Failure to successfully arrange payments will possibly lead to the creditors defaulting your account and then proceeding to take further action by issuing a claim form at the county court to collect the debt.

However, prior to the issue of the claim form the creditor is required to send a letter of claim to be completed by the debtor within the given timeframe. At this stage parties can agree a payment plan in order to avoid matters progressing by way of court action. If this cannot be agreed then the matter will in fact, most likely, proceed by way of issuing court proceedings.

A county court judgement or a default notice can affect your ability to obtain credit, loans, mortgage etc in the future, this can damage your credit history and will remain on your records for a number of years.

It is extremely crucial that any debts are dealt with as soon as it is financially possible in order to avoid being sent a default notice or a County Court Judgment.

If you need help and advice regarding outstanding debts, please do not hesitate to contact us on 0113 350 4030 or at hello@scesolicitors.co.uk.

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SCE Solicitors is a boutique employment law and litigation practice based in Leeds which advises clients nationwide. Please note that the information in this blog is to provide information of general interest in a summary manner and should not be construed as individual legal advice. Readers should consult with SCE Solicitors or other professional counsel before acting on the information contained here.

Sam Mukhtar
Latest posts by Sam Mukhtar (see all)
Sam Mukhtar

Sam Mukhtar is a paralegal at SCE Solicitors, she has over 5 years of legal experience. Prior to starting her role at SCE Solicitors, she worked in a regional firm in Greater Manchester dealing with civil matters before moving to Leeds and joining the SCE team.

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