Personal Debt

A recent study revealed that around 15% of the adult population need debt advice. That may seem like a small percentage but works out at around 8.1 million people in the UK.

Nowadays, personal debt is almost unavoidable. It’s an everyday reality for many people, and they spend their lives balancing their books to keep their debt in check. If you are concerned about your personal debt, we have the solutions to help you manage your debt or clear it entirely.

What is Personal Debt?

Personal debt is how much you owe to other people, businesses, creditors, or banks. It is similar to household debt, but only covers how much you yourself owe, and doesn’t include the other members of your household (such as your partner or dependents).

There are a number of ways to build up personal debt:

• • Credit Cards
  • Student Loans
  • Rent/Mortgage
  • Car Loans

These loans seem minor on their own and are a great way to get a higher education, car, and home. However, if you aren’t careful, personal debt builds up fast.

How Personal Debt Builds up

Making regular payments is a great way to improve your credit score, making it easier to be approved for future payments. However, if your financial situation changes while you have debt to pay, it can soon become a problem.

Many people choose long term loans to make the regular payments more manageable. This is recommended, you shouldn’t pay more per month than you can afford, but you may find that adding more debt over the years is easily done.

Most people take out first loans at around university age. Naturally this is when student loans begin but is also when most people get their first car and start renting.

Students can gather a lot of debt without having a concrete career path, they may not secure a well-paying job until years after graduation. Part time jobs pay the bills at the time, but it can be easy to fall into debt that haunts you for years.

This is why most people struggling with personal debt are younger than 35.

It isn’t just young either. Every industry is more competitive than ever before, and starting a business is becoming more and more expensive. New business owners must take out large loans to get started, which can take years to pay off even if the company does well.

The Impact of Personal Debt

Your net worth is based the overall value of your assets (such as a house, car, business etc.) and your liabilities (the amount of debt you owe). The more debt you have, the lower your net worth will be.

Sometimes your net worth will balance out if you accrue debt to improve the value of your assets. However, this is tricky to balance if you aren’t 100% confident in your financial future.

When your creditors believe that you are unable to meet the terms of your repayments, they will take action to collect what you owe. This can lead to debt collection or other legal action. Creditors can use a range of legal means to force you to repay your debt; understanding these processes will ensure you can handle whatever method they choose.  

If you have lots of debt, it’s important to understand the options you have, and which will suit your needs best.

We have a range of solutions to help you reduce your debt and secure your financial future.