COMMENT
We're Just A Nation Of Binge Borrowers!

By Cliff D'Arcy
December 7, 2005

According to research from One Advice, over three million of us could have unsecured debts of £10,000 or more, plus 252,000 people may owe at least £50,000. Ouch!

The first thing to note is that these figures exclude mortgages; they measure only consumer credit, including credit and store cards, car and personal loans, overdrafts and so on. What's more, it's reckoned that 203,000 people are considering declaring themselves bankrupt - and that's before our annual Christmas credit spree!

The above research also reveals that a tenth of those who owe £10,000+ worry about their ability to repay their debts. A fifth says that they sometimes have trouble keeping up their monthly repayments, and 1 in 33 (3%) claims to have this problem every month. One in sixteen (16%) plans to seek debt-counselling advice, and one in fourteen (7%) is considering bankruptcy. Crikey!

If you're worried about your debt burden, take this quick quiz to see if you've become a credit junkie. If you are, you need to tackle your problem right away, before it gets worse. Of course, just like any other addiction, "plasticmania" often requires a dose of "cold turkey"!

I tend to divide problem borrowers into three core groups:

1. If your basic outgoings (just the bare essentials, such as food, mortgage/rent, travel and household bills) exceed your income, then you need professional help. Try the FREE debt-counselling services offered by the Consumer Credit Counselling Service, National Debtline and Payplan.
   
   If your debt burden is simply too great to bear, you may benefit from entering into an Individual Voluntary Arrangements (IVA) or by becoming bankrupt. However, tread carefully, because fees for a typical IVA can amount to several thousand pounds, so commercial debt-management providers make big profits from IVAs.
   
   
2. If you can meet your basic outgoings, but not all of your credit repayments, you should try to freeze the interest on your debts and negotiate lower repayments, which a free debt-advice firm can do for you. Also, cutting back on your expenses will help to boost your disposable income and bring forward your debt-free day.
   
   
3. If you can cope with your monthly debt repayments, but you'd like to be debt-free faster, try reducing your interest bill by using 0% balance-transfer cards or lifetime low-rate deals. Again, trimming your outgoings and boosting your income will speed up your march towards financial health.

Finally, I've no doubt that there'll be a huge surge in the number of people contacting debt advisers in the post-New Year hangover period. Sadly, many distressed debtors will fall into the hands of debt-management firms, which stand to profit handsomely from their problems. Before you take this route, read these Ten Ways To Dump Your Debts, and ask for help on our popular Dealing with Debt discussion board. Otherwise, you may end up coughing up thousands of pounds in needless fees!

More: Get help in our Get Out of Debt centre | Twenty Steps To Debt Freedom.