Finding a Debt Management Solution - Q&A

Finding the right solution in the choppy waters of debt management can be tricky. Navigate your way through with our Q&A article.

How badly is the UK in debt?

1 trillion is the most recent answer (Jan '07). And bankruptcy is on the increase for many individuals. Over 23,000 people became insolvent in the UK in the first three months of 2006, a 73% increase on 2005.

Why has debt become so huge?

It is thought to be a combination of consumer confidence from low interest rates and high employment. Loans and credit cards have never been so readily on offer. Debt management solutions have become more accessible - recent changes in bankruptcy law have made becoming bankrupt an easier option than before, although it should never be viewed as an easy way out!

IVAs and personal loans are also more accessible - we are more aware of the financial products available to us - it's hard not to watch TV without seeing an advert offering the latest debt management solution.

How can I avoid getting into debt?

• Don't overspend! Of course that's easier said than done and for many of us debt of some kind is a reality in our lives.
• If you don't feel you can trust yourself with credit cards, then don't get one. If you do, make sure it has a low interest rate. Often people pay a higher rate than they need to. You can get a rate near to 4.5% yet many pay closer to 20%.
• Avoid store cards. Their interest rate is much higher than most credit cards.
• If you are in debt then be pro-active and get financial advice to find the right debt management solution for your situation. Getting this wrong can be costly later on.

Is it a good idea to consolidate debt with a loan?

In some circumstances, but this carries additional risks. It's always best to seek financial advice before deciding on a management solution. Interest rates on loans can be high and therefore the 'quick fix' solution to debt can often be more costly in the long run. You need to make an informed decision on any loan you take out and read the small print. If you get a secured loan for example, and are unable to keep up repayments you could lose your home.

Should I save or pay off my debts?

It makes more financial sense to pay off your debts. The quicker you pay off debts, the less interest you pay, and the cheaper that debt is in the long run.

I'm panicking about debt, what do I do?

There is plenty of advice for finding the right debt management solution, so don't panic! Find an independent financial adviser who will give you an initial free debt counselling session to help you get started. Your debt problem won't go away unless you face it head-on.

Who are MRA?

MRA Debt Help is an ethical debt management company offering free, impartial debt advice to anyone struggling with debt, both in the UK and Internationally. We offer a debt management solution where it is suitable and give advice on alternative debt solutions where it is not.

Why MRA?

Our negotiations skills ensure that our debt managrment clients nearly always pay less and get-out-of-debt faster than "free" debt management customers. We do not serve the credit industry. Our only loyalty is to our clients. Our offices are based in Battle (near Hastings) in East Sussex, England.

If you need help, call 0800 612 92 23 now.

For independent financial advice, visit our sister company, Mike Robertson Associates, at www.mraltd.com. You can email an independent financial adviser for professional help or call 0870 803 1995.

Ask the Expert