It's no secret that debt is a major problem in the UK, with figures from the debt charity Credit Action predicting that during November 2007 Britain's personal debt was increasing by ?1million every four minutes.
The same survey also revealed that every UK adult owes an average of ?29,063, this includes outstanding mortgage debt.
Some of the biggest problems regarding debt stem from the fact that many people choose the simple way out an ignore the problem, hoping it will go away. This however, is one of the worst steps you can take.
Sadly, ignoring debt will only make the situation worse. Depending on your individual circumstances and the nature of your debts, ignoring them could result in a seriously damaged credit rating or even loosing your home.
The following is a list of some of the ways ignoring debt can impact on your life -
Your Personal Health & Relationships
The most common health problems resulting from debt include major stress, which can lead to depression and/or anxiety. Such conditions can even manifest into physical symptoms such as headaches, eating problems and sleeping difficulties to name but a few.
The possible mental and personal affects of debt are ultimately going to have an effect on any close relationships you are in, especially if you live with a loved one.
No matter how strong you consider your bond, your increased stress is likely to impact negatively upon any relationships causing arguments and in extreme situations complete relationship breakdowns.
Your Home
More figures from Credit Action, predict that around 77 properties where repossessed on a daily basis throughout November 2007.
One of the major factors contributing to a rise in repossessions is consumers' ignoring their debt problems because of their inability to meet the required repayments.
It is for this reason that securing any loan against your home should only be done if you are confident you will be able to maintain the repayments for the entirety of the loan.
Your Credit Rating and Creditors
If you're ignoring your debt problems, and as a result making late payments or just missing them entirely, then it's a certainty that this will be having a significantly negative effect on your credit rating.
Whether you're making late repayments or unable to make any at all, this negligence will be logged on your credit report, and will make it very difficult for you to obtain credit in the future.
Naturally, your lender is going to do everything in their power to get their money back if you're failing to comply.
To begin with your lender will usually flood you with letters and phone calls, to making sure you are aware of the situation and to hear what you wish to do about it. If you fail to respond to such attempts of communication your lenders are likely to move onto more serious measures.
Your details may be passed onto debt collection agencies, who will then do everything in their power to recoup the outstanding debt.
The final step lenders will usually take is to threaten court action.
In summary, all of the distressing situations outlined above can be easily avoided by making sure you do not take out any lines of credit unless you are certain that you will be able to keep up with the repayments. This is achieved through thorough market research and an assessment of your current personal financial situation.
Its worth noting that even if your financial circumstances change, lenders will almost always be willing to come up with something to make repayments more manageable for you. Such debt solutions generally include informal arrangements, "repayment holidays", or an extension on the loans length and for more severe debt cases an IVA (Individual Voluntary Arrangement).
