Control debt – Don’t let debt problems drift

MyCallcredit says that even though debt is seen as a “taboo” by many, it should not prevent people struggling with debt taking action before their lives are affected.

“People need to manage their finances and prioritise their debts to make sure their homes are not at risk and they don’t feel the only option left to them is bankruptcy,” said MyCallcredit director Alison Nicholson.

“Bankruptcy stays with someone for life and is by no means an easy option.”

Her warning comes as official figures show that the number of bankruptcies has reached new highs, something that stays on a person’s credit record for at least six years.

MyCallcredit recommends that people admit they have a debt problem, answer “red letters”, contact creditors and keep an eye on debts.

“Bankruptcy will usually mean you lose your home, if you are a homeowner,” says ClearDebt’s David Mond.

“It leaves a big black mark on your credit rating for six years and it is difficult to rebuild your financial reputation afterwards.”

He added: “However, for those with few assets and a big debt to income ratio, bankruptcy can still be the best option. Debtors need to get specific, individual debt advice.”