5 Debt Management Questions Answered

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Debt Management Questions

At Enjay Debt Management, we know that being in debt can usually be a period of embarrassment and loneliness. Often, our clients tell us that they struggled to find somebody to turn to regarding information and guidance whilst remaining confidential.

This is where we can help. We don’t want you to struggle to seek questions at what can be a troubling time, so we’ve answered 5 frequent debt management questions – so that you can make informed choices regarding your debt.

What should I do about my huge credit card debt?
Credit card debt is becoming more and more frequent. If you do find yourself in major credit card debt, you do have options. First of all, consider if you have any way to take that debt and transfer it to loans or other cards with a significantly lower rate. Review all of your outgoings and see if you can cut costs elsewhere to add to your credit card repayments (ie. gym memberships, unnecessary direct debits, dinners out).

2. When should I declare bankruptcy?
Bankruptcy is a scary word. However, it is often a positive solution for many individuals. Nicholas Cage, 50 Cent and Donald Trump have all declared bankruptcy, and they all seem to be doing just fine. Declaring bankruptcy can restructure your debts, allowing creditors to work with you to pay what you owe whilst getting a level of protection that won’t leave you destitute.

When to declare bankruptcy depends on the individual case, but there are warning signs that should raise alarm for any individual. For example, if you are struggling to meet your outgoings, cannot pay your bills, are about to be evicted, and have no financial alternatives, you are in trouble. If you have way more debts than assets, and are struggling to fend off the outstanding creditors, you may need to consider bankruptcy. This is a monumental decision and should not be made lightly without professional support.

3. What bankruptcy options do I have?
If this is the decision you have made after talking to our debt management advisors, then you need to know which type of bankruptcy to declare. The two most common types of bankruptcy are a straight bankruptcy or a reorganisation bankruptcy.

Straight bankruptcy is the simplest form. This liquidates your current assets in order to pay off as much of your debt as possible. Any remaining debt is then haggled over. Be aware that this could mean losing your home, car, and any possessions of value. Reorganisation bankruptcy is a better choice for anyone with property and is the alternative if your annual income is too high to qualify for a straight bankruptcy. Both of these options have many rules and regulations.

4. How do I improve my poor credit score?
A low credit score will take years of behaviour into account, so there are no quick fixes but there are steps that you should start taking right now to improve it: for example, making sure you pay every outstanding bill on time, staying out of an unplanned overdraft as much as possible.

5. What’s the difference between good and bad debt?
How can debt ever be a good thing? – we hear you ask… Good debt is anything that creates value over time. For example, buying a home as this investment will grow in value and will ultimately lead to more money at the end of the day. Bad debt, however, does not create any value. It is money that is spent on disposable items, high-interest rates, and anything else that contributes to spending without the eventual financial gain. Consider these differing types of debt before each expenditure.

Have any other questions? Don’t hesitate to get in touch with our friendly team. We can offer you the professional help and support needed on a confidential basis. Call us on 0800 612 7958 or email us at info@enjaydebtmanagement.com.

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