| Mortgages, loans and credit card debt have brought | | | | If a lender cannot come to an agreement with you |
| UK consumer debt to over £1 trillion. Yet each | | | | regarding repaying outstanding debts, they will often |
| day, more and more people are finding themselves in | | | | pass your debt over to a debt collection agency - this |
| financial difficulty which they cannot get out of - and | | | | will remove the debt from their accounts receivable |
| this ever-worsening situation has led to a sharp rise in | | | | records. When this happens, the transaction is marked |
| personal insolvencies, IVAs and bankruptcies. | | | | on your credit file and your account is placed in |
| Despite soaring profits, many banks and financial | | | | "default". In some cases, debt purchasing companies, |
| institutions are now discovering that they might not | | | | such as Capquest Debt Recovery will buy the debt |
| recoup the money that they have loaned to | | | | from the original lender - often for a discounted price - |
| consumers. In efforts to meet their financial outgoings, | | | | and pursue you for the full balance of the debt. |
| many people are turning to secured loans in order to | | | | Since not all customer debts will be collected, |
| consolidate their debts into smaller monthly payments. | | | | businesses typically record an allowance for bad debts |
| However, these new loans are often paid over long | | | | which is subtracted from total accounts receivable. |
| periods of time, usually running into several years. If you | | | | When accounts receivable are not paid, some |
| find yourself in a situation where you're struggling to | | | | companies turn them over to third party collection |
| make ends meet, it's a wise idea to seek financial | | | | agencies who will attempt to recover the debt via |
| advice. There are many companies which can advise | | | | negotiating payment plans, settlement offers or in |
| you on the best way to manage your debts, or you | | | | some cases, legal action. Having a default on your |
| could consult your local Citizens Advice Bureau for | | | | credit file can make any future applications for credit |
| help. | | | | more difficult, and multiple defaults or a County Court |
| If you fall behind with your payments, your lender will | | | | Judgement (CCJ) will make applying for credit |
| usually try to contact you either by phone or letter in | | | | impossible. A defaulted account shows on your credit |
| order to discuss your situation. It's a wise idea to keep | | | | file for a period of 6 years, whether the account is |
| your lender informed of any changes in your financial | | | | subsequently settled or not, while a CCJ will remain for |
| circumstances, as lenders will often be more flexible if | | | | 6 years also, unless it is paid within a month of issue. |
| you fall on hard times. Burying your head in the sand | | | | Should you ever find yourself in a situation where |
| often only makes matters worse in the long run, and | | | | you're struggling financially, seek advice on how best to |
| avoiding paying what you owe can have severe | | | | handle the circumstances before they escalate out of |
| consequences such as ever-increasing arrears or | | | | control. Burying your head in the sand will only make |
| even bankruptcy. | | | | matters worse. |