Dealing With Your Debts

Managing your debts is probably something that you keep putting off. It is pretty difficult to do when the creditors continue to call. And call. And call some more. It is about time you quit hiding, and start dealing with your debts face to face. There are steps that can be taken to assist you in managing your debt, and clearing your name from the creditors phone list once and for all.

The first thing you should do is develop a budget. This is a crucial part in eliminating your debts. It also assists in helping you take control of your current monetary position. You need to first examine your set expenses such as mortgage, car and rent payments, insurance co-payments and premiums,etc. Then list your other costs such as entertainment and recreational activities. You must prioritize these expenses and determine whether or not you have enough money left over each month to donate to your debt reduction efforts.

Another option in reducing debts is to increase your monthly payments on credit cards. When you pay more than the minimum payment, a greater sum of money is applied towards the overall account balance. In the end, this will cost a person less money in interest. If you add just a few extra dollars each payment, the number of payments of each loan or credit card can be decreased. What does this mean for you? Decreasing the amount of payments made lowers the sum an individual pays in interests and in fees and charges.

When attempting to manage your debts, you should contact your creditors immediately. Occasionally, if you let creditors know that you are attempting to eliminate your debts, credit companies will decrease your card interest rates. Also, if you are having problems making monthly payments, let the creditor know, and many will arrange a specialized plan for you.

Consolidation is a significant option in reducing and managing your debts. Having numerous high interest loans, high interest bills or credit cards causes you to spend more money for the items that were purchased then they were actually worth.If you are a real estate owner, think about a second mortgage or even a home equity loan. This will eliminate the high interest rate debts. However, beware. Most of these types of loans will require you to put up your house as a source of collateral. If you fail to make your payments, you could very easily lose your home.

Credit counseling may be the perfect solution for managing your debt. Most credit counseling services assist you in coming up with a logical option for eliminating debt. These organizations can provides a variety of services such as, debt managing advice, and classes and workshops aimed towards money management, debt consolidation and budgeting.

Debt Collection Facts

Debt Collection Facts


The insolvency procedures open to a creditor are a powerful
tool in recovering debts.  Whether the debtor is a company or an individual, an
intelligent application of the insolvency rules can enable a creditor to obtain
payment of their debts without the need for protracted and costly litigation.

The insolvency rules can be used for a broad range of debts
exceeding £750 provided that the debt is not genuinely disputed by the debtor.
Insolvency procedures however can be a high risk strategy and one needs to be
very careful in using these procedures. There are substantial adverse cost
consequences where the procedure is incorrectly used.


It is often the case that debts that are difficult to
collect from the debtor company are as a result of inadequate checks being made
as to the financial strength of the company when the contract was entered
into.  It is therefore essential that you should check the credit rating of any
potential new customer or client and where there is concern as to the ability
of the company to make payment for goods or services supplied, then you should
obtain a guarantee either from a parent company of sufficient financial
standing or an individual to ensure performance of the contract.

It is essential that any guarantee is documented in writing
and clearly places the guarantor under a binding and contractual obligation to
meet the liabilities of the company or individual if they default in meeting
their contractual obligations.  It is essential that the wording of the
guarantee is well drafted as the courts tend to construe the terms of a
guarantee strictly and will only find that there is a third party liability if
it is quite clear from the wording of the guarantee.


Where a debtor has failed to pay you monies for goods or
services supplied, it is normal to charge interest for late payment.  Interest
can be charged either in accordance with your terms and conditions of business
provided your terms make provision for this or, alternatively, you can apply
the Late Payment of Commercial Debts (Interest) Act 1998 which allows you to
claim interest on overdue accounts.  If the contract with the debtor predates
7th August 2002, then businesses that are eligible to charge interest can do so
at a rate of 8% above the Bank of England base rate that was in place on the
day the debt became overdue. For contracts dated on or after 7th August 2002,
all businesses can charge interest at a rate of 8% above the late payment
reference rate.

The Bank of England base rate on 31 December, is the “reference rate”
for debts becoming overdue between 1st January to 30th June each year.
The Bank of England base rate on 30 June, is the “reference rate” for
debts becoming overdue between 1st July to 31st December each year.


A well drafted set of terms and conditions of business will
include a retention of title clause.  The effect of such a clause enables a
seller of goods to retain ownership of the goods supplied until payment has
been received in full.  This can be of great value where the purchaser of the
goods supplied becomes insolvent.

There are various types of retention of title clauses but
the essence of a well drafted clause means that a seller will have added
protection in the event of failure by the purchaser to comply with their
contractual obligations and pay for the goods ordered.  In particular where a
buyer subsequently goes into liquidation after acquiring stock which is subject
to a retention of title clause, then the seller of the goods may be able to
obtain the return of the goods notwithstanding the fact that the buyer has gone
into liquidation.

A carefully drafted retention of title clause is a powerful
tool to assert ownership rights and recover property.  They can however be
complicated and need careful consideration.


One of the major reasons that clients have difficulty in
recovering their debts is because they either have inadequate terms and
conditions of business or they in fact fail to have any written terms and
conditions of business.

Although terms and conditions will vary from one business to
another and from one industry to another, certain key areas are common to all
businesses and need to be addressed in your terms and conditions.  Your terms
and conditions should :-

– Ensure that the customer or client’s details are correctly shown.

– Make clear whether you are dealing with an individual, a
partnership or a limited company.

– Set out what services or goods you will be supplying.

– Clarify when payment is due.

– Make provisions to protect you if for good reason you are unable
to supply the goods or services or only part deliver the goods or services or
if faulty goods or inadequate services are provided.

– Ensure that you retain ownership of goods until payment in full
is received.

– Make clear any additional charges that may be payable if the
customer or client fails to pay in accordance with the payment terms.  In
particular the right to claim interest and the right to claim for collection
costs and solicitor’s fees should be clearly set out in the terms and conditions.

– Ensure you comply with all statutory


A well drafted set of terms and
conditions will make collection of a debt substantially easier.