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Debt

it's 21 Sep, 2023 9:34 pm

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Debt

Background

This information is about the specific health area mentioned above. It comprises a combination of textual and video information, on our site and on external sites.  We will be adding new specific health areas and further information continually.

The idea is for you to understand more about the health area you are addressing before you get too far building your action plan.

General Information

What Is Debt?  According to Investopedia:
Debt is something, usually money, borrowed by one party from another. Debt is used by many corporations and individuals to make large purchases that they could not afford under normal circumstances. A debt arrangement gives the borrowing party permission to borrow money under the condition that it is to be paid back at a later date, usually with interest.

The Citizens Advice Bureau say about debt: Dealing with money issues can sometimes be off-putting, but if you don’t understand how things like credit or mortgages work, you could end up losing out financially or getting yourself deep in debt. The following pages will give you the information you need to make the right choices, including help to deal with your debt problems, how to avoid losing your home and how to get your finances back into shape.

Wikipedia define debt as: Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The debt may be owed by sovereign state or country, local government, company, or an individual. Commercial debt is generally subject to contractual terms regarding the amount and timing of repayments of principal and interest. Loans, bonds, notes, and mortgages are all types of debt. In financial accounting, debt is a type of financial transaction, as distinct from equity.

Debt can be so debilitating and can create depression and anxiety. People often don’t intend on getting into debt – things often escalate out of hand and before you know it you have lots of debt. Many people gamble or take a risk and assume their employment or income is going to continue and be guaranteed. If it stops people often struggle and get into debt.

Many people worry about the debt instead they need to train their powerful brain to worry about getting out of debt.

You’re not alone and there are millions of individuals, groups, companies and even well known brands get into serious debt and have to make a plan to fix it.

National Debtline have a guide you can download which addresses debt – it’s long but comprehensive and you don’t have to read all of it!

 

Background Information

There is information available which will help you formulate your action plan – both on our site and on external sites.

On our site

DebtDrive

DebtDrive provides you with all the information from a number of sources. It provides you with guidance and information to enable you to analyse your current situation and how best to tackle the problem. It also provides support from organisations and experts who you can contact for professional advice.

We have relevant information on DebtDrive
Go to DebtDrive
ChangeDrive

ChangeDrive is about the ability to make change happen in your life. How to stand back and evaluate your behavior and how to create new habits. ChangeDrive also has support and experts that can give you advice on turning a vicious circle into a virtuous one.

We have relevant information on ChangeDrive
Go to ChangeDrive

On external site(s)

There are no links to external information

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Questionnaire

In order for you to assess what you know about this health area, we suggest using a questionnaire. This might help you understand your situation in this area, or taking it might improve your understanding of the area.

You may be able to take this questionnaire online – either here on our site or on an external site – or download it and complete it on paper – it depends on copyright (and whether we’ve managed to build it on our site!).

The ways you can take a questionnaire:

More than one external site questionnaire, Questionnaire on our site

Take Questionnaire on our site

You can take a questionnaire on our site. This will score the questions automatically and give you a summary showing what your score means.

Our Questionnaire

We believe the questionnaire at Debt Camel is the most informative on different types of debt and how they affect you.  The questionnaire is copyright Debt Camel and licensed at Creative Commons here.

Welcome to your Types of Debt Questionnaire.  This questionnaire is from DebtCamel; we found this to be the most informative questionnaire in terms of explaining the different types of debt, and also what their impact is.  This information is reproduceable under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International (CC BY-NC-ND 4.0) license, which means we can use it in its original form without making changes.

This applies to someone living in England, Wales or Northern Ireland. The same general diagram (shown below) may apply in other countries, but the types of debts, the timescales and credit recording may be very different.

Is that debt is a priority? Could you get a CCJ for it? Why isn’t it on your credit record? If you have problems with your debts, it helps to understand why different debts sometimes have to be handled differently.
Getting one wrong could be a big mistake!
Here is a quiz, seeing if you can place some debt examples into the right place on the diagram below. Whether you think you are a debt expert or it just looks confusing, have a go… The answers page explains what goes where and why.

A brief (no legal jargon!) explanation of my four terms:
  • Priority = a debt that is important, because something bad can happen if it’s ignored.
  • Legal = any debt where there is a balance unpaid.
  • Enforceable = any debt where you may be taken to court and are likely to lose.
  • On credit file = any debt of yours that is showing on any of the three credit reference agency records.

What are the eight different areas?
Some combinations are impossible – all priority debts are enforceable in court; all enforceable debts have to be legal debts.
But the following combinations are possible:
1. priority debts which are not on your credit record
2. priority debts which are on your credit record
3. Non-priority debts which are enforceable and on your credit record
4. Non-priority debts which are enforceable but not on your credit record
5. legal but non-enforceable debts which are on your credit record
6. legal but not enforceable debts which are not on your credit record
7. on your credit record but not a legal debt
8. not in any of the above groups.

types of debt

Below is a list of debts (A-W) that all belong somewhere on the diagram – but in which section?
A) Council tax arrears from last year.

B) Three year bank loan taken out a year ago.

C) Credit card you defaulted on seven years ago where you have been making token payments ever since.

D) British Gas debt from a house that you left eight years ago.

E) Letter from a debt collector about a Talk Talk account which isn’t yours.

F) Credit card debt included in a Debt Relief Order that started six months ago.

G) Your PCP car finance that you are up to date with.

H) A bank loan from 2009 which you stopped paying four years ago, where the debt collector can’t find the Consumer Credit Act agreement.

I) A credit card you haven’t paid anything to since you defaulted nine years ago.

J) Your mortgage.

K) A catalogue debt you defaulted on two years ago and paid in full last year.

L) Unpaid income tax.

M) Current electricity bill which you can’t pay.

N) Your overdraft

O) A 4 year old bank loan you settled with a full & final settlement last year.

P) Money you owe a builder.

Q) Mortgage shortfall from when your house was repossessed in four years ago.

Add description here!

R) Bank loan you repaid on time five years ago.

S) Child maintenance that you owe.

T) HP on a car which you voluntarily terminated last year.

U) “Buy now, pay later” deal on a microwave from Littlewoods.

V) Payday loan debt from 4 years ago – you went bankrupt two years ago and were discharged one year later.

W) Credit card account opened ten years ago and managed with no problems for seven years. Now in an arrangement to pay (or DMP) for three years.

Thanks to DebtCamel for producing that questionnaire, which as we said is the most informative we found on debt.

If you are feeling completely lost, talk to a good debt adviser. They will help you sort out which your priority debts are and help you get a plan for your whole situation.

Priority debts, whether they are in section 1 or 2, all need to be sorted – getting a proper repayment plan in place – before you deal with non-priority debts. See What debts and bills are top priority? for more info.

Take questionnaire on external site

You can take this questionnaire on at least one external site.

Mental Health and Money Advice have a debt test from MoneyHelper on their site.  Taking this test enables you to benchmark yourself and find help.

The BBC have a debt questionnaire on their News site which you can take online – it’s quite simple but needs some financial information, and gives some useful feedback.

Go to external questionnaire

Stepchange have a simple 5 question quiz which shows whether you have debt problems or not.

Go to external questionnaire

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A Butterfly Life: 4 Keys to More Happiness, Better Health and Letting Your True Self Shine

Times of change can be a challenge, no doubt! Whether it’s a relationship breakup, job loss, or being diagnosed with a serious health issue. Or you may WANT things to be different, but it feels a little scary or overwhelming. The butterfly reminds us change can be beautiful, even necessary, in order to realize our full potential and live our best life.

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