As a rough rule of thumb, if your repayments to credit cards, loans and other unsecured debts total more than 20% of your take-home pay each month, then it’s reasonable to assume you have a debt problem.
If your situation is becoming unmanageable, and you need to seek help as soon as possible, ideally from a free charitable advice organisation such as the Consumer Credit Counselling Service. If you currently have just enough to cover your debts then you’re not in trouble yet, but you do run a risk of having problems if you take out more credit or your income drops. You need to trim down your outgoings if possible, and also try and increase your income.
If you contact CCCS, we would give you a comprehensive debt counselling session, and draw up an in-depth budget detailing your income and expenses. We can also advise on increasing your income to help you cover your outgoings. If necessary, CCCS will help negotiate with your creditors and set up a repayment plan that you can afford. We can also offer other solutions if they’re appropriate, all completely free of charge.
Always make sure you arrange payments for priority expenses before addressing credit cards and loans. If you don’t pay priority debts, such as your mortgage, rent, council tax, and utility bills, you could have serious and immediate consequences.
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