Payday Loan Debt Advice

Getting a payday loan suggests that the person is already in some kind of financial difficulty...

The fact that someone chooses to take out a payday loan would suggest that the person is in some kind of financial difficulty. Whether caused by mortgage or rent arrears, outstanding utility bills or just the challenge of living within one's means, debts can be very difficult to clear.

Interest Rate Charges

Likely to be much higher than on an overdraft...

The rate of interest charged on different outstanding debts needs to be considered carefully when planning your debt repayment schedule. For example, the rate of interest charged on a store card is likely to be much higher than on an overdraft. Similarly, the rate of interest charged on a payday loan is much higher than for most other forms of lending.

Prioritising Debt

Identify which of your debts will cause you the most trouble...

When attempting to put your finances in order, it makes sense to identify which of your debts will cause you the most trouble if they are not paid off. Perhaps surprisingly, it may not be the largest debts that will have the biggest impact on your lifestyle. For example, having your electricity cut off for non-payment of a bill will cause much greater immediate problems than leaving a large credit card debt unpaid.

Ideally, the following debts should be paid off first to reduce the risk of being evicted and to stop too much disruption to your life:

• electricity, gas and water bills;
• mortgage payments;
• rent;
• council tax;
• money owed to HM Revenue and Customs - income tax and VAT;
• court fines;
• secured loans;
• Repayable Next Payday
• hire purchase agreements

Once these debts have been repaid, you should consider paying off the rest of your debts:

• unsecured loans;
• bank overdrafts;
• credit and store card bills.

A number of organisations offer debt counselling advice such as:

Citizens' Advice Bureaux

Citizens' Advice Bureaux (CAB) throughout the UK offers advice to people in financial difficulties. CAB also has an online advice guide (www.adviceguide.org.uk) that offers guidance on a variety of issues including:

• housing issues and entitlement to benefits;
• tax advice;
• general debt advice;
• tax advice;
• links to other reliable online information providers;
• help to locate your local CAB office.

Consumer Credit Counselling Service

Offers free, confidential advice and support for people with financial problems...

Another useful source of debt advice is the Consumer Credit Counselling Service (CCCS, website: www.cccs.co.uk). The CCCS is a registered charity that offers free, confidential advice and support for people with financial problems. As part of its web-based provision, the CCCS offers an interactive Debt Remedy service where the user completes an online questionnaire, at their own pace, giving details of their current financial situation. From the answers given, possible courses of action are suggested. The questionnaire can be completed anonymously, allowing the user to avoid the personal embarrassment that might be associated with a face-to-face interview.