Personal Debt in the First World

Personal Debt in the First World
Personal debt problems are afflicting more and more people in the so-called first world nations which despite their relative prosperity compared to the third world are becoming increasingly despondent and despair of ever finding a solution. The twin effects of the credit crunch and the global recession are further aggravated by changes to debtors’ personal circumstances. Whether people are insolvent or are just struggling with their debts, it is worthwhile to look at the causes and effects of debt problems in order to understand what needs to be done to arrive at a solution.
Causes of debt can be broadly categorized under one of three headings: I’m to blame; nobody’s to blame; somebody or something else is to blame. What caused your debt problems?

How did I get to this state of affairs?
It’s nice to be able to assign blame for our problems on someone or something else. Accepting responsibility oneself is hard to do as it feels like an admission of personal failure. Even partially blaming someone else for our debt problems does provide some crumbs of comfort. Was it my fault or my boss’s or my employer’s that I lost my job? Was it so wrong to want to give my children a good standard of living and a good education? It wasn’t me that raised my credit limits on my credit cards. Why did the government not call a halt to the easy availability of credit? It wasn’t my fault that my marriage broke down and that I had to undergo a costly divorce. Perhaps we could have continued living in a small house but with a growing family taking out a loan to build an extension seemed like a good idea at the time. Who would have thought that my overtime would be completely withdrawn? I didn’t do any thing that my neighbours and friends weren’t already doing.

How my debt is affecting me.
I’m afraid that I will lose our family home. I feel a failure and my wife and children are beginning to blame me. My health is beginning to suffer from the worry and stress of it all. I don’t sleep properly anymore. If my employer finds out about my financial difficulties then my opportunities for advancement and promotion will be severely curtailed, given that I am in a position of trust and responsibility. I might even lose my job. My relationship with my partner is deteriorating and we argue all the time, mainly about money matters. I don’t rule out separation or divorce if things don’t improve. If my friends and neighbours find out they will probably shun me. My children are going to have to make do with an inferior education. I will have to take a second job, if I can get one. My business is going to the wall and there is nothing I can do about it. I dread having to ask my parents for help and I may even have to ask them to let me move back to living with them. I was planning to get married and have children but now I can’ afford to do either.

Solving our Debt Problems
It hardly matters what the causes and effects of our debt problems are or whom we may want to blame. The important thing is to do something about it – find a cure or a solution. In the UK solutions include bankruptcy, individual voluntary arrangements, debt management plans, debt relief orders, administration orders, selling or remortgaging assets to release equity, debt consolidation or even financial assistance from family or friends. In the USA some of these solutions are also available. Individuals may file for bankruptcy under Chapter Seven or alternatively Chapter Thirteen of the US Bankruptcy Code. These two processes are quite different and not everybody may file for bankruptcy – it depends on individual circumstances. As well as that the bankruptcy rules and regulations and the application of these vary from state to state. A further alternative in the USA is to enter a Debt Settlement program usually with the assistance of a fee-charging firm specializing in debt settlement. In Ireland, legal solutions for debt problems are archaic, expensive and quite draconian, particularly bankruptcy. However new legislation has been promised by the Irish government following the publication last year of the recommendations contained in the Law Reform Commission’s consultation paper for the reform of personal insolvency law.

First Steps to Addressing Personal Insolvency
The first and crucial step is to recognize and accept that you have a problem and to resolve to do something about it. It may or may not help to identify the causes and effects of your financial condition. The second step is to work out if you are in fact insolvent. The third step is to establish precisely what your financial condition is. This requires the gathering of information on your income and expenditure, your assets and liabilities. The most important step is to obtain professional advice. You should probably get this from more than one source. Initial advice of this type – regarding personal insolvency – should be free. Don’t get hooked into or committed to using a source of advice until you are satisfied with the quality of the advice and the initial and ongoing cost of both the advice and of any plan of action you decide to pursue. Shop around. Talk to your bank manager, talk to CAB, talk to the CCCS, talk to an insolvency services provider – there are many of them in the marketplace. You can research them on the internet.

Find out more about debt problems and solutions by visiting Paddy’s site. Alternatively if you are looking for debt advice and would like debt help then visit here.

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1 Pharmacy technician job description June 8, 2010 at 12:58 am: Great site. A lot of useful information here. I’m sending it to some friends!

2 Glady Bernardon June 5, 2011 at 3:03 pm: Thanks for a really interesting read, learn quite a few tips here, trying hard to improve my credit , i did a consumer proposal 7 years ago and just now i am starting to rebuild my credit slowly but surely and trying to avoid that credit card trap.

Debt Problems – Cause, Effect And Cure

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