Debt Crisis 1 - The Moment Of Panic

There is a moment - as the full realisation of debt out of control hits - when, at least metaphorically, the knees buckle, the head swims, and the urge for flight swells to an almost irresistible force.

This is the 'Moment of Panic'. More accurately this is the start of a very long moment of panic.

And for quite a while it will return in short bursts.

And there is every reason to have such a Moment and such moments. For you have no idea what lies before you, and no idea what mess you are in. You have, after all, never been there before, and probably don't know anyone else who has either.

I say enjoy the Moment! Savour it, milk it, stroke yourself with it! Soon enough you are going to come to your full shaken senses. Then you will have to handle matters coolly, calmly and thoughtfully.

While in The Moment:

1/ Make no decisions;

2/ Sign no papers; and

3/ Don't try to make sense of anything.

To do any of these you must be as clear and as rational as you can manage. During your Moment you are not going to be that.

The panic is fed, of course, by the thoughts of the whole world crashing on your head, of fingers pointing at you in the street and of being cast from your home to wander the streets begging crusts from strangers.

Or maybe even of being thrown in prison and breaking rocks in some cold and hostile place.

Well in England and Wales at least this last is not going to happen. There are only two situations involving debt that can lead to prison here. One is where rates are involved, and unless you are withholding rates on principle, it is unlikely that this will happen since there are probably other problems that can be addressed.

The other is where you have committed fraud, and if you have done that you are not going to be reading this article. Having bad luck, being silly or being ill are not fraud. Losing your job is not fraud, suffering the effects of inflation is not fraud. Being old is not fraud. And having a mental disorder is not fraud.

You are not in a debt crisis because you chose to be. Something has happened since you took on the loan, and - in England and Wales at least - your creditor is expected to take that into account and negotiate a solution.

There is a structure of priorities which places those things you need to live as priorities, and most loans as non-priority. But there are some difficulties where you own assets, especially a house, which requires a lot of thought about how to go forward.

Since it is a priority to have accommodation and mortgage or rent are priority debts it makes no sense for mortgage lenders to repossess in many circumstances, and that is very much so in a weakening house market. For, unfortunately, while you possess the house, the mortgage is a separate debt secured on the house. Repossession of the house does not clear the debt, and the money received from selling the house may be far less than the mortgage figure.

If the lender places you in a position of having less money available he is cutting off his nose to spite his face. For you to stay in that property paying rent and looking after the property makes more sense, specially if it is on the basis of reviving the mortgage when things pick up again. An ideal worth exploring at least, if it is needed.

Lots of room for negotiation - once you are over The Moment of Panic. Similarly with other debts whether secured or unsecured. In all cases what makes sense can usually be agreed.

Though sometimes you have to argue your corner pretty strenuously.

And if all these possibilities are at the back of your mind in Your 'Moment of Panic' you will be less likely to rush to decision or signature.

For that period keep out of the water, there be many sharks.

About the Author:
Joseph Harris - Debt Control Man
author: Control Your Debt Crisis on Your Own Terms
http://www.controlyourdebtcrisis.co.uk
debt dictionary: http://www.controlyourdebtcrisis.co.uk/debtwiki/
Joseph Harris You may use this only if the signature is kept with the article

Article Originally Published On: http://www.articlesnatch.com

Tags: debt

, default

, panic

, England

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