Think money Personal Loans

Borrowing a bit of extra cash from time to time when we need to can be a quick and convenient way of covering costs - and many of us do it.

Some recent figures from HSBC looked at borrowing on credit cards alone - both in the past and today. Back in 1984, people in the UK owed a total of £4.5 billion on their credit cards - whereas today, that figure has sharply increased to £57 billion.

However, although borrowing on things such as credit cards, overdrafts and personal loans could be useful, getting into debt is always something of a risk - particularly in the current climate, when many people's finances are feeling the effects of rising living costs and squeezed disposable incomes.

With this in mind, the sooner you can get out of debt, the sooner you can improve your financial security, and regain control of your money.

Here's thinkmoney's guide to getting out of debt and improving your financial health.

What types of debt are there?

Debts can be divided into two different categories: 'priority' and 'non-priority'. It's important to know the difference between the two types of debt, as falling behind with them could have very different consequences.

Priority debts

Generally speaking, your priority debts are the most important of all the debts you have to consider.

They include:

• Mortgage/rent
• Secured loans
• Hire Purchase agreements
• Utilities (gas, electricity & water)
• National Insurance
• Council tax

Failing to keep up with these costs can come with serious consequences, such as eviction or repossession of your property, or - in extreme cases - imprisonment. However, your lenders will give you time to take action to avoid these outcomes, which are considered a 'last resort' - so don't be embarrassed about talking to your lenders directly to get help and advice.

Non-priority debts

Non-priority debts include all types of unsecured borrowing, such as credit cards, store cards, overdrafts and personal loans. However, just because they're classed as 'non-priority' it doesn't mean that repaying them isn't important - it just means the consequences aren't as serious.

Having said that, non-repayment of these debts could damage your credit rating, affecting your chances of successfully applying for further credit if needed - and your unsecured lenders could take legal action against you if they feel it's necessary.

Managing your debts

As long as you can keep on top of your monthly repayments, borrowing money needn't be much of a problem - and could be a helpful way of covering costs from time to time. However, it's important to look out for the 'warning signs' that could indicate that your debts are, or could soon become, unmanageable.

Interesting facts

• Howard Nassiri is a national law firm based in Orange County, California. Vincent D. Howard and Damian J. Nassiri founded the law firm in February 2007. Howard Nassiri is known for its representation of consumers in the areas of mortgage foreclosures, mortgage workouts, wrongful foreclosure, and mortgage related bankruptcy. The law firm files...
• Regal (Hastings) Ltd v Gulliver [1942] UKHL 1, is a leading case in UK company law regarding the rule against directors and officers from taking corporate opportunities in violation of their duty of loyalty. The Court held that a director is in breach of his duties if he takes advantage of an opportunity that the corporation would otherwise be...