Can you reduce your credit card debts?

Millions of us are now struggling to pay off our credit cards. The good news is that as the numbers rise, banks are increasingly agreeing to reduce or even remove your debts. We highlight where you can go to get help.

BANKS wrote off an enormous £1.18 billion of card debt in only three months at the end of last year.

That’s up from £740 million in the previous quarter, and up from £894 million during the same period in 2009. The latest figures from the Bank of England show how UK banks are more willing to help those struggling with huge credit card bills.

But this certainly doesn’t guarantee that your debts will be written off. Banks will look closely at whether you can’t pay rather than won’t pay. If you’re squandering your spare cash, you’ll still be expected to meet your payments. Also, having your debts written-off will still damage your credit record.

As millions of borrowers struggle to bring down their card and loan debts, debt helplines and management agencies have seen a huge rise in the number of enquiries.

Steve Rees, managing director of private debt management agency Vincent Bond & Co, comments: “These statistics echo the trends we are seeing at Vincent Bond as the banks, and the collection agencies who represent them, are becoming more prepared to accept settlement offers, with larger amounts of the debts written off.”

As with most other private debt agencies, Vincent Bond charges every customer a fee.

However, there are several charities and government bodies who provide debt advice and management services for nothing. For example, the Consumer Credit Counselling Service and National Debtline are registered charities that provides free, impartial advice to people struggling to repay debts.

Citizens Advice, which also provides free independent advice, has raised concerns with the Office of Fair Trading (OFT) about a number of bad practices used by some commercial debt management firms. These include persistent cold-calling of consumers and taking unauthorised upfront fees.

A CCCS spokesman explained that if people have the ability to repay their debts, instant write-offs are not something they would advise.

Debt advisers put those who can pay their bills onto a debt management plan. They will negotiate with your creditors to make repayments more manageable - interest and other charges are often frozen while you get on a better financial footing. Then you make one monthly payment to the organisation which distributes it among your creditors.

The important thing is that you don’t stick your head in the sand: If you’re in financial trouble, it’s crucial to get professional, impartial help as quickly as possible.