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Last Updated: Tuesday, 4 October 2005, 10:15 GMT 11:15 UK
28 years old and bankrupt
Credit card
Liz never viewed credit cards as "hard cash"

Household debt has broken through the 1 trillion barrier. Six years after applying for her first credit card, "Liz" is now bankrupt. Here she tells her story to BBC News.

It is six years since I applied for my first credit card. I am now 28 years old and bankrupt.

My debt started when I moved out of home at the age of 22. I'd never had the opportunity to get credit before, as my parents had a bad credit history and that prevented me from getting credit while I lived in their house.

I always swore blindly that I would not apply for a credit card. Having seen the trouble that my Dad had gone through with his finances and the warnings I had strongly received from him I was positive that I would never apply for a credit card.

Slippery slope

A short time after I left home I decided that I would like to pursue an A level and decided I would need a computer to type up my essays. I took out a loan for 800 to buy a computer and printer.

I decided that I would like to celebrate the turn of the century by going to Egypt and spending it on the banks of the river Nile.

I was afraid to open the post as I knew it would be another bill

I booked the holiday in the first quarter of 1999. However, it became apparent later in the year that I was going to have trouble raising money to pay the balance of the holiday. I became quite desperate to raise the money and thought my only option was to apply for a loan or credit card.

I was granted a loan which I used to pay for the holiday and to cover my spending money.

I also got a credit card, and decided I would take it on holiday with me - but only for emergencies.

Holiday frenzy

It all fell down from there really. I soon discovered the benefits of "plastic money" and was again off on another holiday, this time to eastern Europe.

Before I knew it I had accrued nearly 3,000 in debt over a space of just over a year.

I often wonder if there is such a thing as a 'debt personality'

It was time to get another card, I opened another one - once again in case of "emergencies".

However, I found I quickly slipped into the pattern of buying on plastic and not thinking of the consequences.

I was burying my head in the sand. Before long I had a handful of credit cards and was afraid to open the post as I knew it would be another bill.

I tried to close some credit cards by transferring balances and taking advantage of six-month balance transfer offers - but I found it hard to juggle the debts.

Easy credit

Although I knew I was in debt I found it extremely hard to stop spending.

Yet again I found myself in a shop paying with plastic and the debt started increasing again.

I guess I never treated the credit card as hard cash and therefore I found it easier to justify and carry on spending.

I often wonder if there is such a thing as a "debt personality" and if so do I have one? In my parents' time if you didn't have the money you went without.

So much has changed in the modern world whereby if you can't afford it you put it on the credit card and pay it back monthly - a concept only developed in the last decade or so.

When my debt got out of hand on my credit cards and I was having trouble sleeping I decided I needed to do something about the situation.

I was now 20,000 in debt and sinking. I thought the best thing to do would be to cut up the credit cards and apply for a loan to consolidate my debts.

National Debtline: A free, confidential and independent service funded by the Department of Trade and Industry and the credit industry. Tel: 0808 808 4000
Business Debtline: Provides a free telephone debt counselling service for self-employed and small businesses, funded by banks. Tel: 0800 197 6026
Consumer Credit Counselling Service: Funded entirely by the credit industry, the service offers advice to people in debt. Tel: 0800 138 1111
Citizens Advice: Offers free, independent and confidential advice from more than 700 locations throughout the UK. Tel: 0207 833 2181

This worked for a while until I got myself another credit card.

What I don't understand about the credit card companies is that they are happy to lend money to people without finding out whether they can afford to pay it back.

Again, before I knew it my debt was creeping up again and then in the Autumn of last year, I was made redundant from my job as a PA.

A short while after this I approached a debt management company who advised me that they would be able to take over the debts for me with a small monthly charge each month.

In turn they would negotiate with the creditors and arrange for interest payments to be frozen and arrange reduced monthly payments, all for a fee.

I thought by going through one of these debt management companies it would help solve my problems but it just made them worse in the long term.

It took the debt management company about six months to negotiate with all the creditors. However, in the interim, I had still been paying payment protection on some accounts.

And, I was still accruing charges such as fees and interest, despite the fact that I was paying a firm to sort out my debt.

Although I was making smaller payments each month I was owing more money as each month went by and it was going to be about ten years before I could pay off the full amount of the debt.

There were a couple of credit cards and store cards which I had, stupidly, not put on the debt management plan and I started using these again and before I knew it my situation had blown out of control.

I wasn't getting the work that I was used to in the past. The secretarial market was quiet, I had bills coming in but very little money to clear them.

I now realised that I had no way of keeping up my payments to my creditors and the debt management companies. I started thinking of the dreaded option of "bankruptcy".

I didn't know what else I could do.

Through my research I found that my only course of action in the end was to put in a petition for my own bankruptcy.

Bankruptcy in my case was not as bad an option as it might be for others, simply because I have no assets. I live in rented property and do not even own a car.

Although many people are able to control their spending, many people bury their heads in the sand like me - and don't actually admit they have a problem until it is too late.

For me, it was 38,000 too late.

Liz is a cover name to protect the writer's identity. If you are struggling to cope with debt, there are a number of free advice services that can help you and offer you emotional support (see factbox in text).

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