BBC News Online asks the experts how Joanna Kelly, a financially-challenged graduate, should tackle her �14,000 debt problem.

Joanna Kelly, 25, from County Londonderry in Northern Ireland, left university with a mountain of debt and her bank breathing down her neck.

Joanna Kelly in debt

Having graduated in July with a 2:1 in European Studies from Liverpool Hope University College, she now owes the Student Loan Company more than �12,000.

Coming from a low income family, she received a grant. But taking out a full student loan was a given.

"Without the loans I wouldn't have been able to go to university, full stop." she says.

See what advice two debt experts have for Joanna Kelly:

The debt spiral

Joanna knew that going to university would stretch her finances, so she worked when her studies allowed and rarely went out for a night on the town.

But she didn't bargain for her finances taking a sudden turn for the worse in her final year.

I didn't count on such a tremendous struggle straight after graduating

Joanna Kelly

While studying in France for a term, Joanna's branch of Natwest bank failed to allow her to access funds in her current account.

As a result, Joanna turned to her credit card which she had only used sparingly until that point.

But the delay in being able to access the funds in her current account meant she got heavily into the red: "It was either use the card or starve", she said.

And her debts rose to �1,700 - �200 over the agreed credit limit.

'Shabby treatment'

On returning to the UK, Joanna's bank hit her with a �100 in charges and asked her to pay �30 a month to bring the balance down to the agreed credit limit.

Aggrieved at what she describes as "shabby treatment", Joanna stopped the repayments when realising that she was doing little more than paying off the interest.

"It seemed like a complete waste of time. I asked if I could halt the repayments and save up to pay off a large chunk of the debt but my bank refused."

Overdraft suddenly slashed

Then things got worse: one month before graduation her bank reduced her current account overdraft limit from �1,500 to �1,000.

She was told to apply for a graduate loan to pick up the slack but a credit check revealed the card debt and she was refused.

"It seems unfair that the banks decided to slash my overdraft limit at a time when there was no-way I could repay. I was plunged further into the debt spiral," she said.

Struggle after graduating

Now, Joanna is afraid she will not be able to afford to take up a new job as a language assistant in France.

"I didn't count on such a tremendous struggle straight after graduating. Unfortunately, there was no help as to how to cope with the debt burden."

A spokesman from Natwest said: "We feel we have been fair to Joanna. However, we understand leaving university so much in debt can be daunting and we are happy to work out a repayment plan with her."

Francis Klonoswki, independent financial adviser, replies

All in all, I believe Joanna has shown considerable financial restraint while at university.

And her total indebtedness when entering the world of work is not as great as many students.

Francis Klonowski

It's a pity, therefore, that Joanna's bank has decided to get tough and refuse her a graduate loan - particularly as they ought to be aware of the circumstances surrounding her overspending in France.

Despite that, Joanna is best off working with her bank to find a solution.

She needs to explain thoroughly the job she has lined up in Lyon and ask how they can help her and keep her custom for when she starts earning .

The fact that her bank refused her a loan doesn't mean all lenders will turn her away

Francis Klonowski

In tandem with this, Joanna should explain the situation to her prospective employers to see if they can help with accommodation in France.

Look elsewhere

If that fails, the fact that her bank refused her a loan doesn't mean that all lenders will turn her away.

Joanna should write to the credit rating agencies Equifax and Experian, enclosing a cheque for �2 and SAE to both, asking for a copy of her credit report.

If the credit card debt features, Joanna is entitled to enter her version of events into the report which should help when it comes to applying for loans in the future.

Work off debts

However, Joanna should be wary of lenders that target people with poor credit histories, as they often charge high rates of interest.

In the final analysis, it may seem unpalatable but if Joanna can't sort out things with her bank - or get another high street bank to step into the breach - she may have to postpone taking the job in France and work off her debts from home.

Sophie Brookes of National Debtline replies

Unfortunately, Joanna's situation is typical of many graduates today - even though she tried to manage her finances carefully.

National Debtline

Credit cards can be an expensive way of borrowing if you are unable to clear the balance every month.

Joanna's frustration that the payment recommended by her bank barely covers the interest charged on the money owed is understandable.

She needs to show a willingness to repay her debts, while making it clear that she needs money

Sophie Brooks

However, simply ceasing the repayment was not a good idea - as it was taken as an act of bad faith by the bank.

Recalled

As for the authorised bank overdraft, these are widely seen as an inexpensive, hassle-free way for a student to borrow.

On the other hand - as Joanna has found to her cost - a bank can recall the facility at any time. Having said that, it's unusual for a bank to do so.

Duty-bound

Where now? Joanna needs to go to see her loan manager at her bank - under the Banking Code they are duty bound to look at cases of financial difficulty sympathetically and positively.

In any meeting with her bank, Joanna needs to show a willingness to repay her debts, while making it clear that she needs money in order to take up the position in France.

But if Joanna finds that her current bank sticks to its guns then she should approach another bank, explain her situation and why she needs a graduation loan.

Card transfer

What is more, Joanna should look to transfer her credit card debt to a new card provider.

The credit card market is very competitive with many providers offering low introductory rates for six months or longer.

If Joanna is able to transfer she may find the repayments she makes are no longer swallowed by interest payments.

However, if she gets a new card, Joanna has to be disciplined and not use it.

Disclaimer

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