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The reality of debt
Debt can be difficult to deal with and it can pile up easily.
When you’re in a stable financial situation it can make sense to take out loans for those essential items or buy what you need on finance. This can be a massive help in the short term which can help in a time of need or when those unexpected bills arise.
Using finance plans often isn’t a problem whilst you have the income to pay it back and can seem like a great short-term solution to getting something you need – like a car or to pay an unexpected bill. However, when your circ*mstances change, for example, if you get sick or become unemployed it can leave you struggling to make repayments.
But don’t worry there is help available and it is possible to deal with even the biggest of debts.
Facts and figures
Debt is more common than most people realise.
According to The Money Charity, the average total debt for each UK household in August 2021 was £62,706. This means that whilst some households will have little or no debt others may have significantly higher debts.
Clearly, if you are currently experiencing debt you are not alone.
There are many reasons why debts occur and it is never something to fear or be ashamed of. Government cuts in the UK, changes to benefits and disability payments, an unstable housing sector, and the roll-out of Universal Credit have had a significant impact on many people’s lives.
Borrowing has become the norm for most people, whether it’s to pay an energy bill or make rent payments debts can easily occur from just trying to get by.
What should you do?
If you have found yourself struggling with debts you might not know where to turn.
It is important not to ignore the problem, even if you have no money to pay back debts simply hoping the problem goes away won’t help the situation and might leave you in a worse position. Some debts are priorities, such as rent and mortgage payments and council tax. Failure to pay these can lead to the loss of your home or dealings with the courts. It is important to not leave your debts, so what should you do?
The first thing to do is not panic.Help and support are available for free from independent providers.
Please beware that some companies will offer to manage your debts but charge a fee for services. These are known as debt management companies and whilst they help you to consolidate your debts they take a fee out of the payment you make to them. This will leave you owing more, as the interest will continue to add on for a longer time. It also means that the time you spend paying off your debts will increase as you now have fees to pay on top of the original debt and any accrued interest. If you are willing to use these companies look into how much it will cost you first.
You can however get all the help and support you need for free as many charities can help guide you in becoming debt-free.
So where can you get help?
There are a few great options and it will depend on your circ*mstances and personal preference which one you choose. The places listed below are charities that can help you for free. They essentially do the same things as debt management companies but do not charge you for the pleasure of helping solve your debt. When you are in debt the last thing you want to do is add to the cost, using a free service is highly recommended.
These are UK-based charities, if you live abroad you will need to search for similar organisations that can help you.
Here is a list of the places that can help you deal with your debt.
Citizens Advice:
Citizens Advice provides free advice on a range of problems to anyone who needs it. The service is completely confidential and offers impartial advice. They are an independent service so you can rest assured that they are not linked with any business. Apart from offering advice they also do research in order to change the policies at government level which are affecting people’s lives.
The debt services they offer which can help you are:
- Free online information to explain different debt solutions such as debt management plans and debt relief orders. With so many technical terms it is great to have a resource which can explain the different options for dealing with your debt.
- Sample letters which you can use if you are contacting creditors yourself. The templates include a holding letter, which asks creditors to hold off taking payments. This is useful if you temporarily have no access to funds but will be able to make payments at a later date, for example if you are sick and currently receiving less money than usual but will be able to pay when back in work.
- Telephone advice, you can speak to an adviser and get debt support. Contact details for your area can be found on the website. They can give you initial advice and may refer you on to a specialist who can help you specifically with debts. This can include helping you create a financial statement, contacting creditors or applying for bankruptcy.
- You can search for your local Citizens Advice office if you prefer to see someone in person. Many local hubs can help assist you with digital applications for any benefits you may be entitled to.
- Digital advice is available for anyone unable to call in or visit a local office. You can chat to an advisor online through live chat, email or message through Facebook. This is great for those with limited time or if you need to contact Citizens Advice whilst at work. Dedicated debt specialists are available to answer your debt related queries so you know you are receiving practical, honest advice.
Step Change Debt Charity:
This is one of the UK’s leading debt specialists, helping hundreds of thousands of people each year.
They offer free advice and can help people arrange payment plans or set up a solution to enable you to become debt-free.
- Step Change is a great option if you are unable to phone for advice as they provide online advice. You simply fill in details of your debts and income and get tailored advice about your options.
- The website is filled with helpful guides and advice, you can even find budgeting tools to help you plan your finances.
- However, you can still call for advice. They ask you to fill in a budgeting form first which will speed up the process. There is also a free phone number which is great, you can call step change on 0800 138 1111. This advice line is open Monday to Friday 8am-8pm and Saturday 8am to 4pm.
- There are also other numbers you can call if you want more tailored advice. Check out the contact details here to find out specialists in areas such as setting up Debt Payment Plans.
The Money Charity
The Money Charity is a financial capability charity in the UK. They aim to help people gain control over their finances in order to help with debt, budgeting, and gaining the skills to improve their money management.
Whilst this is not a place you can call for advice they do offer many online resources which can help you when dealing with debt.
Available on the website:
- Money management guides and information on budgeting.
- Information on financial products, the best places to save etc
- Specialist debt information where to go for help
- What debts you should be paying off first, it can help to know what your priority should be.
The money charity is a great place to go for initial information and you can then get specialist advice.
Debt doesn’t need to be scary and it can be easily solved if you deal with it as soon as possible. Make sure to get help when you need it, look for free debt advice options, and don’t be afraid to speak to your creditors.
