
How Can I Get Help With Debt In Scotland?
Getting help with debt in Scotland The help available for those struggling with debt in…
There is personal debt and then there is household debt. Personal debt is the money you owe creditors yourself, therefore no-one else is responsible for paying this off. Whereas household debt is different. But what is household debt, who is responsible and how can you reduce it?
Simply put, household debt is the combined debt of all members of your household. In the UK, this includes consumer debt and mortgages as well as car loans, student loans and credit cards.
In the UK, The Money Charity provides information, advice and guidance to people of all ages, helping them to manage their money well. They also compile debt statistics and here is the latest information;
So you can see from these statistics that household debt is rising and this can have knock on affects for anyone.
This can be a complex question. For example, if you live with other people then you are each individually responsible for your own debt. Every person has their own credit score which is an overview of your finances. Hence if you build up debt in your own name, then your partner cannot pay it off for you, nor are they responsible for your debt.
However, if you have taken out a joint mortgage under both names, then you are both equally responsible for the debt. This is the same for a car loan or any loan taken out under joint names. If you cannot pay it off, then the other person is equally responsible for making repayments on what they owe and this will affect both of you.
Household debt is measured in different ways and what you see can depend on what country you live in. For example, in the UK, it’s high because it includes ‘mortgage secured loans’. This also includes what is known as ‘equity loans’ which is what you owe if you took out a loan against your house. Whereas, in the US, household debt is defined as what individuals personally owe which can include what they owe their landlord.
Perhaps you’re not sure how much you currently owe. It’s a good idea to keep track. You can do this by checking your credit score for free every 12 months through one of three credit agencies in the UK. Go to Equifax, Experian or TransUnion for this. Now you have the information to see how much you owe and if you need extra help with your repaying your debt.
Before your debt does get out of control, here are some of the signs to look for;
If any of these apply to you, it’s time to seek some help or support with your debt.
When it comes to your family, it’s important to stay in control of household debt because missing repayments can lead to difficult situations. For example, you could face bankruptcy which can lead to some of your valuable possessions being sold in order to pay off your debt. Or you could even lose your home if you can’t keep up with your mortgage repayments.
With a wider outlook in terms of the UK, there is a direct link between an increase in household debt and the financial recession of 2007-2012. This is because when one household in the economy is in trouble, it affects other households. Although access to credit is vital to individuals and businesses, too much easy credit can lead to a crash similar to the 2008 credit crunch.
So if you want to reduce your household debt, what steps should you take? The first thing to do is to create a budget. Here are some other ideas;
Finally, household debt is not all bad. It plays a vital role in our day to day lives. For example, families need to borrow money to get a home. Individuals need to borrow money for a car to get to work. Consumers borrow credit to pay for items which help businesses to grow. Furthermore, it helps to drive the economy in the UK creating business and work opportunities.
However, if the debt becomes too much for your household, then there’s a chance you could be putting your home or possessions at risk. If you are struggling to regain control, then talk to a specialist debt adviser as soon as possible.
Getting help with debt in Scotland The help available for those struggling with debt in…