What to do if you're struggling with debt

What To Do If You’re Struggling With Debt

Introduction

If you’re struggling with debt, you’re not alone. Thousands of people find it hard to cope with debt in the UK each year.

With high monthly repayments, debt can quickly spiral out of control if not managed properly. Not many people intend to get into debt, but you may have lost control over your spending or repayments. Or perhaps circumstances in your life have changed unexpectedly, leaving you with large debts.

Table of contents:

    What Is Debt?

    Debt can build up in several ways. In fact, it’s a very common problem. If you buy something on credit, or take out a loan, you are creating debt. For example, if you buy a sofa on a credit card, you will need to pay for the full amount and any interest charges and fees because you bought it on credit. Hence, if you can’t pay off the debt from the item you bought, you will start building up debt and the interest will get higher and higher.

    Debts can also come from other consumer goods, including your mortgage, utility bills, car payments, or even your education such as a student loan.

    Did you know that over half of the UK population has some form of debt? Many people struggle to repay credit cards, loans and overdrafts, so don’t think that it’s just you.

    Which debts should I pay first?

    Once you admit that you’re struggling with debt, the first thing you need to do is work out which debts to prioritise. The only way to free yourself from the burden of debt is by paying off what you owe, and this will take time and commitment.

    One way to work this out is to use a debt management company. These companies can offer advice on how much you owe, and help you make a plan for repayment, such as an individual voluntary arrangement (IVA) or even bankruptcy in some cases. A debt management company can also negotiate lower repayments with your creditors on your behalf.

    Be aware that the debt management company you’re working with will take a cut of any payments you make to them, so always check how much this is likely to cost you before signing up.

    How Do People Struggle With Debt?

    It’s easy to struggle with debt without even realising. For example, you may be about to buy your weekly food shop, but your credit card has no more money on it, so you have to stop.

    Or perhaps you can’t pay the electricity bill this month and you get warnings that you might get cut off.

    Sometimes you simply don’t realise how much money you owe on that student loan, or how much interest is building up on having several credit cards.

    However, there are often times when people make irresponsible borrowing and spending decisions. If you know that your credit card is maxed out, it’s unwise to get another one for example.

    The Financial Implications of Struggling With Debt

    You may struggle with the high monthly repayments which build up with debt. At first, you may have been able to manage your repayments, but if you miss a few, they start to get bigger.

    The implications of this mean you need to live off an even tighter budget in order to pay off your debts. Hence you may not be able to afford things you enjoy doing.

    Furthermore, if you miss payments, your credit rating can be affected. Which means that you’ll find it difficult to get credit at the best rates, especially in comparison with people who have an excellent credit history.

    Moreover, a poor credit rating can make debts even harder to repay.

    If you’ve got to the point where you are moving from creditor to creditor and you’re even struggling to apply for debt management plans, then you need some extra help.

    Ultimately, struggling with debt can develop into a serious problem of its own. If you are having difficulty with multiple loans and bills, it may seem that you don’t have many options available.

    But you can seek professional help.

    Struggling With Debt – How You Can Get Help

    If you’re struggling to cope with debt, then there are several options open to you.

    1. Speak to your creditors as soon as possible. They may help you to sort out repayment plans or reduce your interest rates.
    2. Start a debt management agreement. This is where the repayments are paid directly from your bank account every month, rather than you paying off each creditor by yourself. This agreement is usually set up for a certain period, and you will need to pay an administration fee.
    3. Do some research on the options available to you, including bankruptcy. Consider the risks and the costs for each decision.
    4. Speak to someone who can offer free advice first, such as Citizens Advice Bureau or StepChange Debt Charity. They may offer useful help.
    5. If it’s all too overwhelming for you and debt is having a negative impact on your life, don’t think you are alone. You can speak to the Samaritans for free from any phone on 116 123. Or call the National Debt helpline free from any phone on 0808 808 4000.

    Finding A Way Out Of Debt

    Dealing with debt doesn’t have to take over your life. Debt problems can be managed with the right support. Getting your debt under control is the first step and speaking to someone who can help you. Controlling your spending and paying off your current debts will help you to regain some financial stability and break the cycle of increasing debt.

    If you are experiencing stress and anxiety due to spiralling debts, it’s time to deal with it.

    Remember this; your debt situation is not permanent, and with some advice and support you can get out of it. Start taking small steps to manage your debts one at a time. Speak to an expert and consider all the options available to you to consolidate your debts and get rid of them once and for all.

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