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How to deal with debt

On average, the Citizens Advice Bureaux in England deal with 1,960 debt issues every day. If you owe money, you are certainly not alone. In fact, it is estimated that every adult in the UK has unsecured debt of nearly £4,000.

When you owe money, it can be hard to see a way forward. Anxiety and worry cloud rational thought, and you can easily become overwhelmed.

You may feel as though your hands are tied, but it is possible to become debt-free, and youcan be in control, every step of the way. Here’s how:

 

1 – Make contact

Discuss your situation with your creditor. Be open and honest about your circumstances at all times. Reputable companies should listen to debtors who are struggling, especially if they are direct and truthful about their finances. Together, you should be able to discuss and agree upon a payment plan that works for you both.

Allowing correspondence to build up will weigh heavily on your conscience. So remember to respond to all communication from your creditors, whether this be via phone or email.

 

2 – Seek neutral support

If your debt is spiralling out of control, then help and advice is always available. As well as discussing the matter with your bank, there are a range of charities and organisations who are waiting to help you get your finances back on track. They can also offer advice on how to communicate with creditors effectively.

Before speaking to them, write down your debts and associated creditors. Where possible, try to have an understanding of the interest rates attached to each debt. It is also useful to have a copy of your wage slip or earnings, alongside any essential outgoings.

Discussing your finances with a neutral party will allow you to gain perspective, and feel empowered to make the right choices moving forward.

So for free financial advice and support, contact:

StepChange will work with you to create a free debt management plan (DMP).

The National Debtline will provide a telephone advice service, and they will help you to create a DMP.

PayPlan are independent providers of DMPs.

Shelter specialise in housing support, and provide advice online, over the phone or in person.

 

3 – Talk to your debt collector

If your debt is passed to a debt collection agency, try not to panic. This really is standard practice in the industry. Every day, thousands of people across the UK speak to debt collectors. It can feel daunting to receive post from an unfamiliar business, but try not to ignore their efforts to make contact. Debt collectors will want to engage with you, so once again, be honest about your situation. It is important to be realistic and understand what you can truly afford to pay back, and at what rate. If you are unable to pay in a single payment, collection agents can work with you to create realistic and affordable repayment plans.

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