Debt Awareness Week: Seeking debt advice

Getting advice is an essential step in understanding and controlling debt, and can put your mind at ease. During Debt Awareness Week, three experts highlight the importance of early intervention and how to take the first steps to a better financial situation.

Now, more than ever before, it is important to be aware of the advice and support available if you are in debt or have worries about your finances. As unemployment rises and the furlough scheme comes to an end, many people will experience financial difficulties for the first time.

“Now more than ever we are seeing some of the things that ring alarm bells for us around people needing debt advice more,” highlights Craig Simmons, head of debt advice policy and strategy at the Money and Pensions Service.

“Before the pandemic more than five million people registered as missing bill payments, now we expect that to grow more than 50 per cent in the next year to 18 months.”

Importance

There are many factors that can contribute to problem debt, but without seeking advice this can go on to affect all aspects of daily life.

“You find with people in debt that they don’t concentrate at work as much as other people, there’s an impact on their home life, taking that step not just helps your finances but your broader life as well,” stresses Craig.

Reduction in income, job loss and increased costs due to spending more time caring for loved ones are all contributing factors which can lead to overwhelming worries about money.

Andy Shaw is a debt advice coordinator at StepChange, the UK’s leading debt charity, he says: “Many people have experienced a reduction in incomes and the results are increasing numbers of people in problem debt.

“People were able to defer payments on mortgages and credit cards and so on and not worry about it for a few months, but of course, once that support started to lessen later in the year that’s when we started to see an increase in demand.”

Early intervention

If you have concerns around your finances, it is helpful to remember that you are not alone, but seeking support early is key.

“Being in debt and worrying about finances can be a lonely feeling,” stresses Dennis Hussey, a money adviser at National Debtline. “Knowing that there is help out there and you are not on your own can make a huge difference.

“You won’t be the only person in this boat. Whether you’re already in debt or perhaps just concerned about the prospect of debt, it is always worthwhile seeking advice.”

When you reach out for support, a debt adviser will look at your finances, income, expenses and debts before talking to you about building a sustainable way forward. You don’t have to be in debt to seek this support: if you are concerned about your finances, job loss or are unable to work you can speak to an adviser to voice your concerns.

Budget

Often, the first step when you seek support is creating a budget and deciding what amount you can afford to pay to your creditors.

“I can’t stress the importance of making a budget enough because it can be difficult to see where to start when hitting hard times and actually having a list of your income expenditure and what your debt is can be helpful to get a sense of where you are and what your next steps might be,” offers Craig.

Starting a budget might feel overwhelming, but you don’t have to do it alone. If you can’t or don’t want to speak to someone over the phone, you can access tools online like the Money Advice Service’s Money Navigator Tool.

This personalised online tool will take your unique circumstances into account before giving recommendations on how to budget.

As the furlough scheme ends at the end of April, a new scheme will be launched in May to help people deal with problem debt. Breathing Space gives people 60 days to work with a debt adviser and create a plan while creditors cannot add interest or other charges to existing debt.

Next steps

Taking the first steps to seeking debt advice can be scary and speaking to someone close to you can be reassuring.

The organisations you owe money to, along with those helping you with debt advice, have to make reasonable adjustments if you disclose your disability.

“When it comes to things like putting a budget together, it includes being mindful of things like extra costs,” explains Andy. “It is also the case that the organisation that you owe money to will have its own policy and procedures and specific additional steps they can take to help people in that situation.

“The overriding advice is to be up front and let people know and they do have obligations to try and help you with that.”

Debt advice organisations will also try to be as accessible as possible during this process and can liaise with a third party if you are more comfortable with this, Craig says: “You can normally see an adviser, you can call, we can do text, webchat: there’s a huge range of options for us to get debt advice to people, you don’t just have to do it on the phone or in person.

“Many times, people get advice and confirm they are happy for a friend or family member or carer to speak on their behalf, once confirmed with the debt adviser they will be happy to confer with a third party and offer advice.”

Regardless of the financial situation you find yourself in, it is important to know there is free and impartial support available when you need it. Remember you are not alone in this journey and seeking advice early will put your mind at ease.

If you are seeking financial advice, speak to the Money Advice Service, StepChange or call the National Debtline on 0808 808 4000.

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