It’s easy to think of debt as something that happens to other people – until some misfortune, or a spiralling cost-of-living crisis, means you find yourself under financial heat.
It’s easy, too, to avoid dealing with it for as long as it can be put off. Both the stress of and stigma surrounding debt can stop people speaking up for help.
But if there’s one tip debt experts could give everyone, it’s this: act now.
Organisations such as StepChange report that people will often wait for up to a year after getting into money difficulties before they try to seek support.
There’s no shame in needing help. Getting into debt is no moral failure, whether you have struggled as daily costs soared or you fell into difficulty driven by other factors.
And you’re not alone if you’re wondering: where on earth do I start? Keep this no-frills, no-nonsense guide on hand for when you’re ready to take those first steps towards getting out of debt – ideally sooner rather than later.
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Collect information about your outgoings and your debt
If you have been overwhelmed by problem debt, you might have lost track of all the details. Before you do anything else, check all of your debts and write down the details in one place. That should include who you owe debt to, how much, and which need to be paid off first.
(Those priority debts include: rent arrears; mortgage or secured loan arrears; council tax arrears; gas or electricity bills; phone or internet bills; TV licence payments; court fines; overpaid tax credits; payments for goods bought on hire purchase or conditional sale; unpaid income tax; national insurance or VAT, or unpaid child maintenance. Speak to Citizens Advice if you need help prioritising among these.)
Having this information, plus details of your income and other outgoings/home budget, will make the process of negotiating with creditors or support services much easier.
Remember: Take interest rates into account when collecting this information, including interest on debt which might not yet have kicked in.
Speak to your creditors
Dealing with debt doesn’t have to be a complicated process. You should contact whichever companies or institutions you are in debt to first because they have an obligation to support you. That might mean lowered monthly payments or putting you in touch with a specialist team if you are disabled or vulnerable.
It could also stop things getting worse, if you are concerned about not being able to cover your bills for the months to come.
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Remember: some of your creditors’ suggestions could affect your credit score, so make sure you’re clear on the ramifications of the plan you’re agreeing to.
Try to increase your income…
In the current climate, it’s tempting to scoff at the suggestion of bumping up your income or simply spending less. But creditors and advice organisations will want to know if you have covered these bases, so it’s worth checking out your options – and you might be surprised by what you’re entitled to.
Start with an online benefits calculator to check you’re not missing out on cash support from the government. You should also research what grants and support funds are run by your local authority.
Find out if you qualify for help through new government schemes online.
To cut spending, make sure you’re not paying too much council tax. You can search for discounts, and their eligibility criteria, online.
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Check your outgoings in case you could switch to something cheaper, like low-cost broadband or a different phone deal. It’s not a great time to switch energy supplier, but you might be entitled to grants or discounts to pay your bills. Citizens Advice can help with this too. Or try making your home more energy efficient via an energy grant from the government.
If you have children in school, be careful not to miss out on free school meals if your family is eligible. You might also get free transport and help paying for uniforms.
No one expects you to manage it all alone. These organisations want to hear from you and help you come up with a plan personalised to your circumstances.
StepChange: provides confidential and free expert advice on debt, as well as tips on budgeting, financial advice, and ways to prioritise your debts. StepChange has helped its clients repay £4bn and has helped over five million people since 1993.
Money Advice Trust: operates a confidential national debtline which is available over the phone or via webchat. Its business debtline can help you if you’re a small business owner or self-employed.
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Mental Health & Money Advice: provides practical tips to lessen the strain of the financial crisis and maintain your mental wellbeing.
Citizens Advice: provides help to deal with problem debt, to avoid losing your home and to get back on top of your finances.
MoneyHelper: offers guidance to help you through the often-stressful situation of talking to a creditor about money you owe them, how to navigate credit and Buy Now Pay Later agreements, and other money concerns.
Your finances are no one else’s business, but simply speaking out about the pressure you’re under could help you feel more in control – and less alone.
There are online communities of people in similar situations, from MoneySavingExpert forums to Facebook communities for people facing debt challenges to offer each other support and solidarity.
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Remember: Problem debt can be a huge contributor to mental health difficulties, and just taking action can relieve some pressure. But if you need some additional support, contact Samaritans or your GP for help.
This Christmas, 3.8 million people across the UK will be facing extreme poverty. Thousands of those struggling will turn to selling the Big Issue as a vital source of income - they need your support to earn and lift themselves out of poverty.
