Problem debt

Dealing with problem debt

If you are struggling with problem debt, you are not alone. More than eight million people in the UK are reported to have financial difficulties. It can sometimes feel that there is no end in sight, but there are solutions.

The most important thing to remember is that you do not have to face this situation alone and there is help available. The longer you ignore your debts, the worse the situation becomes.

How do I start to gain back control?

Believe it or not, realising that you need to take action to resolve your debt situation, seeking help and talking about it can be the hardest step. Time and time again we receive feedback from clients who report that they feel so much better after that first contact and conversation with us.

Step one – create a list of everyone that you owe money to

Putting together a list of everyone that you owe money to should be the first step that you take. This list should include the outstanding balance and the contractual monthly payment.

Step two – highlight your priority debts

Priority debts are the most important debts that you need to pay. They are ones where serious action can be taken against you if you miss payments.

Priority debts may include:

  • Mortgage repayments
  • Secured loans
  • Rent
  • NI rates / council tax
  • Utility bills
  • Hire purchase agreements
  • Taxes
  • Court fines

Once you have detailed your priority debts and basic household living expenditure, you should be able to work out how much money you have left to deal with your non-priority debts.

Non-priority debts include things like:

  • Credit card and store card payments
  • Bank loans
  • Overdrafts
  • Catalogue repayments
  • Money you’ve borrowed from family or friends

You can’t ignore these, but you don’t need to deal with them as a first priority.

Step three – work out a personal budget

You need to work out a monthly budget to see what your income and expenses are.  A budget will help to decide what options are available to you. It will enable you to see if this something that you can manage yourself by reducing your non-priority spending; or is this something that you need specialist advice and guidance with?  A budget will help you decide what you can reasonably afford to repay your creditors, so it’s important to be realistic.

The Money Advice Service has a useful budget planner that can help you get started.

Step four – get independent advice

There are lots of options for dealing with debts. For example, arrangements you can make with your creditors or more formal ones that debt specialists can organise for you.

It’s important you get independent advice to help you find the best way to deal with your debts. Free and independent advice is available.  Organisations may offer advice in person or over the phone. You should choose an option that you feel most comfortable with. At Arthur Boyd and Company we offer face-to-face advice, zoom and telephone advice.

Step five – communication is key!

Make sure you deal with your priority creditors first.

Once you know what you can afford to repay, you can talk to your creditors about your situation and what you’re going to do about it. Believe it or not, creditors very often will want to help and may allow you some time to get back on track. In May 2021, the government backed an initiative known as ‘Breathing Space’. Breathing Space will give those facing financial difficulties space to receive debt advice, or mental health crisis treatment, without pressure from your creditors or mounting debts.

It is important that you are realistic about what you can afford to repay and don’t assume that you’ll be able to pay back more in the future. You should always follow up a phone call with an email or a letter confirming exactly what has been agreed.

You may have little or nothing left to offer your non-priority creditors, but you should still talk to them, explaining the situation.

Creditor contact is something that we can give you support with. We offer practicial and impartial advice you on how best to approach this.

Get in touch

If you are struggling with problem debt and want to know about the options available to you, get in touch to arrange a call from one of our specialist debt advisors.

We are here to make the road to debt recovery a little easier.


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