If you fall into debt, you mustn’t ignore it. Sticking your head in the sand can lead to more severe consequences. To help, Mirror Money has detailed three steps you must take if you are unable to make a debt repayment
The number of Brits facing debts has skyrocketed and with the cost of living still high more Brits are expected to fall into it.
Debt is becoming a major issue in the UK with the amount of debt owed by Brits totalling 1.8billion at the end of May this year according to figures by the Money Charity. The types of debts Brits owe range from “priority” which include rent or mortgage, energy, council tax and court fines to “non-priority” which includes credit card and store card debts, payday loans, and overdrafts.
Debt can be hard to manage once you fall into it, and sometimes life can get in the way and you may not have the money to make a certain payment one month. If this happens to you, you mustn’t ignore it. Sticking your head in the sand can lead to more severe consequences.
Maxine McCreadie, personal finance expert at UK Debt Expert noted that it was not “uncommon” for Brits to struggle with debt repayments but noted that it was “crucial” that people “acted quickly”. She said: “It could be an unexpected car repair, a higher-than-expected energy bill, or simply the cost of school uniforms if you find yourself unable to make your next payment, it’s crucial to act quickly to regain control and prevent the situation from worsening.
To help those potentially struggling, Maxine has highlighted three steps you must take if you are unable to make a debt repayment
Assess your financial situation
Maxine says the first step you should take if you are about the miss a debt repayment its take an “honest and thorough” look at your income, essential expenses and debts and create a budget. She explained: “Creating a detailed budget will help you pinpoint why you can’t make the repayment and determine whether this is a temporary setback or a more persistent issue. Understanding your financial situation is the foundation for making informed decisions going forward.”
Amy Knight from Nerd Wallet UK backed this step noting that understanding your outgoings is key to achieving “financial fitness” and was “particularly important” for people who’ve fallen behind on debt repayments. She added: “Look back through your transactions over the last three months and categorise everything you’ve spent as either a ‘want’ or a ‘need’. Some mobile banking apps can help you do this quickly, but a simple spreadsheet or a pen-and-paper method also works.”
Amy noted that once you can see where your money is going, then you may be able to organise your finances to help you work on any “priority debts” you may have. Priority debts are the most important debts to tackle first as not paying could lead to serious consequences. These include losing your home, having your energy supply cut off, losing essential goods or going to prison if you don’t pay. Amy said reducing these debts could help make your situation “feel less scary”.
Contact your creditors
Maxine says it is vital you do not ignore your debts and you reach out to your creditors “as soon as possible”. Although it may be daunting, creditors are often willing to work with you if you “proactively explain your situation”. She said: “Open communication can lead to renegotiating payment plans, adjusting terms, or even temporary payment deferrals. This step is important in preventing further financial strain and potential damage to your credit score.”
Amy again agreed noting that it was “much easier for a company to help you through periods of financial difficulty if they understand your circumstances”. She noted that being open and honest can also help “take the edge off the overwhelm”. She added: “If you owe money to several providers, ask a trusted friend to help you write out a list and contact them one by one”.
Seek professional advice
Finally, Maxine says if managing your debts feels overwhelming, you should not hesitate to seek help. She explained: “Professional debt advice services, such as UK Debt Expert or the debt charity Stepchange, can offer free guidance tailored to your circumstances. Debt experts can provide advice on negotiating with creditors, exploring all debt solutions available, or considering consolidation options.
“Professional support can be instrumental in finding a sustainable solution and safeguarding your financial future. Taking these steps promptly can make a significant difference in managing debt and maintaining your financial well-being.”
If you’re experiencing problem debt or are feeling stressed about money, you don’t have to suffer in silence. The sooner you reach out for help and speak to someone about what you’re going through, the sooner you can get your finances back on track. Contact Stepchange.org for online debt advice 24 hours a day, 365 days a year, or call 0800 138 1111, Monday to Friday 8am to 8pm and Saturday 8am to 4pm.