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Many of us may have misconceptions about how debt advice works that could stop us from getting the help we need now or in the future.
Unless you’ve contacted a debt charity before, chances are you may not know much about them. But understanding how debt advice works could mean you feel more comfortable asking for help when you need it.
Debt is a growing problem, with a fifth of adults borrowing more money compared with a year ago and fewer expecting to save in 2023, according to data from the Office for National Statistics (ONS). And with the Bank of England forecasting that average real earnings will fall in this financial year, debts could become tougher to repay for many.
Plus, higher inflation means that those on benefits are receiving less money in real terms and will continue to do so until at least April 2025, according to findings from the Institute for Fiscal Studies.
However daunting it may seem, it’s better to reach out as soon as possible rather than try to cope with your money worries on your own.
Louis Zarins-Brown, director of operations at Money Buddies, a Leeds-based debt advice and financial capability service, says: “The average time between someone realising they have a problem with debts and getting help is about 12 months, so that’s a whole year of worry, stress and usually lack of sleep before people seek help.
“We find a big cause for putting this off is often embarrassment or shame that they have not been able to resolve the issue themselves, or that they have fallen into debt in the first place.”
A recent NerdWallet study reveals some of the myths stopping people from asking for debt help.
Myth 1: You have to pay for debt advice
You don’t need to pay for debt advice. But one in three (32%) of the 2,000 adults polled online in April said they wouldn’t ask for debt help because they didn’t want to pay for it.
There are many charities that can give you free advice and practical help when it comes to budgeting and managing your money and debts. They can also set up a debt solution, such as a debt management plan (DMP) or an individual voluntary arrangement (IVA), but only if they believe it is appropriate and the best option for you.
Myth 2: You need large amounts of debt to qualify for help
In our survey, one in four (24%) respondents said they wouldn’t ask for help because they didn’t think their situation was serious enough.
But you don’t need to be in thousands of pounds of debt to contact a debt charity for advice.
Greg Jenkinson, a debt adviser at debt charity StepChange, says: “If you’ve been worrying about money, that’s usually a sign that you need some help. Debt advice charities can help review your budget and see if a few small changes can make those payments less difficult.”
He continues: “Even if someone doesn’t need a managed debt solution, having an early conversation can prevent things from spiralling out of control.”
He recommends that you get advice as soon as possible, highlighting that last year 92% of clients at StepChange said they wished they had sorted their debt sooner.
Myth 3: Your credit score will be affected
One in five (19%) people surveyed said they wouldn’t get debt help because of the potential impact on their credit score.
But contacting a debt charity won’t have any effect on your credit history. Anyone looking at your credit file won’t be able to see that you’ve asked for help, so this should never be a reason to avoid getting professional advice.
Your credit score will only be affected if you take certain actions to tackle your debt, such as setting up a DMP.
Myth 4: You can only get help by phone
Our survey found that 26% of 18- to 24-year-olds and 27% of 25- to 34-year-olds wouldn’t ask for debt help because they don’t want to speak on the phone. But there are other ways you can get advice.
If you prefer to speak to an adviser face to face, Citizens Advice is a charity that has centres across Great Britain. If you need debt help and live in Northern Ireland, NI Advice can offer advice by phone or email, as well as offering debt services in your local area.
There may also be local organisations in your area that offer advice in person, such as Money Buddies in Leeds, West View Advice and Resource Centre (WVARC) in Hartlepool and Spitfire Services in Birmingham.
Many debt charities also allow you to get full advice online, whether that’s talking to a trained adviser via live chat or contacting debt organisations via email or an online form and getting tailored guidance on what you can do next.
Myth 5: It’s not confidential
Almost one in five (19%) of the people we surveyed wouldn’t ask for debt help because of concerns about confidentiality.
But all debt charities are entirely confidential. Anything you discuss won’t be shared with your creditors, employer or other third parties, except on a need-to-know basis and only with your permission.
For example, your creditors will know you’ve contacted a debt charity if your adviser contacts them on your behalf to set up a debt solution.
Where to get help
If you’re worried about your finances, you should reach out for help as soon as possible.
Jenkinson says: “There is no shame in seeking help – talking about debts and facing those concerns regarding money can be the first step towards a brighter, more positive financial future. Ignoring the problem will not make it go away, so no matter how intimidating it may seem, it’s always better to address debt sooner rather than later.”
There are a number of debt charities that you can contact, including:
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