How to Find Debt Help
Debt charities can offer free professional help, and you can try to work with creditors directly. Other options require closer examination.
To find the right solution to your debt problem, first you have to face up to it. It’s easy to bury your head in the sand and just throw bills and statements into a drawer unopened. Many people with debt don’t even know how much they currently owe.
But knowledge is power, so step one is to sit down with a cup of tea, take a deep breath and open all those statements.
Who may want to seek debt help
Find out all your outstanding balances and check what interest rate you are paying, tot up everything you owe and stare that number in the face. Now look at your income and outgoings to work out what you can realistically afford to repay each month.
This process will help you work out whether you are in a debt crisis and need a formal solution, or whether you can sort out the problem yourself with better money management.
Some people will find that a closer analysis of their spending will highlight areas where they can trim back and identify expenses (say, an unused gym membership) that can be cancelled. In these cases, writing a budget that prioritises essential bills and debt repayments may be enough to get back on track.
However, if you are in a position where this is not enough — for example, if you are needing to borrow to repay other debts, or struggling with bills like rent, mortgage or utilities — it makes sense to seek professional help from a free debt charity.
Alternatively, if you have debt problems but they are not yet unmanageable, you can approach creditors yourself to find an informal solution.
How to get debt help
Debt charities can offer free professional help. There are a number of them out there, including StepChange, National Debtline, Christians Against Poverty, Citizens Advice and Debt Advice Foundation.
Lots of companies will offer to deal with your creditors for you, but they can charge as much as 17% of your payments to organise a debt management plan for you that you could do yourself or with a debt charity for free.
>>MORE: Debt management plans
A debt consolidation loan takes your assorted debts and combines them into something you chip away at with one monthly payment. It can help to focus your efforts, but before you go this route it's important to compare the cost of your existing loans with a new single loan. While a consolidation loan might give you a lower interest rate, it might also extend the term of your debt and have you ending up repaying more over the long term.
You can approach your creditors directly and explain that you are struggling and need to reduce your payments. Present them with your budget and proposed repayment schedule, and ask them to freeze interest and charges to give you a chance to make a dent in your debt. Even if they don’t agree, you could start making your proposed payments anyway (even a token payment like £1 a month while you get back on your feet).
Be aware they could potentially take you to court, but a judge may look unfavourably on them not reaching a reasonable compromise with you when you are taking steps to deal with your debts. Just be wary about approaching your bank if you have debt with them but also a current or savings account. Something called ‘the right of offset' could allow them to take money from other accounts you hold with them to pay off debt, although this is rare.
Finally, you might tap others who have walked this path ahead of you. Maybe you have friends or family who've dealt with and overcome debt. You also can check out the number of online forums where people write about their situations; some post their household budgets for others to point out where they could save money and in which order they should tackle their debts. Be cautious here, though: While you may get some good advice, you could get misinformed too. Remember that you can get professional advice for free via debt charities.
Being in debt and feeling that you aren’t in control of your finances can be really stressful. But don’t suffer in silence — there is lots of help and support available to get you back on the path to financial freedom.
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Hannah is an award-winning journalist with a background in the trade press. She writes about finance, asset management and business for Shares, Citywire, FE Trustnet, and interactive investor. Read more