The latest debt statistics show that the average household in the UK owes more than £54,000. When household budgets are squeezed by rising prices, more and more families are finding themselves “maxed-out”, and unable to cope with their level of debt. Before the 2008 crash, credit was easily-obtainable. Since then, as wages have fallen in real terms, and more and more people find themselves in part-time or insecure jobs, it can be all too easy to slip into debt. It may be tempting to ignore the problem, but it won’t go away without action on your part. The key thing is not to borrow any more, and get into further debt. It is best to seek advice, sooner rather than later. You need to:
• Work out how much money you owe
• Work out you monthly or weekly income
• Decide which debts are the most pressing
• Pay off these debts first
• If your debts are less pressing then consider making a voluntary arrangement, to pay off
debts at a rate you can manage
• Finally, if you are not in a position to pay off your debts, there are other options you can
Debts classed as priority because if their importance and the consequences of losing assets or the use of services include:
• Mortgage and rent arrears
• Electricity and gas bills
• TV licence arrears
Non priority debts include:
Whilst these debts are still important you have more flexibility in relation to the following:
• Money borrowed from family and friends
• Credit cards
• Student loans
• Water rates – your supply cannot be cut off for non-payment
A debt advisor can help you through the process of freeing yourself from debt. There are many sources of free, financial advice where you should not be asked to pay anything up front. Experienced debt advisors deal with a wide range of debt problems every day and know of all the latest debt solutions available. Your debt advisor will help you to work out a budget and prioritise your debts as well as advise you on the most appropriate debt solution that suits your own circumstances. This may include schemes that allow you to repay your debt at a more affordable rate but over a longer period of time such as a debt management plan.
If you don’t have the resources to pay your debts, your debt advisor may suggest some other options. These include options like a debt relief order, an IVA or as a last resort bankruptcy. There are advantages and disadvantages to these. If you decide to declare yourself bankrupt, you will be unable to apply for credit while the bankruptcy order is applicable, and you will be unable to work in certain professions in. However, once you have received your bankruptcy order, you will be free of debt, and can make a fresh start. Debt relief orders can be applied in certain circumstances, if your debts are less than £15,000, and you are on a low income. They are applicable for the period of 1 year.
Whatever your personal circumstances, your debt advisor will be able to help and give you guidance on what can often seem complex and baffling legalities. The important point to this is not to put off the process of starting to manage and take control of your debt.