Debt advice blog

At Debt Support Trust, our advice team know all too well that debt happens for a variety of reasons and that’s what’s important is getting the correct advice and a plan in place to once again be debt free. The plan could be to negotiate with creditors, which we can help with, or a solution whereby you repay what you can reasonably afford each month. There are positives and negatives to every debt solution, but if you’re finding that debt is continuing to grow, and the situation isn’t getting easier or better, then speaking to someone can often be helpful.

Debt Support Trust’s charity money advisers are available on 0800 085 0226.

Debt Problems Are Uncontrollable

Society tells us that credit is good, but debt is bad. In truth, they are the same thing. Your credit score reflects how creditworthy you are, so when you apply for finance for a car or perhaps are applying for a mortgage, you want a good credit score so you’re accepted and can get the best rate of interest. Ultimately, to improve your credit score you need to borrow money and repay the contractual amounts on time.
Debt problems occur when contractual credit agreements are no longer manageable. The reasons debt situations can arise vary, but often it’s linked to loss of income, separation or divorce, an over-reliance on credit or an increased cost of living. For instance, a £400 per month repayment to debts could be affordable, however there’s a loss of income then it can be very difficult to make the payments. For other people it may be that the debt was manageable with interest free periods, however when these ended the monthly payments increased and became unaffordable. When a debt problem continues to grow and the amount owed isn’t getting better then the best advice is to ask for professional debt advice.

Talking about debt and money worries can help. When we speak to people struggling to manage debt, they often explain that they didn’t mean for the situation to get out of control and that if they could go back they would do things differently.

Seeking Debt Advice

Making the first phone call is always the hardest, but we aim to make it as friendly and supportive as possible. Our objective is to ensure you have every available option to consider and more importantly someone who will listen, understand and offer useful advice.

If you would like to speak to a debt adviser you can call 0800 085 0226 or send us an email (contact@debtsupporttrust.org.uk) with your name and telephone number and we’ll arrange to contact you back. We’re happy to give advice over the telephone or via email.

Recent statistics have confirmed that the UK Inflation rate has fallen to its lowest level for 2 years. Low inflation suggests the cost of living is lower for the things we buy. Statistics show that employment has risen too.

So, what does this all mean? Well, it suggests that more people are in employment and the cost of living has become more affordable so more people may feel we have extra money in our pockets.

The Office for National Statistics revealed the drop was largely due to energy bills and fuel falling.

Mike Hardie, ONS head of inflation, said: “The fall in inflation is due mainly to cheaper gas, electricity and petrol, partly offset by rising ferry ticket prices and air fares falling more slowly than this time last year.”

If you have debt worries, then it could be the best time to seek debt advice. You can speak to a debt advisor at Debt Support Trust on 0800 085 0226.

Unemployment Rate Falls To 2.5%

The unemployment rate fell to 4.0% – a joint 43 year low – with 32.53 million people in work across the UK.

As inflation falls and employment rises it should, at least in theory, help people struggling to afford their month to month living costs. However, for many people a small cost saving may not be enough to pay the essential bills and also contractual debt obligations. If you feel your monthly repayments to debts are too difficult and you don’t have enough money for essential living costs each month, then why not have a confidential conversation with our debt advisors?

Our debt advice team assess your income, expenditure, assets and liabilities alongside your debts. We can then make recommendations on how to improve your finances. We can recommend adjustments where your expenditure is too large or alternatively suggest a debt solution. If we recommend a debt solution we will explore all options and consider the pros and cons of each route forward.

Insolvency Rates Rising

At the end of last month it was revealed personal insolvency figures in England and Wales rose to a 7 year high of 115,229, a 16.2% rise from 2017. Insolvency debt solutions, such as bankruptcy and IVA’s both rose during 2018, however there was a much greater increase in people entering the latter.

There was a 9.8% rise in the number of people entering bankruptcy, however there was a 19.9% rise in those entering an IVA.

An IVA allows people struggling with their debts to repay an affordable contribution each month towards their debt, typically for 5 years. There are other solutions available too, such as a Protected Trust Deed or DAS in Scotland or a debt management plan. To determine the correct solutions we look at a person’s financial and personal situation, before explaining the relevant solutions in detail.

Get Debt Help

If you’re struggling with debt and find making your monthly contractual payments to your debts difficult, then you can get confidential and supportive advice from Debt Support Trust. You are under no obligation to proceed with our advice, but sometimes just sharing your concerns and worries can help.

You can speak to a friendly adviser at Debt Support Trust on 0800 085 0226 or complete our online debt test for a suggested answer to your debts.

Your credit report summarises your financial position and is used by lenders to check your rating to determine if they are willing to lend to you. However, for many people in debt, checking a credit file is a daunting experience.

It’s not uncommon to be worried about your credit score, especially if you’ve missed, or not been able to make your contractual payments towards debts. However, a credit report can be valuable for understanding just how much debt you have.

Credit Referencing Agencies

There are four main credit referencing agencies – Experian, Equifax, Crediva and TransUnion (formerly Call Credit).

The role of the credit referencing agency is to provide a lender with a review of your financial history and creditworthiness.  Once the lender has your credit report they will make a decision on whether they are willing to lend to you. A credit report can be carried out for various types of lending, such as mobile phone contracts, credit cards or a car loan.

Your credit score will quickly highlight whether you have a poor, average or excellent credit rating group. The maximum number (the best) can vary depending on the credit referencing agency. For our advice team to determine the most applicable debt solutions it’s ideal to know how much unsecured debt you have, to which companies and what secured lending you have outstanding. If you’ve not been opening your creditor statements for fear of the debt, then your credit report can often give you a guide as to how much debt you currently have. This can help in determining which debt solutions you may be applicable for.

Free Credit Reports

There are resources and companies that offer free credit reports. Our favourite is Noddle from TransUnion. It’s free for life and offers you your credit rating and score, lists credit you already have, whether you’re on the electoral register, details of people you’re financially linked to and searches which have been conducted over the past two years.

Noddle is excellent because it’s free, however it only covers your credit report with TransUnion / Call Credit. Check My File offers a free 30 day trial and shows you data from all four credit referencing agencies.

We’ve tried both companies and Noddle is certainly our favourite, however, Check My File is useful if there’s a debt or two missing or you want a more comprehensive report. If you do decide to open a Check My File account and don’t wish to pay for it in the future, you will need to cancel your account. The cost is £14.99 per month if you don’t cancel.

If you would like help or advice on your credit file you can speak to Debt Support Trust on 0800 085 0226.

We regularly hear from people who have recently found out their friend or family member is in debt. At Debt Support Trust, we don’t only assist people with money issues, but friends and family who are worried about their loved ones. For most people, being in debt or knowing someone in debt is a difficult process; you have limited knowledge of the options available, it can be frightening and you may be unsure of the solutions which can help.

It’s important to remember that there are debt solutions available and options which can help alleviate money worries. Whether the debt is an unexpected bill or multiple debts accrued over a longer period of time, there are solutions which can be explored. Together, we’ll help you understand the pros and cons of each solution so that you or a friend/ family member can receive the information you need.

While many people still believe debt problems only occur because of frivolous spending, it’s not the case and in many instances the debt has arisen because of a change in circumstances. For instance, a reduction of income because of a new job/ loss of hours at work, separation / divorce or the cost of living increasing resulting in an over-reliance on credit.

If you would like to speak to a debt advisor from Debt Support Trust, please call 0800 085 0226. Any conversation is confidential and we will not contact your friend or family member without their permission. We can offer you guidance and support to be able to best help a person struggling with debt.

Top Tips to Help People In Debt

There are a number of things you can do to help a person in debt. We’ve listed our top tips below:

• Supportive – The first tip we can offer is to offer support. It may have come as a shock to you and you may initially panic and worry, however by being supportive you’re encouraging a person in debt to take the necessary action to become debt free. Remember, your friend or family member will have been dealing with this debt for some time before you found out, so they may simply just need somebody to listen and reassure them. Support them in taking steps to regain control of their finances.
• Positive – Reassurance is important for anyone in debt. Positivity breeds positivity so by saying “It’s OK, there will be options” or “don’t worry, we can get this sorted” you’re offering positive reassurance that things will improve. That often gives a person the courage to speak to a debt advice charity and seek help.
• Be Helpful – Offering emotional support is important but factual information can be useful too. Why not sit down and help complete a statement of affairs? We can help you with this. You want to list the monthly income, expenditure, amount of debt and monthly contractual repayments as well as finding out if there are any assets. This will help clarify the financial position for the person in debt and help them to see ways they could save money or whether they need debt advice from a registered charity.
• A Problem Shared – Many people struggle to tell anyone about their debt problem, never mind their family or friends. Often when people call the Debt Support Trust charity helpline the feelings of guilt, anxiety and overwhelming pressure are evident. Through years of experience we know that anybody could find themselves in debt and that what’s most important is supporting and empowering a person with money worries to be able to take back financial control. Understanding the journey a person in debt has taken to tell you about their financial situation is vital to being able to support them.
• Guidance – Offering guidance can be invaluable to a person worrying about debt. For instance, you could agree to meet them to open their mail and collate creditor statements, gather necessary information about the debts and even be there to help them whilst speaking to a debt advice charity. People in debt can sometimes feel alone – by offering guidance and clarity you’re helping them take positive steps to resolve the debt.

Try To Avoid

We’ve created a list of things you should try and avoid. These are often difficult because a debt problem can come as a shock, which you may be trying to process yourself. However, if possible, it’s best not to:

• Criticise – we often hear from parents, siblings and friends who are worried about someone in debt, where they’ll say a phrase such as “I don’t know how they could be so stupid”. While it’s not uncommon to think debt arises from overspending, it’s not always the case and it’s typically a problem which will have occurred over a number of years.

• Ignore the problem – encouraging someone to deal with their debt will ensure they’re taking steps to be debt free. By continuing to ignore the problem, it will make the issue harder for your friend or family member to take the steps they need to make to get the debt under control.
• Take too much control – from time to time we speak to people who want to over-manage a person who has debt problems. This can include taking control of their bank account and liaising with creditors on their behalf. While this can be helpful at the initial stage, it’s important to empower a person with debt worries to take control themselves. Try to act as a support but not take overall control to resolve the problem.

A Little Extra Support

Debt and money problems can occur for anybody – whether it’s a celebrity worth £20 million or a retired pensioner who is struggling to pay an energy debt. The reason for debt is always the same; there isn’t enough money to pay the necessary expenditure and cover the repayments to debts from the income available.

However, you can be a positive support to a person in debt. If they’ve trusted you to tell you about their money worries, we’re here to help too. You can call us on 0800 085 0226 if you would like some advice or email us at contact@debtsupporttrust.org.uk.

This week we helped someone at the charity with over £30,000 of credit card debt who was looking for tips to pay off her credit card debts fast. She recalled, “I can’t remember spending the money, but I certainly know it’s harder to repay the debt now I have it”. It’s always more difficult and time consuming to repay debt compared to spending the money at the time.

For some people the debt problem started, unknowingly, at a young age of between 18-21 and the debt issues continued from there. Regardless of how the debt was accrued there are always options to help become debt free once again and live a life without debt.

Credit Card Debt: The Debt Dilemma

When your unsecured debts, like credit cards, store cards and personal loans total more than your available disposable income, what options do you have available? You may not have enough money to pay your monthly bills and your contractual payments to debt, but there are debt solutions designed to help.

You can assess which debt solution could be right for you by completing the debt test and analysing your debt. You’ll receive an idea of which debt solution could be the most applicable, but you could have two or three different options, so it’s always best to speak to a debt advisor before proceeding with any debt solution.

Tips to Repay Credit Card Debt

There is some helpful advice we can offer to help you manage your credit card debt. Everybody’s situation and circumstances are different and unique, so what will be suitable for one person may not for another.

For instance, if you’re currently unemployed and unable to make your monthly contractual payments to your debt then it may take longer to become debt free. However, you can take control of your financial future by proactively speaking to your creditors and asking for a period of grace until things improve. Your creditors will likely offer you to make token payments to your debts – this is where you pay a set amount each week / month towards the debt. It won’t be the contractual payment, but a more affordable amount. Your creditors could freeze interest and charges in the meantime so the debts don’t continue to grow.

Tip 1: Seek advice

There are multiple reasons we advise you to seek advice about debt problems, but the most important one is that it’s good to talk to someone else about the financial issues. “A problem shared is a problem halved” is very true!

The other reason is that a debt advisor could guide you through all of your options and help set you on the right path. If nothing else, you’ll receive all of your options – along with the positives and negatives – so you can make an informed decision.

Tip 2: Talk to your creditors

Your creditors may be able to offer you some financial assistance to make the process of repaying the debt easier. Your credit card company may be able to offer you a better rate or support you while you try to pay down your debts.

Tip 3: Budget

One of the best tools at our disposal is a budget. It helps demonstrate just how much money is available to pay towards debts each month. Your budget should include all incomes (earned income from employment, pensions, benefits etc) and expenditures (rent/ mortgage, food, gas/ electricity, council tax etc) for each month.

You will then be in a better position to understand how much you can afford to repay towards your debt each month. If your monthly contractual payments to debts are more than you can afford then a debt solution may be required.

If you fail to meet your monthly contractual payments to your debt then a default may be applied to your credit file, which can mean that future credit is more expensive or difficult to obtain.

Don’t Struggle Alone

Dealing with debt can be a difficult and frightening experience, but it doesn’t have to be. Support and advice is available from our debt charity. Our advisors are friendly and ready to help with confidential advice.

You can call us on 0800 085 0226 between Monday – Friday 8am to 7pm. Alternatively, you can try our online debt test.

We know that debt problems occur for various reasons and that struggling to deal with complex debts can lead to increased levels of stress, issues at work and trouble maintaining relationships.

In a recent conversation with BadCredit.org we discussed how our charity has been helping people with money worries and what options exist.

The number of British people living in poverty has reached a 20 year peak, with more people 14 million people struggling to make ends meet. Rising inflation and the cost of living certainly haven’t helped, with only yesterday the cost of rail fares being increased by, on average, over 3%. Many Brits are also finding that their rate of pay hasn’t increased in line with the cost of living, which has resulted in their essential expenditures rising faster than their earnings.

With less money available to pay creditors, it can often lead people to seek debt and money advice.

How Do We Help?

As discussed in our recent article with BadCredit.org, from the very first phone call we offer a sympathetic, non-judgemental ear. Our primary focus is to understand your personal and financial situation and consider which debt solutions would help you to achieve your objectives of once again becoming debt free.

We’ve helped thousands of people out of debt and usually there are two or three options available. When this happens we’ll explain the positives and negatives of each option so that you’re informed and empowered to make a decision on your financial future.

If you would like debt advice, please contact us on 0800 085 0226 where a trained and friendly advisor will be able to help.

You can read more about our service and our interview with BadCredit.org here.