Money worries affect the mental health of 1 in 4 North West adults, according to recent research from R3, the trade body for insolvency professionals. Here are R3’s tips for dealing with debt problems:
- Acknowledge the problem. Avoiding personal finance problems will only make them worse.
- Ask for help. Professional advice is readily available and is often free of charge, whether it’s an initial meeting with a licenced insolvency practitioner, or help from the National Debtline, or a local Citizens Advice Bureau.
- Prioritise the payments of your debts. An advisor, as mentioned above, can help.
- Budget. Be honest with yourself, identify your essential financial commitments and cut back on luxuries. At the very least, maintain the minimum monthly credit card payments to retain your credit rating while you sort out your finances.
- Communicate with your creditors. By getting in touch with your creditors at an early stage, you can give them an opportunity to help that might not be there in future.
- Be transparent. Give full details about your financial situation to both your advisor and your creditors.
- Take your time before choosing the solution that’s right for you. Don’t allow yourself to be pressurised, and make sure you are taking advice from a regulated professional.
- Don’t keep digging. Avoid turning to new credit cards or payday loans to plug the gap in your day-to-day finances. This might only make your situation worse.
- Learn about your options. If you require a formal insolvency procedure, there are a number of options appropriate to different levels of debt. Formal options include Debt Relief Orders (DROs) for smaller debts, Individual Voluntary Arrangements (IVAs), and bankruptcy. It will cost more time and money if you start off in the wrong solution, so make sure you take advice about all the options open to you.