How to manage and reduce your debt

how to manage and reduce your debt

how to manage and reduce your debt

Global – Over the past 12 months, the number of people worrying about money has skyrocketed, according to the charity StepChange. His research found that 45% of British adults have experienced difficulty paying household bills and paying off loans over the past few months, up from 30% a year ago and 15% in March 2020. So if debt becomes a problem for you, what can you do about it?

Admit the problem

Another study by StepChange found that 55% of its clients waited over a year before seeking debt help. Sue Anderson, spokesperson for StepChange, says: “Many people have been silently waiting and suffering. They are trying to use other coping mechanisms before contacting us.”

The reasons for the delay may vary, but stigma is still a real problem. A Financial Conduct Authority (FCA) study shows that 42% of people who were in financial difficulty and ignored their creditors’ attempts to report missed payments did so because they felt ashamed.

Misconceptions about how people get into bad debt persist, and many people who get into trouble fear that others will see the problem as the result of poor money management. In fact, StepChange says the vast majority of its clients have experienced financial hardship due to life changes that have led to a sudden drop in their income: being fired, bereavement or ill health can of course have serious consequences. and in recent times skyrocketing energy, food and fuel bills have put people in trouble.

Get your priorities straight

Identify your priority debts (where the consequences of default can be severe, such as rent or mortgage arrears, electricity bills, council tax, and court fines) and make sure you address them first.

Contact your creditors

The cost-of-living crisis has led to a shift in areas of debt that cause the most stress. Citizens Advice reports that prior to the pandemic, council tax arrears were the most common form of debt, followed by credit, shopping and credit card debt. Now, energy debts are the biggest cause for concern. Contacting organizations you owe money to may mean that you can negotiate a more affordable way to catch up on late payments.

Get debt advice

Debt counseling is an FCA regulated service and reputable counseling services are an extremely helpful way to get help to improve a difficult situation. StepChange, National Debtline, Christians Against Poverty and PayPlan offer unbiased, unbiased advice and have helped thousands of people through the debt maze.

Choose a reputable service

Beware of commercial debt management companies seeking to profit from those with debt problems. “The worst culprits are predatory lead generators and bankruptcy service providers,” Anderson says.

Trying to hide a problem won’t improve your credit score.

An FCA study found that two out of five people (40%) who experienced financial difficulties believed (incorrectly) that talking to a debt counselor would have a negative impact on their credit score. “It’s a useless factor,” Anderson says. “People think that by taking steps to pay off their debt, they can ruin their credit history, but this is not the case.”

About Wiz Writer

Wiz writer is a regular contributor to the workers' rights. Blogger, writer, strategist, and Passionate about making a dent in the digital universe.

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