If you have found yourself worrying about money, particularly if you have unresolved debts, and are struggling to know where to turn, it can be easy to feel overwhelmed and alone. It might be extremely easy for you to get into debt, but acceptable resolutions and help can be hard to come by, making this difficult and stressful time all the more so.
The most important thing to keep in mind is that no matter how desperate your debt situation feels, there is help available and there are things that can be done to help make your situation more manageable. Unfortunately, it is often down to the person in debt to initialise this help and this can be challenging if you don’t know where to look.
Before choosing the nuclear option and declaring bankruptcy, you should first look into alternatives that can help reduce your burden. One of the main issues with getting the right help is that we don’t like to feel judged for our actions, and often getting into debt isn’t a choice and is associated with feelings of shame.
Analyse your situation
The first thing you need to do when you’ve decided to ask for help with your debts is to analyse your situation. Start by making a list of all your debts and the amounts you owe to each creditor. Include everything, such as contracts, phone bills, rent or mortgage arrears, utility bills, and even personal informal loans from friends and family. All of this information needs to be taken into account when getting yourself into a better position financially. You should also include details of when the debt started, when you first missed a repayment, and whether interest or other charges have been added to your totals.
Gather your credit reports
Every time you borrow an amount of money or pay it back, a credit report will be generated to reflect this information. You can get copies of these reports to show exactly how much you have borrowed and from whom, as well as how much you have repaid and to whom. You can request copies of your credit reports from Experian, Equifax or TransUnion in the form of a statutory report. This information will be vital if you opt to apply for IVA assistance or choose other debt assistance programmes.
Check which of your debts have mandatory repayments
The good news is that not every debt will need to be repaid. You must repay debts that are legally mandated such as your council tax, tenancy agreement or water rates, but there are some debts that may be written off under the right circumstances. For example, you may not be liable for debts that fall into the following categories:
It has been more than 6 years since you last made a payment and have had no contact or attempted contact with the creditor during this time
The contract was signed under pressure or was misleading
The creditor did not do their due diligence and check you were able to afford the repayments
There are other kinds of debt that you may not be liable for, such as if you were a second cardholder on another person’s credit card account and the primary cardholder has failed to make repayments. If you think this might be the case then you’ll have to review these debts in detail.
List your debts by priority
You may need some independent debt advice for this, but listing your debts by order of priority can be a huge help. Some debts simply are more important than others, and knowing which ones you should prioritise paying off first can really help make things more manageable. There are many companies and organisations in the UK that specialise in offering free debt and financial advice to UK residents.
This advice is designed to help make things easier for you to manage, and they will be able to make sure your debt solutions will be the best thing for you and for your creditors. They aim to bring fairness and balance into what is often an emotionally fraught situation, and as such will often be able to arrange the best resolutions to help you.