I learned first-hand the stress that unmanageable debt can have on people’s lives – I also learned that most money problems aren’t insurmountable.
During Debt Awareness Week, Ann Francis of Cambrian Credit Union explains that however overwhelming your money situation may be, help is available to get you back on a sound financial footing.
Having worked as a debt advisor for Citizen’s Advice, I learned first-hand the stress that unmanageable debt can have on people’s lives – I also learned that most money problems aren’t insurmountable.
Credit isn’t a bad thing, in fact without it most of us will take on debt at some point in our lives, whether it’s a car loan, credit card or mortgage, borrowing can help us get what we need without a lump sum in the bank. However, when financial circumstances change for the worse, like they have for many in the Covid pandemic, debt can become a burden that’s increasingly hard to bear.
When you find yourself starting to struggle with debt, that is the time to take stock. As a debt adviser I often saw people at crisis point and, as with so many things, early action can stop it spiralling out of control. If you are in this situation, it may be as simple as contacting the organisations that you owe money and ask to reduce repayments to a manageable sum. The Coronavirus pandemic means that many organisations are more financially sympathetic and you can also ask for a payment holiday if it’s meant an interruption to your earnings.
Creating a budget is a positive way to take control of your money situation. Listing and reviewing your income and expenditure every month can help you identify unnecessary expenditure and ways to save money.
If you are struggling financially, specialist debt advice from the likes of Citizen’s Advice or StepChange can help. These organisations are free to use, have up to date guidance and can advise on budgeting and income maximisation as well as helping you find a suitable path out of your debt issues. Private debt management advisers, however, are often not a good idea and with free options available I would always recommend the no-cost route.
When you are thinking of a formal route out of problem debt, it is important to understand your options and their consequences. For instance, bankruptcy and an independent voluntary arrangement (IVA) are both forms of insolvency that can write off some or all of your debt. However, they are legal processes that are recorded on your credit file for six years from the date they begin and so can make it difficult to get further credit. These orders can also impact on some occupations and your ability to buy, or even rent, a home.
For people with unmanageable debts of less than £20,000, who aren’t homeowners, a debt relief order (DRO) can be an option. This can help you write off a debt, but the consequence is that it will impact on your ability to get credit.
An important way to avoid unmanageable debt is to be very careful reading the small print when you take out credit. Make sure you understand how much you will repay in total, as well as every week or month, the length of the loan and any early repayment charges.
As a financial cooperative, Cambrian Credit Union is an ethical and responsible lender. We check a loan is affordable for your circumstances, at the time, and lend from as little as £100 to help you in a tight spot, up to £15,000, with a very clear APR and no early repayment charges.
If your employer is a Cambrian Credit Union payroll partner then you can also save regularly or pay off a loan directly from your salary, even if you don’t have a perfect credit score (subject to affordability and checks).
Find out more at www.cambriancu.com
- Debt Awareness Week is organised by debt charity StepChange and takes place from March 22-28 2021. For details visit stepchange.org