Dealing with debts

Debt warning signs

There are several signs to watch out for. These include:

• borrowing to meet the repayments on a loan or credit card
• only making the minimum payment on your credit card each month
• taking on new borrowing to pay off old debts
• falling behind with payments on loans
• using money earmarked for other essentials, such as food or your annual tax bill, to pay off debts.

What to do if you’re worried

If you're having difficulty paying your bills or keeping up with loan repayments, check if you have any other resources which you can use. This could be savings or money from an emergency fund. Another option could be to borrow from relatives to help tide you over.

If you're unable to come up with the cash speak to your lender or the company you owe money to. You may be able to come to some arrangement with them to reduce or take a holiday from your repayments until your finances improve.

Your lender will probably want some proof that you are genuinely having difficulty rather than just spending your money elsewhere. A good way to show this is to draw up a budget of your monthly income and outgoings.

You can use your budget to work out how much you can afford to pay your creditors each month as well as using it to negotiate with them.

Help with debt

If you would like further help on how to approach and negotiate with your creditors there are several organisations which offer free, independent advice. These organisations are listed below.

• Citizens Advice. Contact your local bureau for advice in person, over the phone or go to www.citizensadvice.org.uk
• National Debtline on 0808 808 4000 and www.nationaldebtline.org
• StepChange on 0800 138 1111 (they recommend completing their online budget form first) and www.stepchange.org
• PayPlan www.payplan.com
• Money Advice Scotland Webchat https://www.moneyadvicescotland.org.uk/webchat
• Advice NI (Northern Ireland) on 0800 028 1881 and www.adviceni.net