The truth about bankruptcy
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Are you one of the people who has had to borrow to pay for life’s essentials? If so, you’re not alone. Read on to find out how to get help.
Whatever your situation, you have to eat – food must always come first on the list of priority outgoings. If you find yourself having to borrow to meet this financial demand, then something has gone wrong and needs to be fixed as soon as possible.
If this is you, and you’re not sure where the money for your next meal is going to come from, there is help out there. Food banks are available if you’re in an immediate crisis, find the one nearest you here.
Your council may also have a scheme set up to help people, and it’s sometimes possible to get an advance on your benefits if you’re in receipt of any. Shelter have lots of advice on these, and other, options for solving an immediate food/money crisis, so make sure you get the help you deserve.
Borrowing to pay essential bills
Of course borrowing money can be a manageable, sometimes beneficial, thing to do if the circumstances are right and you know how you’re going to pay the money back. However, the statistics from this survey show us that, unfortunately, people are having to borrow in less than ideal circumstances.
There are some bills in life that are classed as priority bills. These are bills like your council tax and any loans secured against your house. If they go unpaid the consequences will be severe and can include losing your house or even being prosecuted.
12% pf people said they would delay paying an essential bill like their rent, so that they can meet other repayment obligations, or that they would simply avoid the company that they owe money to.
It’s so important that you know which bills are priorities and which aren’t so you can avoid causing yourself a lot of trouble down the line. If you are at all unsure take a look at our blog all about this.
If you can’t pay back your debts according to the agreement that you first signed, ignoring the problem won’t make it go away and will probably make it worse. It’s very unlikely that your lender will forget about it and they could start legal action, which can be stressful, time consuming and end up costing you more in legal fees. It’s always best to explain your situation to your lenders.
Borrowing to pay off other debts
While borrowing to pay off other debts may not seem as serious as having to borrow to pay for food, it’s still not the ideal situation to be in and can lead to you falling into a cycle of unmanageable debt.
From our experience dealing with problem debt, we know that people often start using credit due to a change in circumstance. If their situation doesn’t change back and they don’t put a budget in place to pay this line of credit, they can find themselves in a situation where they become completely reliant on credit sometimes only to manage the repayments and interest on previous borrowing.
As we’ve said above, you shouldn’t make payments on unsecured debts, like credit cards and store cards, before you’ve paid debts that are secured against your home or funds due to HMRC, or your utility bills and rent. If worst comes to worst you should delay paying non-priority unsecured debts and focus on the more important ones.
A debt solution could help
There is some good news to come out of the survey. 30% of people said that they would seek independent advice about their debts and over half said that they would speak to their lenders if they were in trouble. This follows our advice and is exactly what you should do if you see that your debts are becoming unmanageable – you don’t have to struggle alone.
General money and budgeting advice is available for from us and the The Money Advice Service and there are also formal solutions available to pay back your debt. Debt help is out there and our debt advisors are only a phone call away.
*Red Dot questioned a nationally representative sample of 2,005 adults aged 18 and over between 6 October 2015 and 13 October 2015, of whom 651 were Scottish residents.
by Christine WalshBack to blog home