Reach out as soon as you know you’re not coping with your debts

Posted 12 March 2016

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It’s never too late to get help with problem debt and the sooner you reach out about the issue, the better.

If something goes wrong in life, the sooner you address the problem the better – “A stitch in time, saves nine” – as they say. The sooner you fix that leaky tap the less water you’ll waste, and the same goes for money problems. With over 20 years’ experience helping people deal with debts that have become unmanageable, we know that it makes sense to ask for help as soon as you know you’re not coping with your debts.

That’s not to say that its ever too late to ask for help with debt problems, it isn’t – there’s always a way out, no matter what stage your debts are at. What we mean by this is that you’ll suffer less negative effects if you get help and professional advice sooner rather than later.

In this two-part blog, we’re going to explore why that is and how you can overcome obstacles that could be holding you back from getting the help you need and deserve.

Reasons why you may not be reaching out for help

For some people, reaching out for help may be easier said than done. Let’s have a look at some of the obstacles that could be holding you back and how to overcome them.

Embarrassment – some people may feel that they don’t deserve help with their debts because they are responsible for them, or they feel embarrassed to have got themselves into problem debt to begin with. There’s no need to feel embarrassed about your situation and let that stop you from seeking help. No matter how bad you feel about your finances, you’re certainly not alone – over the years we’ve helped over 200,000 people solve debt problems! In fact the Money Advice Service estimates that some 8m people in the UK are currently struggling with problem debt.

Added to that, we find that many of the people we speak to are struggling financially because of a change in their personal circumstances that was beyond their control, such as illness or the break-down of a relationship. Remember that we are here to help you, not judge you.

Secrets – some people may not want to address their debt issues because they have kept them a secret from someone in particular for a while, and would like to keep it that way. But if you choose to speak to a debt advisor then your conversation is entirely confidential, and many cases even if you start a debt solution you can keep this confidential too.

If you’re having trouble confronting the issue with someone, particularly a partner, our blog offers lots of helpful advice.

The good news is that reaching out to professionals can sometimes really help you when it comes to talking about your debt problems with someone else at home. This is because when you do have the conversation, you will be able to show them you’re committed to putting the situation right and that there is a way out. If you’re worried how your debts may affect someone you intend to marry, have a look at this blog post.

Waiting for things to sort themselves out or a change in circumstances – you may have found that you’ve got into the habit of thinking that things will sort themselves out, or that things perhaps aren’t bad enough for you need help. If you can genuinely deal with the situation yourself by taking on extra hours at work, or with help from family or friends, then great. However, if you’re consistently falling behind with your repayments, or it’s affecting your ability to pay for the other essential things in life, it’s very unlikely that things will just sort themselves out and it will be best for you to reach out for professional advice.

What can my creditors do if I miss payments?

When it comes to trying to collect money you owe them, your creditors will take progressively more severe action the longer things remain unresolved, and this is the main reason why it’s better to act quickly.

If you miss a payment, the first thing a creditor will do is contact you to make you aware of this. This will normally be in letter form or over the phone, or perhaps both. As you miss more and more payments you may find that this contact increases. Your lender may add extra charges to what you owe, and will also continue to add interest – so your debt will actually be going up the longer you leave it.

Normally, after missing around three to six payments, your creditor will consider you to have defaulted on the credit agreement. This means that you’ve officially broken the terms of the contract that you signed when you borrowed the money (or agreed to use a service, like water or electricity as the case may be). If you do receive a default letter, it will be clearly marked as such and will also tell you what you can do next and where you can go for help.

From this point, the creditor is able to pass the debt onto a debt collection agency. A debt collection agency is either a completely separate company whose job it is to chase money that is outstanding on behalf of the creditor, or they can be a separate department, but still part of the same company that you owe money to.

If your debt is secured, the creditor can start the process of repossessing anything that was part of the agreement that you signed. So, for instance, they can take your car if you did not pay your hire purchase payments. It’s also at this stage that your creditors are able to start court action to try and get the money back, although exactly how long they leave it before they try this will differ from company to company and they must write to you to inform you if they intend to do so.

Why is it better for me to get help as soon as possible?

Although your creditors can take the above action against you for not making your payments – they are less likely to if they know that you are in financial difficulties and that is why you’re not making payments and that you have a plan to pay your debts off.

For instance, if you miss one or two payments, but call the lender to explain why, and how you intend to put this right, you might be able to put a plan in place that prevents a default. Even if you’ve already received a default letter, calling the creditor straight away may save them the trouble of starting legal action and you the stress of any court appearances or even of having bailiffs turn up on your doorstep.

And apart from trying to stop your creditors from taking the next step in recovering outstanding amounts, the sooner you act the more chance you have of stopping interest and late charges being applied to your accounts, which can significantly increase the amount that you owe overall.

Your creditors would always prefer you gave them a call and explained why you’re missing payments, rather than for you to just not pay them with no explanation at all. 

Don’t suffer in silence

So from an official point of view, it’s better to reach out as soon as you know you’re not coping. But apart from that, debt worries can take a toll on your health, both mental and physical and, if left unchecked, can seriously impact other areas of your life.

Relationships can become strained under the weight of long-term debt worries, and your performance at work may be affected if you’re constantly worrying about how you’re going to pay the next bill. Jumping every time you hear letters hit the doormat and dreading the phone ringing is not a way of life you have to resign yourself to. No one should feel like they have to suffer in silence and deal with these problems by themselves. You may also feel like you are missing out on the things you love in life – whether that’s a quiet drink, or a night out with friends, because you can’t afford it.

Getting help as soon as you know there’s a problem is not just about preventing your creditors taking legal action and saving you money in interest, it’s about protecting your own mental and physical health and not putting yourself through unnecessary anxiety. As soon as you know that the problem is solvable and being dealt with, you should find that a huge weight is lifted off your shoulders.

If you think that your debt problems have already caused you to experience feelings of depression and anxiety, our blog Debt & Depression should help – here’s part one and part two

So, that's enough for now. Come back tomorrow for part two, where we'll look at how you should address the problem. 

by Christine Walsh

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To find out more about managing your money and getting free debt advice, visit Money Advice Service, an independent service set up to help people manage their money.