Debt management: how to manage your arrears and cover the costs – what should you do? | Personal finance | Finance
Debt, both public and private, has recently reached unprecedented levels due to the coronavirus. To ease some of the pressure on families, the government and the FCA have eased the rules around credit card debt and personal loans. Due to the seriousness of the situation, many people may have had to go into debt just to cover their bills.
Rachel Griffin, tax and financial planning expert at Quilter, commented on how substantial this could be: “As the UK emerges from lockdown and the economy begins to come back to life, many borrowers will start to face a new challenge: managing the burden of their debt after the end of government support programs and the end of loan repayment holidays.
“As of May 21, 2020, 877,800 people have had their credit card payment freezes, 608,000 payment holidays have been granted on personal loans and 1.8 million payment holidays have been approved by lenders. .
“In total, more than 3 million people are on a payment holiday from UK lenders.
“While the government support measures are welcome and will give respite to those who are most vulnerable and who depend on the credit for daily expenses, those who benefit from payment holidays will have accumulated their debt during the period, and many will be looking for a helping hand to pay off the debt once the support ends.
Fortunately, Rachel highlighted a number of public and free organizations that can provide unbiased advice: “There are many government-backed services, such as the money advice service and the money advice service. pensions, which are free, as well as charities such as StepChange or Citizens Advice.
Make small changes.
“Is there anything you can do to reduce expenses? Do you need all the services you pay for, like gym memberships or media streaming? Can certain bills be reduced? Purchases that can be limited?
Adopt a good saving habit.
“Although difficult, putting a few pounds aside each month can be helpful not only financially, but also mentally. Challenge yourself to find a way to save money on a regular basis, no matter how little it may seem.
“If you are struggling with your finances, there is no reason for you to bear the burden alone, there are many who are in the same situation as you. If you are not responsible for household finances , ask the person in charge. It should be an open and honest conversation.
Talk to an expert.
“Advisors are well equipped to help you develop a long-term plan.”
Avoid getting rich quick.
“If something sounds too good to be true, it probably is. Scammers thrive in times of uncertainty and vulnerability, so be extremely careful of anyone asking for your financial information.
Take care of your general well-being.
“Anything you can do to ease your mind and improve your well-being at this time is vital, whether it’s exercise, meditation or talking to loved ones.”