This period of uncertainty has caused a lot of people in Scotland serious financial problems, as we discovered in our recent COVID-19 Debt Analysis report. But it’s also given many of us the chance to stop, think about our situations, and decide to make positive changes.
At Carrington Dean, we’ve just launched a TV ad campaign encouraging people in Scotland to take control of their new normal. It’s a phrase we’ve all heard a lot about, but the key thing to take from it is this – what your new normal looks like is up to you.
In the spirit of taking control of your new normal, here are five actions you can take to make sure debt isn’t a part of it.
1. Don’t hide from your debt
When you have money worries, sometimes the easiest thing to do is bury your head in the sand. If a creditor sends you a letter? Ignore it. If they give you a ring? Let it go to voicemail. If they turn up at your door? Don’t answer.
Many people think their money problems will sort themselves out eventually – one of the UK’s biggest debt charities found 50% of their clients wait a year or more before contacting them. The unfortunate reality with debt, however, is that the longer you leave it, the worse it gets.
Every creditor you owe money to will follow a process when trying to reclaim it. They will make good-faith attempts to get in touch with you, whether by letter, phone, or in person. But just because you’ve gone off the grid, doesn’t mean your debt has.
The longer you leave debts unpaid, the more they pile up – with late payment fees and other penalties on top. And the longer you ignore creditors, the more severe their attempts at collection can become. If you don’t want debt to become part of your new normal, take action.
2. Make those hard financial choices
Living with a pandemic has taught us all about making sacrifices. Sometimes making hard decisions in the short term is what’s best for the long term. It’s no different with debt.
There are any number of reasons a person falls into debt, many of which are outwith their control. Maybe you were made redundant during the pandemic? Maybe your hours were cut due to a lack of demand? Maybe you were suffering a temporary cash flow problem and you tried to make up the shortfall with an expensive payday loan?
However you fell into debt, pulling yourself out of it is entirely up to you, and will involve some tough decisions along the way. The first step is to make a list of your priority debts – council tax, mortgage or rent arrears, court fines. These are the non-negotiables you should pay first.
Beyond that, you should look to set a strict budget for yourself and try to dedicate as much disposable income as you can towards paying off what you owe. This might involve forgoing luxuries in the short term, but will ensure you avoid overspending and increasing your debt.
3. Take advantage of the extra support available right now
There are no upsides to what we’re all going through at the moment, but at the very least the Government and many creditors have recognised how hard it’s been, and taken steps to offer people some breathing space on their debts.
There are a number of schemes and support systems available right now that might help you get your house in order and put yourself in a better financial position for your new normal.
Mortgage holidays
Homeowners struggling financially due to the effects of the pandemic have been able to pause their mortgage payments since the first lockdown in the Spring. With the pandemic showing no signs of lifting, however, you can now apply for a mortgage deferral of up to six months until 31st January 2021.
A pause on evictions
Since England has gone back into lockdown, the pause on evictions in the UK has been extended until at least the 2nd of December. Given the UK Government had already committed to pausing evictions over the Christmas period – from 11th December to 11th January – it seems highly unlikely eviction action will be taken until 2021 at least.
Furlough extension
Now that the devolved nations of the UK are each moving between different forms of lockdown in an attempt to stop the spread of the virus, the UK Government has taken the decision to extend furlough until March next year – ensuring people whose jobs have been impacted by the pandemic will have some form of income beyond the winter.
4. Seek debt advice
Debt isn’t something people like to talk about. Even though most of us have some level of debt – and problem debt affects millions of people across the UK – some people feel a sense of shame about their money worries.
That can often stop them sharing their troubles with friends and family, leaving them shouldering the weight of their debt alone. But there are other resources available to people in problem debt.
We discovered in our recent Debt Insight Report that 46% of people would feel more comfortable talking about their debt with a professional, compared to only 33% who would feel comfortable discussing it with their loved ones.
There are several organisations who specialise in free, confidential debt help for people in debt trouble. Debt charities like the Money Advice Service and Citizens Advice offer free support and guidance for money worries, and can point you in the right direction if you need more practical debt help.
5. Use a debt repayment plan
The ultimate goal of anyone living with problem debt is to pay it back. If you’re struggling with money issues right now, seeking advice is a great first step. Eventually, though, you will need a practical, affordable debt repayment plan.
As Scotland’s debt specialists, Carrington Dean helps hundreds of Scots manage their debts every single day. We’re one of the UK’s leading providers of IVAs, and our repayment plans allow people to condense all of their debts into a single monthly payment – and even write off the debts they can’t afford to repay when they reach the end of their agreement.
We understand that every person’s situation is unique, so our team of debt experts are trained to help you find a debt repayment plan that is tailored to your circumstances.
With so much uncertainty hanging over every other part of life at the minute, it’s important to focus on the things we can control. Debt is absolutely one of those things.
