So what are the warning signs that you have too much debt?
Jane Tully: Debt and credit are an important part of healthy finances, and the level at which they become a problem will vary from person to person. If you are worried about your finances you should seek free, independent debt advice as soon as possible from an organisation such as National Debtline. While there is no fixed definition of problem debt, the below indicators from StepChange Debt Charity can be a good guide as to whether you should be looking to get advice:
- Using credit/loans/overdraft to make it through to payday
- Making just the minimum repayments on debts for three or more months
- Being hit by late payment or overdraft charges on a regular basis
- Falling behind on essential household bills (e.g. rent, mortgage, energy bills, council tax etc)
- Using credit to keep up with existing credit commitments
- Using credit to pay essential household bills (e.g. rent, mortgage, energy bills, council tax etc)
It’s also important to be able to recognise the signs in our friends and family. Often these can be hard to spot, with signs such as trouble sleeping, becoming more withdrawn or seeming depressed often difficult to link directly back to debt problems. But when these are combined with changes in behaviour such as spending habits, living beyond their means, becoming more secretive or if they have been in debt in the past, it can indicate they are struggling with their finances. If a friend or family member tells you that they are struggling with problem debt, be reassured that there is help out there – National Debtline is free to call, and our trained advisers are there to help in confidence.
Chris Gowland: I completely agree. Every day, we see that anyone is at risk of falling victim to financial harm. Relationship breakdowns, caring responsibilities or bereavement can all put strains on our finances. Often people will find it difficult to talk about how their finances are effected and that’s why we are continuing our Lloyds Bank M-Word campaign, encouraging everyone to have those difficult conversations about money.
How are your organisations working together to help people who are struggling with debt?
Chris Gowland: It may sound obvious, but the first and most important thing anyone can do when they are struggling with their finances is to talk to their bank, and seek independent debt advice. We’ve found that around seven in ten people would not contact their bank if they were experiencing financial difficulty. That could mean millions of people missing out on the support available.
Jane Tully: We say exactly the same thing. If you are worried about your finances or find yourself in financial difficulty, the sooner you are able to talk to a debt adviser, through a free, independent organisation like National Debtline, the better. Signposting and referrals from lenders is such an important way for people to access our support, especially when they have debts across multiple creditors.
We are also working across the industry to make sure support systems are in place for those who are struggling. For instance, both our teams worked really closely on the implementation of the new Breathing Space regulations. These mean anyone who is in problem debt can now apply for protections (or breathing space) from their creditors and any additional fees for up to sixty days in order to help them seek advice they need to get on top of their finances. The scheme represents a real milestone in helping to ensure more people have access to safe routes out of debt.
Chris Gowland: It is so important that anyone who is going through tough times financially is treated fairly and consistently, and industry wide initiatives are central to making this happen. That’s why recently we signed up to the Inclusive Economy Partnership’s new Code of Best Practice for Debt Collection & Recovery. By working together we can help more people get back to financial health.