Finding yourself in a debt crisis can be demoralising and lead to depression. Those suffering personal finance issues due to debt use words like ‘trapped’ and ‘hopeless’ when describing their situation, partly because the strict terms of loan agreements contain little leeway for the unfortunate series of events that befalls each of us from time to time.
If you are struggling to pay your debts or have a poor credit rating from events in the past, it’s important to realise that there is a vast support network that you can draw upon in a time of difficulty.
You are not alone
You are not alone in facing debt issues. TheMoneyCharity reported that each UK household had an average of £63,582 of debt in 2022, and the charity expects this figure to rise to £83,000 by 2025.
Debt is a natural part of life when house prices are so high that most people need to borrow a large sum to get onto the property ownership ladder.
Loans are also commonplace where those with tight finances require additional cash to pay for lifes surprises such as car repairs or private medical treatment.
Let’s look at the different options you have when looking for advice, support or access to better interest rates on bad credit loans:
The government is a sensible place to start for anyone in financial distress. After all, the government has a vested interest in helping Brits remain financially afloat and able to pay their bills including debts.
The government has invested significant resources to found organisations such as UK Money Helper (formerly known as Money Advice Service) to provide information and advice to anyone in the UK who may need it. Their website is full of useful information about debts, insolvency and steps you can take if you feel overwhelmed by demands from your creditors.
Citizens Advice is often mistaken for a government organisation, but it’s in fact an independent network of charities that were founded after the Second World War.
Citizens Advice are known for their in-person branches, which still remain in hundreds of locations across the UK. But you should also be aware that Citizens’ Advice are also accessible via the phone and email, so you needn’t seek out a branch near you to begin to benefit from their services.
Bad credit specialists
Bad Credit specialists such as Evolution Money can help consumers find attractive interest rates despite their credit history. Being able to renew loans or even consolidate high-interest loans into more affordable monthly payments is considered a sustainable strategy for dealing with unmanageable debts without entering into an IVA or insolvency process.
Loan providers are not financial advisers, although FCA rules expect them to perform adequate checks to assure themselves that you can afford to pay back each loan that you take from them.
Private debt advisers
If you feel that you are past the point of no return, and cannot conceive of a way to actually repay your debts, you may require the help of a financial adviser or debt adviser, as they’re sometimes known.
An independent adviser must provide advice in your best interest which is tailored to your personal circumstances. They are trained in all of the legal routes to reduce your debts and even renegotiate payment plans with your creditors.
It can be a relief to enter into a formal process designed to give you a breathing space on payments and collect your financial life together, although insolvency and IVA processes are seen as a last resort because they can have a lasting effect on your ability to borrow money in the future. For many though, this is a decision they are happy to make to reduce the stress and anxiety that comes from debt worries.