How to get over debt

Falling into debt is common in the UK. With the expensive cost of living, individuals can fall behind on payments due to a loss of unemployment, divorce, bereavement or other unforeseen circumstance.

The burden of having more and more bills outstanding can be very stressful indeed and the constant phone calls and letters can feel like it is taking over your life. However, with good advice, useful tools and professional debt companies available, there are several ways to get over your debt.

Stop adding more debt

If you are behind on your card and loan repayments, avoid adding more debt to the pile. By using debt to pay off other debt, it only creates a debt spiral and you can find yourself worse off as a result.

With this in mind, it is worth removing unnecessary forms of credit that you have. You can find this can by checking your credit file online and there are companies that offer free trials. With access to your credit report, you will be able to see all the cards and loans that you have open including payday loans, credit cards, direct debits, phone contracts and store cards.

To simplify your finances and avoid over-spending, it is best to close any accounts that you do not use regularly and minimize the number of credit lines you have open.

Speak to your debtors

By avoiding communication with those that you owe money, it can lead to extra fees and cause the collection phone calls and letters to keep coming.

Most credit providers and utility companies are used to dealing with late repayments and by regulation, are required to offer forbearance to the customer.

By simply giving the debtor notice that you may not be able to make a repayment, they might be able to delay your collection date or allow you to take a repayment holiday. In some cases, you may be able to set up an arrangement or pay plan allowing you to repay in smaller instalments and over a longer period of time so you can get your finances in order.

Budget effectively

Create a list of all your current earnings and expenses, taking everything into account such as food, accommodation, entertainment and bills. See if you can find ways to reduce the cost of your outgoings, such as using a comparison site to switch utility provider or cutting down on luxury groceries that you don’t need. By saving a few hundred pounds each month, it will slowly help you overcome your debt.

For credit cards, use a balance transfer card

If you have several credit cards, you can potentially pass on all the debt to a balance transfer card. If there are providers with special offers, you may be able to get a zero percent credit card, making all your credit card debt much more affordable – and possibly the cheapest form of borrowing possible too.

The balance transfer cards are available long-term and also for those with bad credit, so it can certainly help someone get over debt.

Surround yourself with the right type of people

It is common for those with debt to overspend on social activities such as going out and holidays. If you find that you are in a social crowd that enjoys the finer things in life, it might be better to surround yourself with people on a similar budget, at least whilst you work through your debt troubles. By feeling pressured to overspend at fancy restaurants or shopping centres will only add to your financial woes.

Speak to a professional debt advisor

For free and impartial advice, you can speak to one of the many debt related charities that have been set up to help people in your situation. The debt advisors we recommend include:

Debt management

If you are struggling to manage all your debts, you can consider working with a debt management company like StepChange or seek advice from the National Debt Line.

A debt management company will start by making a list of all the companies you owe money to and contact them each individually to state that you are working with them. This will cause any interest payments to freeze and any collection letters and phone calls to stop.

The company will then calculate your income and expenses such as travel, food, entertainment, accommodation and utilities. They will look at how much you owe to debtors and work out a weekly or monthly repayment plan so that you can pay off your debt to each company and have enough for your necessary expenses.

Also known as a debt consolidation loan, it is the process of taking all your current debt and putting it into one pot. So your income will go straight to the debt management company who will pay off your debts directly over a number of months or years and you will be given a weekly income to pay for your expenses. This means that you won’t have to manually pay each debtor one by one as the company handles this and you will also have enough money for your basic requirements.

Debt management firms will typically take a fee each month for managing your debt or if you work with a debt charity, there will not be any charges involved.