The soaring cost of living is pushing many people to borrow more and leaving them struggling to make debt payments. A lot of people are making stark choices, such as turning the heating system off to keep up with payments of energy bills. A survey has revealed that people’s budgets have succumbed to the rising cost, so they have no choice other than biting the bullet.
Many of you have already whittled down your expenses by far, and yet it is labyrinthine to be able to cover all essential costs. Though borrowing is way easier, do not forget that you must pay back the debt and interest.
If your pocket is feeling a pinch while paying the principal value, how will you be able to pay down interest? Well, if your back is against the wall, you should take the following steps to get rid of debts.
Who should you talk to?
Before you get stuck deeper into your financial difficulties, you should immediately seek help. Consult a financial advisor who can assess your current financial situation to bring a repayment plan that works for you.
Debt advisors can talk you through multiple options. In addition, there are several organisations that can help with debt management, like MoneyHelper, National Debtline, StepChange Debt Charity, and Citizen Advice Service. Most of these organisations provide free service.
Visit their website to know how they can be of great help. Do not put off, as the sooner you take help, the better it is.
What steps can you take on your own?
Do not throw in the towel until you are sure you can do nothing about it. Though debt organisations are out there to help you, it does not mean that you will stop putting in the effort. Even a little contribution will help you stay afloat.
Debt organisations advise that you work out how much you owe, to whom, and how much you need to pay every month. Then identify priority debts like mortgages, auto loans, energy bills, and the like. Suss out how much you can cover in debt payments. You can do it by creating a budget and adding up living costs. Take these away from your income to see how much you can throw at your debts.
Talk to your lender and tell them of your true financial condition and how much you can pay. They will probably allow for minimum payments unless you bounce back. See how you can boost your income. Consider a pay hike. If it is not possible, you should try to grab a part-time job or freelance project.
Energy bills make up a large proportion of your debt. What to do?
Undoubtedly energy bills are the biggest problem of many people. A rapid rise in prices of energy has caused many people to borrow from private money lenders in the UK. Despite borrowing, many people are unable to keep up with the payment of energy bills.
Further, borrowing puts additional pressure on your pocket as now you are to pay interest as well. When you find it hard to pay off energy bills, suppliers can force you to have a prepayment metre installed. This may not be a wise decision, so you should try to clear your debt as soon as possible.
Turning off the heating system will make you sick, so it is not a wise decision to do so. Instead, you should talk to your energy supplier to see if they are ready to accept lower payments. Assure them that you will clear all outstanding debts as soon as you bounce back. It will be to your advantage when you actually have a solid plan.
What if nothing works?
There are chances that you could do all but nothing to pay off your debt. It is essential to bear in mind that you cannot escape your debts, whether they are secured or not. Personal insolvency could help you deal with this situation, but it will affect your credit score for up to six years.
Further, you cannot just lunge at it. You will need to mull over and consult a financial expert before declaring bankruptcy. The official receiver will sell your assets to settle as much debt as possible.
The final word
Debts are a snag when they are challenging to handle. Therefore, it is suggested that you borrow money only when you can clear your dues. As far as it is about energy bills, you should try to work on your budget. The more expenses you cut, the more money you can pay toward energy bills.
Though you can expect some help from energy suppliers, it may not be sufficient. Find out some realistic and wise ways to cut back on energy. Consult a debt advisor for the settlement of other obligations like loans for bad credit with no guarantor.
Be proactive, as otherwise, you will be stuck deeper into debt.
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