If you think you might need debt management advice, you’re not alone. A recent Consumer Credit Counselling Service study found its UK customers have an average unsecured debt of £19,338 – so how do you know when you need debt help?
Have you ever been afraid to look at your bank balance, or open that statement from your credit card company?
Or do you find yourself relying on credit to cover basic household expenditure, such as mortgage repayments, rent, utilities bills or council tax?
If so, these could be signs that you need help managing your debt.
It’s important to spot when your debts are spiralling out of control – and to act quickly. That way, you can get the right debt help before its too late.
But once you’re debt, it’s not always easy to recognise the point at which you really do need help. That’s why we’ve compiled out top three signs that indicate it’s time to seek professional debt management advice.
1. Are you spending more than 20% of monthly income paying off debts?
Loans, overdraft, credit cards, mortgages – it’s easy for debts to pile up. If you’re spending 20% or more of your income on keeping up with your debts, it’s time to seek help.
It’s particularly important to take control of your debt management if you’re on a low income. That’s because unforeseen costs can throw off your repayments and cause you to take on more debt to keep up with your existing obligations – trapping you in a debt spiral.
2. Are you only making the minimum payment on your credit cards?
The minimum payment on your credit card is usually set at a very low level – even if you’re nudging your credit limit.
If you’re only able to pay the minimum amount, alarm bells should start ringing. Not only will it take you years to pay off the card, but most of that payment will go into paying off the monthly interest on your card.
This will result in the card staying close to its credit limit and simply becoming a burden on your finances.
With new cards enticing customers with interest-free periods, it’s easy to get into the habit of not taking interest payments into account. On top of that, high balances give customers additional encouragement to transfer balances onto new cards, increasing the number of credit cards you have and pushing you further into debt.
If you’re only able to afford the minimum repayment, you need to change the way you spend or seek help with your debts.
3. Are you are taking out new loans to pay off old ones?
If you’re taking out new loans or credit cards to pay off old ones, it’s clear that your income isn’t sufficient to meet your debt obligations.
The moment this starts happening, you need to talk to a professional. It’s only likely to get worse.
The sooner you get help the better, because the more into debt you fall, the more limited your options become.
What are your options for debt help?
Some of the most common options for debt help include Debt Relief Orders (DRO), Individual Voluntary Arrangements (IVA) or, in certain circumstances, bankruptcy proceedings.
We’ve teamed up with leading debt management specialists 123 Debt Solutions to help you find the right kind of debt management option before your debts spiral out of control.
So if one of these three signs applies to you, please get debt help now. Ignoring debt simply isn’t a option.