Sleep won’t come, stress won’t go and the thud of letters on the doormat is a sickening sound.
The bills are mounting, interest is rising and the creditors aren’t far from the door.
The downward spiral of debt and distress is a scenario familiar to all too many people, say debt charities – particularly after Christmas in a difficult economic climate.
‘It sounds like a cliché but the figures really emphasise the situation after Christmas,’ says Paul Crayston, spokesman for free advice service National Debtline.
‘Our calls drop to about two-thirds of the normal rate in December and then rise to one-and-a-half times in January.’
Research from the Money Advice Trust, the umbrella charity of National Debtline, has shown that the number of people getting help from free debt advice agencies increased in 2011 to 1.54 million people, compared to 1.4 million in 2010.
Figures also show that around 10 million individuals in the UK (around 20 per cent of the adult population) find themselves in a constant struggle to manage their debts.
For some of these people the situation becomes a nightmare from which there seems to be no escape.
For 55-year-old John, from Gosport, it ended with him being diagnosed with depression.
‘I didn’t have it under control and I was frightened,’ he says.
‘Me and my wife started arguing, we thought we could sort it out and then realised we couldn’t. I wasn’t sleeping, I was comfort eating and I felt stressed all the time.’
Self-employed John (not his real name) ended up with £35,000 worth of debts.
‘It seemed so easy at first,’ he recalls.
‘We knew we could pay it back. But then I lost some work and it became more of a struggle.
‘I got more credit cards with no interest for six months to try and pay it back. But I couldn’t pay it in time and then the interest would shoot right up. And it just got worse and worse.’
John says one of the worst feelings was isolation.
‘We felt we couldn’t tell friends why we couldn’t use the car and go out. I felt we were the only ones ever to have got in such a mess and I didn’t want anyone to know.’
But they were far from alone. Calls to the National Debtline nearly doubled between 2006-2009 to just under 40,000 a month, while the Samaritans say that about 280,000 of calls, e-mails, letters or visits they receive each year concern financial issues.
John felt he had no-one to turn to, but a chance meeting with Jacky Charman, who runs community firm Xcellence4u, opened up a world of help.
‘She was non-judgmental and it just helped talking to someone and realising it wasn’t just me,’ says John.
He was given a booklet and budget planner, put together by National Debtline, and ended up with a free debt management plan from the organisation Payplan.
This allows a debtor to make one regular, affordable payment to the organisation, which then deals with the creditors. Commercial companies charge for this, but organisations like Payplan can do it free.
‘The problem is that a lot of people don’t know how much free advice and help there is out there,’ says Jacky.
She is running a course with colleague Debbie Cox, who has a financial background, at the Nimrod Community Centre in Rowner, Gosport. They aim to give people general advice and tell them about the help that is available.
Jacky says: ‘I haven’t met one person who spends on credit cards thinking they’re not going to be able to pay it back. But it can begin to spiral.’
Even with help, she warns that the road to a debt-free life isn’t easy.
‘Sometimes people want a quick solution. But it isn’t going to be quick and that can be a bitter pill to swallow.’
John says getting help has made a huge difference.
‘I’m much happier now. I can sleep and I’m not worried about losing my house. I feel I’ve got my life back.’
When he sought help, John had eight credit cards, two loans and an overdraft totalling £35,000.
On one loan alone he was being asked for a payment of £359 a month, while another creditor wanted £149 a month.
After the organisation Payplan prepared a free debt management plan for him, he now pays one amount of £350 a month to Payplan, which then divides this up and passes it on to his creditors.
Interest on John’s debts has been frozen, but that will be reviewed after 12 months. This isn’t available to everyone, even those on debt management plans.
The criteria for John was that he had at least £100 a month disposable income to make a payment. Assets and what individuals owe are also assessed.
WHO CAN HELP
· Jacky Charman and Debbie Cox will be holding more free courses in the community as part of the Out There project and run through Gosport’s St Vincent College.
To contact Jacky, go to xcellence4u.co.uk.
· National Debtline – the phone line of the Money Advice Trust charity is a free and confidental service offering debt advice.
National Debtline is open Monday to Friday from 9am–9pm, and Saturday from 9.30am–1pm. Call 0808 808 4000 to speak to an adviser.
Business Debtline is open Monday to Friday from 9am–5pm. Call 0800 197 6026 to speak to an adviser. Go to nationaldebtline.co.uk
My Money Steps, a National Debtline website, offers online advice for dealing with your debts. Go to mymoneysteps.org.
· Payplan – offers free debt management plans and individual voluntary arrangements.
A debt management plan is an arrangement between client and creditors which involves one regular payment at an affordable rate.
An IVA enables you to avoid bankruptcy by making a formal agreement with creditors to pay off a percentage of your debts over a fixed period.
Go to payplan.com or call 0800 280 2816.
· Citizens Advice Bureau – The CAB has professional debt advisors available to advise on budgeting, bankruptcy, maximising income through benefits, renting opportunities and other means, prioritising debts, employment problems and problems with the benefits process. They can also talk to creditors.
Go to citizensadvice.org.uk or adviceguide.org,uk
· For the Consumer Credit Counselling Service visit cccs.co.uk or call the helpline on 0800 138 1111.
TOP DEBT TIPS
Don’t ignore the problem – get advice and it will be easier to deal with the situation.
Get some free advice – think carefully before going to a fee-charging adviser when free, independent help is available.
Don’t borrow money to pay off your debts without thinking carefully – always take advice before making this step.
If you’ve lost your job, or are off work ill, check whether payments are covered by payment protection insurance – always read the small print of these policies.
Check you’re claiming all the benefits you can – go to direct.gov.uk and look at the money, tax and benefits section.
Work out a budget to help decide how much you can put towards repaying debts – a money adviser can help, or you can visit mymoneysteps.org.
Make sure you tackle priority debts first – for example, mortgage payments and council tax.
Source: Money Advice Trust