How to deal with your debts positively – a five point plan

Ruth Duncan, Maxwell Davies Director

Over the last few years, I have noticed a worrying increase in the number of clients (directors, individuals in debt, or creditors), who open up about mental health issues directly resulting from debt problems.

Debt can affect many aspects of a person’s live, their friends and family. It can also have a devastating impact on their mental health, leaving people feeling alienated and not knowing where to turn. Worrying about money can make mental health worse, which means that managing money is harder, creating a vicious cycle for the person in debt.

As an insolvency professional, I help people and businesses who are under a great deal of financial and personal stress to deal with their debts and get back on their feet, making a fresh start. There is always help available to deal with your debts, and the earlier you ask, the better the outcome will be for you.

With Mental Health Awareness Week [MHO] upon us (13th – 17th May 2019), I feel it’s time to promote positive ways of dealing with debt.

My approach to helping clients deal positively with their debts

If you find yourself in debt but struggling to cope, you’re not alone. About 8.3 million people in the UK are affected by problem debt and up to 382,000 businesses fail each year.

Drawing on my 30 years of experience of working with both businesses and individuals in debt, there are five tips that I can share to help you deal with your debts. It’s important to remember that there is a solution for every single debt problem. And that solution will ensure that you come out the other side with your debts dealt with, allowing you a fresh start.

#1 Don’t hide from your debts – acknowledge the problem

Unfortunately, many feel the impact of social stigma attached to a failing business, or being in debt. The stigma doesn’t encourage people to stay out of debt. It often stops them from getting much needed help.

I tell my clients that losing a business, or having individual debts, is not a personal failure, and is something that can be overcome to allow you a fresh start.

Be honest with yourself and address the facts as soon as possible. The sooner you acknowledge the problem with your debts, the easier it can be solved.

#2 Ask for help to reduce the burden – all debt problems are solvable

Getting professional advice is extremely important but having family support in dealing with debt in daily life is an essential first step. Fear of letting loved ones down remains the top reasons why people keep quiet about their business troubles. But all debt problems are solvable, as long as you ask, so share your worries with them and they will help you through.

With a high level of misinformation about everything from director’s disqualification to insolvency procedures on the internet, seeking advice directly from regulated professionals, such as insolvency practitioners, is essential.

I take a holistic approach with my clients, listening to the person sitting in front of me, offering them emotional support as well as the best possible solution. To me, it’s not just about the debt, it’s about the person and helping them get through the situation.

As I talk clients through a range of available options, I can see how their body language changes, the burden they have been living with reduces, and they leave the meeting feeling less stressed and more positive about how to overcome their debts.

#3 Budget. Budget. Budget to help plan your finances going forward

Create a budget plan that you can stick to.

I work with my clients by starting with their income and expenditure sheet and looking at the total amount of debt. Only then I advise on how to prioritise the payments and help with shaping up the budget. I offer a free initial consultation, so you can tap into my expertise to get an independent and no-obligation advice very easily.

#4 Communicate with your creditors to see if they might help

Get in touch with your creditors as soon as you can. You never know what opportunities to help they offer if you speak to them early on.

By giving them full details about your financial situation, you will give yourself time to get the best advice and create an action plan. You may be able to negotiate lower interest rates or even consolidate your loans.

Plus, if you suffer from mental health issues, financial creditors are required to abide by the “Treating Customers Fairly” regulatory and supervisory code which sets out fairness outcomes for financial customers.

#5 Learn about your options (and take your time)

What I find often helps with reducing the mental burden of debt is helping to demystify insolvency procedures: CVA, administration, liquidations for businesses, or on the individual front, bankruptcy or Individual Voluntary Arrangements. These solutions may not be suitable to everyone, but in the long run, when applicable, they can lead to regaining financial freedom giving a chance of rebuilding one’s life.

It’s important to properly understand your options as it will cost more time and money if you pick the wrong solution and have to start over.

I will take the time to talk through all available options to find the one that is the best for you, without feeling pressured.

Remember, you only need to ask

Whatever your debt problem, whether a failing business or individual debts, advice and help is always available and it is vital that it is sought as early as possible.

If you or your business is facing financial problems, then please do not put it off. We offer a free initial consultation. You don’t know what we can do until you ask.

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