Life events, like redundancy, illness or relationship breakdown, can happen to anyone and cause huge financial tremors for people. Under these circumstances it is a time to re-evaluate your finances and get back on track without the extra worry caused by falling into serious debt.
Would you know where to turn if you were struggling to pay your energy bills, credit card bill or even your rent or mortgage? You might go to your bank, utility company or creditor, explain your situation and ask for support – maybe a bit more time to get the money together, or the chance to make a reduced payment until your situation improves.
Some may be understanding and offer help, while others may steer you towards getting some independent debt advice. However, there will be some who say there is nothing they can do and continue to charge interest and charges on your debts.
Under current law in England and Wales, the only way to guarantee a freeze on interest and charges and a halt on enforcement action is by taking an insolvency option, such as bankruptcy or a Debt Relief Order. These can be drastic measures and aren’t right for everyone’s circumstances.
Some creditors are regulated by the Financial Conduct Authority and have rules and guidance on treating customers fairly, but others - like private landlords, for example - are under no obligation to offer help and protection to tenants struggling to pay their rent.
The consequences of refusing to offer help can be extremely damaging for those who are struggling to pay. With no assistance from their creditors, the typical person in debt ends up further in debt and worse off through interest and charges alone.
Without debt support, people often fall back on coping strategies that simply make their debt problems and credit score worse. When creditors fail to help, most people go on to take on more debt to try to fulfil their financial obligations.
If their circumstances don't
improve, these people may then be unable to repay this additional
debt, leading to a credit cycle that can be extremely difficult to break.
