The mounting debt problems many will be facing
As we head towards five months since COVID-19 Lockdown was implemented, the world is starting to learn to cope with the ‘new normal’. But for many, the combined pressures of payment holidays ending and/or incomes reducing will mean they face debt issues in the months ahead.
Costs going up.
Fairly quickly after Lockdown we saw mortgage companies, car leasing firms and many other firms offer payment holidays to customers. If you took advantage of such schemes however, you’ve probably already had the letter land on the doormat saying this is now coming to an end – and payments are starting again. A more formal extended Moratorium period was also created (meaning creditors were not able to take action over unpaid debts), but unless there is further Government intervention this looks likely to end in September.
And it’s not just the big costs that are again leaving bank accounts. Petrol prices are also now slowly rising again, and the need for PPE means many hairdressers and other small businesses are quite justifiably putting prices up to cover these additional costs. The pressure on all of our wallets is certainly returning.
Incomes going down.
Whilst an end of the Furlough scheme will mean a return to work for many, it will not necessarily mean a return to previous levels of income. We read every day of more companies being forced to make redundancies, and many more are having to reduce employee hours, restrict benefits or cut non-contracted workers in order to save costs. With the current economic climate employee pay rises in the coming months will be few and far-between, and of course any potential ‘second wave’ will only worsen all of this.
Cost increases combined with reduced income is never good, and that taking place in a society where many were already living with few or no savings makes it even more worrying. Credit card bills may be more difficult to manage, whether that is due to holidays or home improvements undertaken to make work-from-home that little bit easier. In addition, all the guidance seems to suggest that mental health will be an area of concern for many, not to mention any issues around addiction that might also have arisen both of which can easily impact someone’s ability to work.
We are even seeing some cases of the ‘bank of Mum & Dad’ being called upon to help children through difficult times, which itself puts financial pressure on those who were once financially secure.
What to do?
The key to managing debt is to act quickly. Whether your debt problem is a short blip or a longer-term trend, the sooner you seek advice the better the outcomes will be. And managing debt in the short or long term does NOT need to mean bankruptcy. There are many options available to help you manage your debts, agree achievable payment amounts/periods and help you through this difficult period. But if debts are ignored, even just for a few months whilst you seek your own solutions, they can easily escalate and get even worse.
The French Duncan Debt Solutions team are available to help you or anyone you know who may be facing debt concerns. They can be contacted confidentially on 0800 652 0002.
More information can also be found on: https://www.fddebtsolutions.co.uk/