How to spot the signs of problem debt

Snowdrops

January is the month of resolutions and recovery – and the time when the credit card bills make an unwelcome landing on the door mat.

Depending on which credit card you have chosen, you may have an interest-free period which will give you an opportunity to start paying off your December spending. If, however, you are starting to worry about how you are going to meet essential payments like utility bills or the rent or mortgage, or you have an overdraft which is accruing interest and you don’t know how you are going to be able to clear it, then it is time to seek professional help.

Ways to find support

 For anyone who finds themselves facing debt, the support of people close to them can be invaluable. The Money Advice Service (MAS), a government body set up to provide free and impartial money advice, is calling on friends and family to be alert to signs that loved ones might be experiencing problem debts.

MAS says it can take a year or more before people recognise that their money issues are becoming unmanageable. So, if you are still struggling with debt from Christmas 2016, you are not alone. The advice from debt charities, who offer their counselling services free to anyone who needs it, is that the sooner you come for help, the quicker things can be sorted out.

Signs to watch out for

According to the Money Advice Service the signs that a friend or family member might be facing problem debt could include:

  • A debt in the past
  • A recent life event – an event that has resulted in a loss of income or higher spending for example having a baby, being made redundant, illness, divorce or a death in the family.
  • Over spending – they always seem to have the latest ‘must have’ items although they don’t have the income to cover this.
  • Anxious, withdrawn or depressed – they have reduced time socialising, and/or they are avoiding friends.
  • More secretive – starting to hide issues and avoiding talking about finances
  • Changed their spending habits – either reducing spending (going on fewer holidays or eating out less) or overspending (spending without a plan for repayment for example putting luxury items on credit)
  • Tired or are having trouble sleeping
  • Weight has changed suddenly – either increasing or decreasing

 Jane Tully, Director of External Affairs at the Money Advice Trust, the charity that runs National Debtline, which offers free debt counselling, says if you have debts that you’re going to struggle to pay it’s important to seek help early.

“It helps to make a list of all your debts and see if you can claim on any insurance, such as mortgage payment protection insurance, if you have it,” she says. “Once you have identified your debts, you can contact your creditors to explain the situation, or seek free debt advice from a debt advice charity who can take you through your budget, look at which priority and non-priority debts you might have and the options available to you.”

Get help early

 The Money Advice Service’s own research suggests that 10% of the population could be suffering in silence with serious money problems. Even though they may feel under financial pressure, it can take time for people to realise that they need to take action. MAS says being able to recognise the signs of problem or persistent debt, and getting help early, will prevent these issues becoming critical.

“We know from our research that the journey into problem debt can last a year or longer,” says Caroline Hamilton, debt expert at MAS says.

She says it can be hard to spot that in yourself or others but some of the signs are:

  • missing payments
  • feeling overwhelmed by debt
  • using credit to pay for the everyday essentials
  • worrying about how you are going to make it to next month

You may also have sleepless nights worrying about money, and your relationship may start to suffer. If you live with someone who has problem debt you may notice some of the signs and could encourage them to take action, particularly if they are becoming withdrawn, losing sleep, or losing or gaining weight suddenly.

It’s never too late to seek help

She says that it is “never too early or to late to seek advice” and for someone who is not in debt or not having a problem with debt but who would like some helpful money advice, they can have a chat with a counsellor from the Money Advice Service. “If you go for help earlier then you can avoid a money crisis and open yourself up to a range of options which someone in debt crisis might not have,” she says.

The signs someone is experiencing problem debt are often difficult to spot. They may be hidden due to embarrassment, to protect friends and family from the situation or because they ether don’t realise or want to confront the full extent of the problem. Signs will vary for each person. However, there are a range of physical, emotional and behavioural symptoms which can give friends and family subtle clues about behaviour which seems out of character.

“When people start to worry about debt they might be concerned about how much they are spending and so start declining social invitations, or the nature of their food shop changes,” she says.

More information

The Money Advice Service is free and you can talk through issues in confidence with a counsellor. They can give advice or suggest where you can go for more specialist debt advice. The number to call is 0800 138 7777.

National Debtline offers free debt advice, phone help and webchats:

Business Debtline offers free debt advice

StepChange Debt Charity has Debt Remedy – a free debt advice service

Citizens Advice offers free help with debt problems: https://www.citizensadvice.org.uk/debt-and-money/

A shorter version of this article first appeared in Reader’s Digest Money

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