Alison Green, spokesperson for AXA, says: “The important thing is for people to take control of their finances and get the help and the support they need – the first step of which is taking stock of their debt and sharing this with the people in their lives.”
Once those in the red have steeled themselves and told their loved ones about their money problems, what do they do next?
According to Citizens Advice, one of the best things consumers can do is take the time to go through everything they owe and determine exactly how much they owe to each creditor.
Order these in terms of priority – mortgage or rent arrears, council tax, bills and other essential expenses will be top of the list, while others will be lower down.
Debtors may then want to look at how much they spend each month and on what, and see if they can cut spending in any areas and if they can increase their income somehow.
They should then check how much money they have left over every month to pay off their debts.
Consumers should make sure they use this cash to pay off their priority debts first. It can be a good idea to get in touch with whomever money is owed to and see if they are willing to freeze interest or extend payment deadlines.
If the amount that has to be repaid looks particularly unmanageable, debt advice may be needed.
