Coronavirus is affecting people’s lives up and down the country, particularly our finances.
This week is Debt Awareness Week, an annual campaign run by StepChange Debt Charity to raise awareness of debt problems and help people find free support with their financial ‘What Ifs’.
StepChange can help you take the first step towards resolving your money worries with free, impartial advice.
What if I get made redundant?
Over the last twelve months our lives have been turned upside down by the pandemic, with our finances hit hard. Many businesses are struggling too, and as a result many people find themselves made redundant, or worried that their job might be at risk.
It’s not much fun to think about, but if you’re at risk of redundancy and worried about money and debt, it’s important to know where you stand and how to move forward.
Should I pay off my debts with my redundancy money?
If you’ve received redundancy pay and you have some debt, it can be tempting to pay a large chunk of it off in one go. However, we’d recommend that you use your redundancy money to pay for essential household bills only. Unfortunately, the job market is very unpredictable at the moment, and you don’t know how long it might take you to find a new job.
It’s also important to consider where you put your redundancy pay. Make sure you put it into a bank account where you don’t owe money – otherwise the bank may take it to repay any money you owe them.
Should I take out more credit to repay my debts?
We’d advise against taking out more credit if you’ve been made redundant. A credit card, loan or increased overdraft limit might seem a good way to pay off some of your debt or cover your living expenses, but it’s a short term solution to what could become a long-term problem, and could make your situation even worse in the long run.
What should I tell my creditors?
This is really important if you’re currently in debt. Even if it’s just a small amount on a credit card we’d recommend you let your creditors know you’ve been made redundant. After a life shock like redundancy, those small, seemingly manageable amounts of debt can easily spiral out of control.
If you tell your creditors, many will allow you to freeze interest and charges, or give you a temporary payment break, while you get your finances in order. Lots of people worry about talking to their creditors about debt, but most are willing to be flexible and supportive.
What if I can’t pay what I owe?
First of all, it’s important to know you’re not on your own. At StepChange, we're contacted by over 650,000 people every year looking for help with their debts.
If you’re struggling, we offer free, impartial advice and guidance. Everyone’s situation is different, but we'll take a look at your individual circumstances and help you work out a way forward.
Take the first step and visit www.stepchange.org to use our online debt help tool. Or, if you’d rather speak to someone, expert advisors are available Monday-Friday 8am-8pm and Saturday 9am-5pm on 0800 138 1111.