Debt & borrowing

Worried about debt?

You may be worried about paying off existing debts or thinking about borrowing money to help you get through these difficult times.

If you’re in debt
If you owe money and are worried that you can’t pay it back, there are some key things you need to do.

  1. Don’t ignore it!
    It won’t go away. The sooner you take action to address it, the better you will feel.
  2. Deal with priority debts first
    These are the things that have the most serious consequences if you don’t pay them. They don’t have to be the largest or have the highest interest rates, but if you don’t pay them it could lead to serious problems like losing your home. Find out more about priority debts here.
  3. Start talking
    Don’t ignore letters or phone calls from your priority creditors. Get in touch with them as soon as possible to explain why you are in debt.

If you’re thinking about borrowing
If you don’t have any savings and your income has reduced, borrowing may feel like your only option. Before you borrow:

  • make sure that you understand what money you have coming in and going out
  • reduce spending on any unessential items
  • make sure you have claimed all the benefits you are entitled to

Try and use borrowing as a last resort. If you do need to borrow, make sure you choose the right type of credit or loan for your situation. Otherwise, you could find yourself paying more than you need to.

Shop around and compare deals, looking at:

  • the interest rate and the Annual Percentage Rate (APR)
  • how much you will repay in total and whether you can afford the repayments
  • any penalties for missed or late payments
  • the cost per week or month and whether this might vary.

Avoid payday loans, loan sharks and high-interest credit cards. There are other options like credit unions and responsible finance solutions.

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