Coronavirus is affecting people’s lives up and down the country, particularly our finances.
StepChange Debt Charity is the UK’s leading provider of free, impartial debt advice. As the experts, we’ve asked them for their top tips on taking back control of your finances in a year where so many of us desperately need help.
What if I get made redundant?
In these strange and uncertain times, it’s natural to feel worried, and it seems that everyone has a financial ‘what if’.
With the furlough scheme b and news reports full of businesses struggling, ‘What if I get made redundant’ is the question on many people’s lips. 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 chunk of it off. However, we’d recommend that you use your redundancy money to pay for essential household bills only. Unfortunately, the job market is 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 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, it’s a short term solution to what could become a long-term problem.
Taking out more credit when you’re getting by on a reduced income is likely to make your financial situation even worse in the long run – especially if you’re unable to pay it back on time.
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 small, manageable amounts of debt can easily spiral out of control.
If you tell your creditors, many will give you some breathing space while you get your finances in order. This might be by freezing interest and charges, or agreeing to a payment holiday.
What if I can’t pay what I owe?
If you’re struggling, you may benefit from getting in touch with us at StepChange for free, impartial advice and guidance. Everyone’s situation is different, but we’ll take a look at your whole circumstances and help you work out a way forward. Our expert advisors never judge, but if you’re worried about speaking to someone on the phone you can even get full debt advice online.
Visit stepchange.org to take the first step – we can help you turn ‘what if’ into what to do next.