Sunday, May 26, 2024

How to deal with debt during the coronavirus pandemic

The coronavirus pandemic has seen life in the UK change
beyond all recognition. Following several months of lockdown and a continuous
stream of horror stories from around the world, people are understandably
concerned about the health effects of COVID-19. In addition to this, however,
there are growing financial concerns both for the national economy and indeed
for personal finances.

It’s only right that people continue to do what’s best for
their health and that of their loved ones, but as the government begins to ease
restrictions, minds may start to turn to money worries and how to deal with
them.

If you find yourself amongst the many people who are worried
about managing money or dealing with debts, read on to find out what you could
do to set your mind at ease.

Look after your health first

Debt can be scary, particularly at
a time when many people are out of work or on reduced pay via the UK
government’s furlough scheme. Whilst this may be the case, keeping yourself and
your family safe should remain your top priority in line with official
guidelines.

With the government advocating for
people to stay inside wherever possible, some people may be worried about
leaving their home to go to the bank or pay their bills. If this sounds like
you, there’s no need to worry and there are plenty of alternatives to paying
for things in cash or by sending a cheque. By contacting your banking,
utilities, or other providers, you could find more convenient ways to make
payments so that you can stay on top of your finances during the pandemic.

These days, the majority of
companies are happy to take payments over the phone, via a secure internet
portal, or via an online banking transfer. Just remember to keep a record of
any payments that you make – even when you are staying safe at home.

Communication is key

The government, along with
numerous private organisations, have recognised the impact that coronavirus has
had on people’s finances and in many cases have put in place discretionary
schemes to prevent people from facing the usual consequences of failing to keep
up with payments. If you do find that you are unable to make a payment towards
an existing liability, get in touch with your provider and explain the
situation. There’s no cause for fear, and a cool head and firm understanding of
your situation could help you to deal with things calmly and carefully.

In a similar vein, keeping a
channel of communication open with your banking provider could help you out of
any tricky spots during the coronavirus. If you are struggling financially,
make that clear to your bank or building society as they may be able to offer
you an overdraft facility. If you already have an overdraft, they may agree to
freeze interest charges for a limited period to help you get back on your feet.

Ultimately, communicating with
your lenders and providers will almost always be more productive than simply
ignoring the problem in the hope that it goes away. Let them know if you’re
struggling, and they’ll be more likely to work with you to reach a better,
mutually agreeable position.

Be careful when borrowing

If you’re struggling with a
reduced income or have found yourself unable to pay off your usual costs during
the coronavirus pandemic, it might be tempting to take out a personal loan.
Whilst borrowing might help to cover the shortfall, it’s vital that you
understand the consequences of taking out additional liabilities at what could
be a very challenging time financially.

First and foremost, borrowers
would be wise to check that any lender from which they wish to take out a loan
is authorised and registered. There are strong governance systems in place for
UK lenders, and the Financial Conduct Authority (FCA) oversees such activities.
Provided that you use a reputable lender, you can rest assured that you can
access help if things go wrong – either from the FCA or the Financial
Ombudsman.

Before taking on any further
debts, those with existing liabilities may wish to assess their situation and
work out if they will be able to manage repayments in the future. Even if you
do find yourself unable to deal with outstanding debts, there’s no need to
panic as there are many debt solutions available to the UK public – for
instance an Individual
Voluntary Arrangement
(IVA) which could give you longer to pay off what you
owe. You can learn more about the various types of debt solutions available to
the public at CreditAction.co.uk.

Get on top of your debt

Whatever challenges you’ve faced
during the COVID-19 lockdown, mandatory time off from work or away from the
office may have left you with some extra time on your hands. If this is the
case, a bit of free time could be exactly what you need to get on top of your
finances and start to set goals for improving them.

Money management is a tricky skill
to master, but it can all start with an effective budget. Use time spent on
furlough or away from work productively, and kick start your own financial
recovery from coronavirus.

Sam Allcock
Sam Allcockhttps://www.abcmoney.co.uk
Sam heads up Cheshire-based PR Fire, an online platform that has already helped over 10,000 businesses to grab widespread media coverage on their news at an extremely accessible price point.

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