We all need a bit of breathing space every now and then.
Life can get complicated, with family, financial, and work commitments all coming into play. Most of us will experience some hard times as far as cash is concerned. But it’s surprising how little we know about our rights – and how vague some of those rights actually are.
The UK government has recently proposed offering a six-week “grace period” to people struggling with debts. I think this is a great idea – but there’s a lot more that could be done too. People get into financial difficulties for all sorts of reasons, so it’s important that when they ask for help, a plan appropriate to their circumstances is set up.
In practice, the rules about helping you when you’re struggling with cash come down to each industry’s “good practice” guides, regulations and decisions by ombudsmen and the courts. This means there’s a real mishmash of solutions depending on what you’re complaining about. But there are a few principles that firms should follow.
◆ When you tell a business that you’re struggling to make ends meet, they should offer to give you some time to sort things out. Most businesses will usually give you one to two months. So not long, but enough to help you over the first hurdle.
◆ The business should not continue to apply interest and charges if it’s clear that it’s making the situation worse. If they do so, make a complaint through Resolver.
◆ Be prepared to give details of your financial situation – this is pretty standard. The business then has a range of options, from reduced payments to spreading the debt over a longer period.
It pays to be realistic. The debt isn’t likely to be wiped off. But there are lots of potential solutions.
Things can get a bit complicated when it comes to mortgages. With interest rates heading up, there has been concern that more people will be forced in to debt, although many have moved to fixed-rate deals, so won’t be affected immediately by rate rises. Over the next few years, however, there will be an impact as they renew or take out new agreements.
Mortgages are one of those subjects about which people really do bury their heads in the sand. It’s harder to admit it if your home is becoming unaffordable. And a worryingly high number of people who get into trouble with their repayments do so because they’ve gone into denial about mounting debts.
This can be a nightmare when it comes to helping people. The fact is, if you speak up early – and take an honest and frank look at your finances – there are options here. From payment breaks to downsizing, you don’t have to lose your home.
Some of the people with serious mortgage problems that I have spoken to got into trouble because they put their faith in dodgy advice on the internet. I can’t emphasise this enough: all those stories about your mortgage not being enforceable or debts being wiped due to a legal clause – they’re all rubbish. The only way to turn around a mortgage debt is to admit it and ask for help.
If the lender doesn’t treat you fairly, then Resolver can help. But be prepared for some tough decisions. If your finances aren’t going to pick up in the foreseeable future the answer might be to buy a cheaper home while you can.
Remember, there are organisations that offer free help, like charity StepChange. So don’t wait for the rules to change. Get help today.
James Walker is the founder of online complaint-resolution service Resolver.co.uk