If you have been struggling with a payday loan, and have even had debt collectors knocking at your door, you are not alone. In 2016, it was reported that 8 million adults in the UK are suffering from what is classed as problem debt: i.e. debt that they are unable to pay off as required. To help you to cope with this situation, follow our five-step guide below.
Step 1: Don’t Panic
Take a deep breath. Money worries can lead to unprecedented amounts of stress. As reminder letters and phone calls start to pile up, you may begin to feel besieged by your creditors. You may be experiencing sleepless nights, constant worry and anxiety, irritability, and feelings of despondency. This is a horrible situation to be in, and so now more than ever it is time to look after yourself and get the help and support that you need. Talk to a friend or your partner about what is going on. Call a helpline (the Samaritans are free to call from the UK and ROI on 116 123 and you can also email, visit, and text them, for example), or talk to a counsellor. Never forget that your life and well-being are more important than this debt.
Step 2: Get Professional Financial Help
By law, payday loan companies and other creditors (including credit card companies) are required to send you a list of charities and other organisations that provide free debt help and advice. These include charities such as StepChange, who work with people in problem debt to consolidate and reduce their debts. You can also get in touch with the Citizens’ Advice Bureau, whose staff are well trained in dealing with financial matters and who will be able to inform you with information about the law surrounding debts, and advice about how to proceed.
Step 3: Resist the Urge to Borrow More Money to Pay Back the Loan
It is all too tempting to fight fire with fire and take out another loan to get those debt collectors off your back. However, this is not a good solution, as it will almost certainly trap you in an even worse cycle of debt. Resist this quick fix solution and your future self will thank you!
Step 4: Come to an agreement with your Creditors
Do not stick your head in the sand: get in touch with your creditors sooner rather than later. There are laws to protect you here (the Citizen’s Advice Bureau or a solicitor working pro bono -i.e. for free – will be able to explain this to you), and payday loan companies and debt collectors are legally required to take your financial circumstances into account and to be lenient with you if you are in financial difficulty. Call them and let them know that you are taping the conversation, or keep everything in writing (over email or letters) so that you have a paper trail preserved. Have a budget ready and a clear list of how the loan payback demands have affected you: for example, making it difficult for you to pay everyday bills such as rent and grocery shopping, or causing you high levels of stress and worry. There is every likelihood that they will be lenient with you, writing off a certain amount of the debt, or suspending interest on it. Make an agreement with them to pay back only what you can actually afford without putting your livelihood in jeopardy, in a timescale that works for you.