I’m a debt expert – how you can reduce your payments if you’re struggling with the cost of living crisis


STRUGGLING with debt is incredibly stressful, but there are steps you can take to reduce your repayments.

As the cost of living crisis deepens and inflation causes prices to rise, more people may find it’s harder to keep on top of bills and debt.

The average UK household owes £2,192 in credit card debt alone

According to The Money Charity, an organisation that helps people with their finances, the average UK household owes £2,192 in credit card debt alone.

But there is help on hand if you’re struggling to make debt repayments.

HOAR spoke to expert Andy Shaw from debt charity StepChange who revealed his five tips for helping to reduce payments.

Talk to your creditors

Credit card or debit card debts can quickly stack up, particularly if you’re trying to support a family.

But Andy said an important first step if you find yourself in this situation is to simply talk to your creditors who might be able to change your plan.

A creditor might be a bank, business or entity you owe money to.

Crucially, many will have payment options or help schemes in place for those who are struggling – but you need to let them know first.

“If they don’t know anything about your current situation, they won’t be able to offer support or potentially reduce payments,” he said.

“If you are experiencing problem debt, and are stressed about your finances, don’t suffer in silence.”

Speak to a charity

If you don’t know how to approach your creditors, then charities such as StepChange can help you make a plan.

It offers free and impartial debt advice specific to your needs and may offer you a number of options to tackle the debt.

These include a debt management plan (DMP) to pay off your debts through reduced monthly payments, a Token Payment Plan (TPP) to manage your payments over a short period, or declaring insolvency, which would see your debts written off.

You could also try the National Debtline, which also offers free advice.

To get in touch, you can go to its website, or call 0808 808 4000.

Try a government scheme

The government announced a raft of supportive measures for households earlier this year.

Among the measures is a £650 cost of living payment, £150 disability payment, £400 energy rebate grant and a £300 payment for some pensioners.

But if you’re looking for targeted debt support, the government’s Debt Respite Scheme, also known as Breathing Space, is one option.

Launched last year, it’s free to use and someone in debt the right to legal protections from their creditors.

Under the scheme, people can freeze most interest, fees and charges on debts and pause enforcement action and contact from creditors.

You’ll be eligible for the scheme if you live in England or Wales.

You’ll also be eligible if:

  • You have a qualifying debt
  • You don’t have a debt relief order (DRO)
  • You don’t have an individual voluntary arrangement (IVA),
  • You don’t have an interim order
  • You are not an undischarged bankrupt when you apply

You also can’t have used the service in the previous 12 months.

If you have a DRO, you don’t have to make payments towards most types of debt and your creditors can’t force you to pay off the debts.

An IVA is a legally binding agreement between you and your creditor to pay back debts over a period of time.

And an interim order is a court order that forces creditors to stop legal action for the enforcement of unsecured debts.

Andy said: “If you pass the eligibility checks, your creditors won’t be able to add interest or fees to your debts, or take enforcement action, for 60 days.”

Enforcement action could involve a bailiff at your front door demanding your goods to sell at auction.

Dig around

Not all debt will be credit card or debit card-related.

You might be struggling to pay your council tax, for example.

Council tax is a priority debt, which means the consequences of not paying can be very serious.

And while many households may get help through the Household Support Fund or Council Tax Rebate, there are other things you can do to get help.

Councils have discretionary power under Section 13A of the Local Government Finance Act to right off or reduce your council tax debt.

Andy said your local council’s website should have the information there, but quite often it was buried, so you have to dig around.

He added that you can always just make an approach to your council to see about what help is available to you.

If you’re living alone, with a student or with someone who is severely disabled, you could qualify for a council tax discount.

If you don’t know what council authority you are under, you can use the government’s locator tool.

Consolidate your debt

Debt consolidation is one way of reducing the amount of loans, credit card or debit card payments you are making.

But taking on debt to pay off other debt isn’t always the right route for a lot of people so you need to be careful.

Andy offered up two options you could take which can reduce your debt.

First is a low-interest consolidation loan – this involves you going to a bank or lender and taking out a loan of money and then using the loan to pay off your outstanding debts.

Then you only have to make repayments on one loan as opposed to multiple ones.

But, Andy warned: “It’s not for everybody because of affordability.

“Be careful if you’re a homeowner as well as these consolidation loans are secured against your home.

“So there’s risks if you fail to keep up with payments.”

If you fail to keep up with payments on a loan like this, Andy said, you could end up with your home being repossessed.

So it’s vital to make sure you can afford the repayments.

The second option is a 0% balance transfer credit card.

With this, you can transfer your balance from existing credit cards onto one, and not have to pay interest on it for a period of time, usually 12 to 18 months.

However, Andy said it has been harder to get hold of these credit cards in the last 18 months – and particularly if you have a poor credit score.

He said to shop around on comparison websites to find the best deals.

He added: “The other thing to be mindful of is that you can afford the repayments.

“You’ve got to be really confident that you can make those payments otherwise you’ll end up in more uncertainty than before.”