NewsPersonal Finance

£38million Boost For Debt Advice

Women Call Centre Employee Taking Calls.

The government have announced a new £38million funding package to help debt advice companies reach more people with support and advice. The money has been released in response to concerns that the Covid-19 crisis has forced many people further into debt. The new funds will be given to debt advice services – themselves struggling with the affects that Covid-19 has had on business – to ensure that they can maintain their services and reach those in need.

Seeking advice is a crucial first step for anybody struggling with debts that they can’t repay. From debt management plans to individual voluntary arrangements, there are actually many more options than you may think to help make debt less of a burden. However, these can be complicated for those outside the industry to understand. Debt advice services help by giving people clear information, and guidance about what their best course of action should be.

The best kind of debt advice typically comes from charities that don’t have a vested interest in getting you to sign up to one particular solution. Their advice can be truly impartial, focusing on the type of debt that you have and other factors such as your lifestyle.

Money And Pension Service

These are the organisations that will be prioritised to receive funding: the government has asked the Money and Pensions Service to oversee the allocation of funds and ensure that the money is sent where it is most needed.

Many households will need to turn to these charities for support, so there’s no need to feel alone if you decide to seek support. Charity StepChange have estimated that as many as 4.6 million households could be at risk of reaching dangerous levels of debt due to Coronavirus. They predict that the combined debts could reach a total of £6billion.

Man holding wallet open which is empty. Credit cards and bills on table.

Debt has worsened over recent months because many people are living on reduced income after being furloughed or made redundant. This means that credit becomes a necessary tool for paying essential monthly expenses. Combined with the fact that many people are taking repayment holidays which will send them further into arrears.

These are the types of difficulties that charities can give support with, and the Money and Pensions Service have said that the funding should help them reach an additional million households over the coming 12-18 months. Chief executive Caroline Siarkiewicz said:

“This pandemic is first and foremost a health emergency, but for many the longest lasting impact will be a financial one. Experience and evidence tell us that the number of people needing formal debt advice in the wake of a major event like this increases slowly at first but is then likely to grow for many months. When the greatest demand for debt advice hits, potentially in 18 months’ time, we need to be ready and that means acting now.”

If you have debts that you are unable to repay, or that are causing you stress and anxiety that affects your daily life, then it’s important to seek help as soon as you can. We recommend as a good starting point – they will direct you to other resources if required. You could also consider speaking to your bank or creditor.

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