Financial Difficulties

Whatever you’re facing, please remember that you are not alone, even though right now it may feel that way.

Very few of us feel comfortable openly discussing money at the best of times, let alone when we’re troubled by our finances.

Opening up and talking to someone about what you’re experiencing is the first step towards getting the help you need. This doesn’t need to be someone in your close circle - we know that can sometimes feel uncomfortable. You might find it’s easier talking to a trained debt advisor. They’ll listen to your circumstances and help you figure out your next steps.

Try not to let your money worries consume you and please don’t suffer in silence. You may think you have exhausted all options, but there is always a way, and support is out there.

What happens if I fall behind on or fail to make my loan repayments?

This section may sound daunting, but try not to panic.

It’s important to know the facts before deciding on the best approach to tackle the issue.

Missed repayments will appear on your credit report, and usually result in a fee. The charge amount may vary between lenders – you should check your terms and conditions for full details. Your credit score is also likely to decline as a result of late or missed repayments.

You will receive a default notice if you miss several repayments. If you ignore the default notice, your debt may be passed to a debt collection agency, or your lender could take legal action against you.

If you have a secured loan and you default on your repayments, your lender could repossess your home, or whichever asset you used as collateral against the money borrowed.

We hope that it never gets to this stage, and you’re able to take proactive steps to prevent this from happening.

What to do if you’re struggling to keep up with your loan repayments

If you have a loan that you are having difficulty repaying, you should contact your lender as soon as possible.

Your lender will appreciate you letting them know of your situation, and will want to work with you to find a solution.

Every lender is different, but there may be things they can do to help. You may have the option of a repayment holiday, or reassessing your repayment amounts to make them more affordable.

It’s also worth noting that some lenders may also be able to temporarily freeze your repayments, or the interest you pay on your loan. However, by doing so, you will extend the term of your loan and pay more in interest over the new extended term.

While it is ultimately up to the lender whether or not they agree to freeze your interest or repayments, they must consider your request under guidelines set by the Financial Conduct Authority.

Getting back on track

Once you have spoken with your lender and looked at your available options, you may wish to put a plan in place to clear the remainder of your balance.

Budgeting isn’t nearly as scary or tedious as it sounds, and can be a practical tool to get finances in order.

To work out your budget, make a note of your monthly income. This includes your salary and any guaranteed benefits. The total figure is your monthly budget.

Next, deduct your essential monthly outgoings, including loan repayments, utility bills and Council Tax, rent or mortgage payments, and food shopping.

However much money you have left after your outgoings is your disposable income. You might choose to save this or make an extra payment on a credit account.

Take a closer look at your budget. Are there any areas where you could save money? For example, are you paying for services that you’re not using, such as an old gym membership, or a streaming fee for a service you no longer use?

Not sure where to start?

MoneyHelper have put together an online budget planner tool to help you get started and keep track of your spending.

You can also head over to our blog for handy hints and tips on how to manage your money, including how to save money when heating your home, financial support if a relative needs care, and how to pay for childcare.

Where you can go for help

There are a number of websites offering free, impartial help and support, including:

• Citizens Advice Bureau
• MoneyHelper
• National Debtline

StepChange

Little Loans are proud to have teamed up with StepChange to provide a free, financial quiz. The answers you provide will generate advice for to you and your situation.

Other useful resources

If you’re feeling anxious and overwhelmed about money, or for any reason, there are many places you can turn for some reassurance and an empathic, non-judgemental ear.

• Mind
• The Samaritans

The NHS also have a page dedicated to money worries and mental health.