Thames Valley finance expert's advice for dealing with a new year debt hangover

A finance expert in the Thames Valley is advising people in the region who are struggling to pay for the festive season not to allow a New Year debt hangover to cause them pain throughout 2016.

The Southern region Thames Valley Group of R3, which brings together insolvency specialists from across Berkshire and Hampshire, is recommending a ten-point action plan which can help people recognise, review and address their money issues.

Figures showing the regional breakdown of personal insolvencies in 2014 paint a mixed picture across the Thames Valley. Last year 14 out of 18 local authorities showed a decrease in individual insolvency rates. Wokingham had the second lowest rate in the whole of England and Wales (8.2 per cent) but Swindon (28.5 per cent) continued to show the highest rates of individual insolvency in the Thames Valley, placing it in the top 50 highest rates for local authorities in England and Wales.

Recent research by R3 showed that 41 per cent of people in the South East are worried about their current level of debt, with credit card repayments being the main cause for concern.

Overall the South East has one of the lowest rates for personal insolvency of any region in England and Wales.

David Clements, director at Harrisons Business Recovery & Insolvency and member of the Southern region Thames Valley Group of R3, said:

“Dealing with a New Year’s Day hangover can feel arduous enough, but whilst a couple of paracetamol and a few hours’ more sleep usually deals with the problem, there’s sadly no such quick fix for financial problems and they can be a lot more painful for a lot longer if you ignore them.

"Overall, Hampshire has one of the lowest rates for personal insolvency of any region in England and Wales but the rates are not consistent across our region. The first few months of any new year are often the time when overspending catches up with people.

"For those with debts, seeking advice early from a qualified sources is the best course of action. The more debt builds up, the fewer options there are available. Confronting financial difficulties straight on is the best way to prevent drowning in debt during 2016."

R3’s top ten tips for managing a debt hangover are:

1. Act today. Putting off the problem is far more dangerous than dealing with it.
2. Ask for help. Much professional advice is free, whether it’s an initial consultation with a licensed insolvency practitioner, the National Debtline, Citizens Advice Bureau, or Insolvency Service Helpline.
3. Be honest with yourself. Start by working out how much you owe right now with everything combined. Work out your income and expenditure too. Do not be vague.
4. Prioritise the payment of your debts. Identify your essential financial commitments and cut down on luxuries. Identify outstanding debts with the highest interest charges and prioritise paying these. Maintain minimum monthly credit card payments to retain your credit rating. An advisor can help with this.
5. Communicate with your creditors. This will give them an opportunity to help you at an early stage, which could evaporate further down the line.
6. Learn about your options. A number of formal insolvency procedures are available. Bankruptcy, Debt Relief Orders (DROs) or Individual Voluntary Arrangements (IVAs) provide solutions appropriate to various levels of debt. These solutions are both statutory and highly regulated procedures, and not the “debtors’ prison” of Dickens. It will cost you time and money if you start in the wrong solution, so make sure you take advice about all of the options available to you.
7. Be transparent. Give full details about your financial situation to both creditors and advisors.
8. Take your time to choose the right solution. Don’t allow yourself to be pressurised and make sure you are talking to a regulated professional rather than a provider who may seek upfront costs worsening the position.
9. Don’t plug the gaps short-term. Using your credit card or ‘payday’ loans to tide you over day-to-day is a sure sign of financial trouble, and only likely to make your financial situation worse, rather than better.
10. Spend sensibly. Retailers are still desperate for your cash or credit card payments, but try to resist the temptations they’re offering if you know you can’t afford them.