Good debt advice has a positive long-term impact. This, according to a study produced by the Institute for Employment Research at the University of Warwick.
The study was commissioned and funded by the Friends Provident Foundation. FPF is an independent charity that makes grants and uses its endowment towards a fair and sustainable economic system that serves society.
The Study’s initial findings are shown, in part, below.
There was evidence of repayments
taking very high proportions of household income. Cutting back on spending and
going without items was a major theme for interviewees.
Identifying the specific impact of debt, as opposed to low income generally, is difficult. Debt is perhaps best understood as adding another dimension to the struggle to make ends meet.
It is difficult to convey the strength of the impact of debt on people’s well-being. How it became overwhelming for people, completely dominating their lives.
In particular, interviewees talked in terms of ‘worry’. Which was a spectrum that ran from ‘losing sleep’ through to depression and even talk of suicide. Interviewees identified a strong theme as being about the behaviour of creditors. Ranging from a sense of creditors as unhelpful and difficult to deal with, through to descriptions of creditors as ‘aggressive’, ‘nasty’ and even ‘bullying’.
People should not be categorised as responding to debt in one specific way. Rather, there are a range of available options. People use different approaches, and combinations of approaches, at different times.
All the interviewees had at some point contacted their creditors. It was the willingness of creditors to accept offers that was critical. Contacting creditors did not necessarily help resolve the situation. Additional borrowing was a strategy pursued by many interviewees and was a response to indebtedness suggested by many creditors.
Support by family and friends can be very significant.
One financial specialist shared how friends and family can help people to take that first step towards seeking advice.
“Debt can go from manageable to unmanageable quickly and it can happen to anyone. If someone close has had a hard time lately, perhaps a job loss, drop in income or sudden increase in outgoings, they might find it hard to open up. They might struggle with feeling ashamed of their debt, or of not knowing what to do. You can help by making them feel comfortable enough to talk. This is often the first step to climbing out of debt.”
A wide range of other strategies were employed by interviewees, from using assets to ‘juggling payments’. These did not provide an answer to indebtedness. Some interviewees described themselves as having ignored problems or ‘buried their head in the sand’. However, ‘doing nothing’ should not be seen as a category of interviewees but rather a situation arrived at when other strategies had failed.
The only interviewees who sought
advice as an initial or early option were people who had previously sought
There was a distinct group of interviewees who solely wanted specific information. While others recognised their financial position was unsustainable. Either because of a specific trigger e.g. creditor action, or the more general impact debt was having on them.
The real issue was how long it was before people
Some did so before there was an absolute crisis. But other interviewees talked in terms of having reached a point of ‘desperation’ and ‘hopelessness’. And for them, it was the intervention of a third party that was often critical.
The reasons why people did not seek advice sooner included:
Ignorance of available services. Nervousness about approaching an advice provider when people had little idea what to expect. And debt advice being a last resort.
Seeking advice can be difficult when it is seen as representing failure. Meaning the person could no longer manage their own finances and was unable to cope. For the majority of interviewees, identifying an advice provider was not done on the basis of informed choice There was a strong sense of randomness.
The overwhelming majority of interviewees were very positive about their experience of debt advice. Fears about seeking advice proved unfounded. Interviewees were surprised and impressed by the service provided.
There were a very wide range of aspects of advice that people found helpful.
Three particular elements were found most helpful.
Having someone to talk to (with this including advisers being understanding, non-judgemental and sympathetic).
Being given information and the
importance of options being explained. This was very important in meaning that
people who approached an advice provider with a specific course of action in
mind, often decided to pursue a different option.
Being better able to deal with creditors (whether through practical tips and a sense of empowerment, or representation relieving the pressure of having to deal directly with creditors).
“Interviewees were positive about service delivery.“
The dominant view of interviewees was that improvements would best be achieved by greater promotion. Awareness of the existence of service provision and by services being more widely available.
If you are struggling with debt problems, Ramsey Lomax can help. contact Ramsey Lomax.
“People struggling with debt should seek help as early as possible.”
This is good advice from a leading charity. Taking the first step is always difficult but it is vital. There is help out there and solutions that can help, but you need to take the first step towards getting good debt advice. We have listened to the stories of 1000s of people and are constantly striving to help them. It is our mission to explore all their options and find a solution to help them become debt free. And what’s more, we have helped 1000s to achieve their goals since 2007, over 13 years of dedicated advice.
Finding a good debt advisor is often a relief. At Ramsey Lomax, we have years of experience in helping people. One thing to remember is that your chat with our advisors is completely confidential, free and without obligation. For many of our clients just getting it off their chests and having a sympathetic ear to talk to can make all the difference. At Ramsey Lomax, we understand ‘financial fear’. We have helped 1000’s of people to find a lasting solution to their debt.
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