As the cost of living rises, UK households are finding it more difficult to meet the costs of everyday items. From food to petrol, nearly every aspect of our daily lives has seen an increase. While this has led to more people than ever looking for debt advice, many in existing debt solutions are wondering whether the cost of living will affect their current debt solution.
Will the cost of living crisis affect my debt solution?
As bills rise at a faster rate than wages many will find they have less money left after paying essential living costs. For those on a debt solution it can mean that you can no longer afford your monthly repayments, something that can feel like a backwards step on your journey to reducing your debts.
That said, there is help available if you are struggling to pay off your debts.
Can’t afford IVA repayments
An IVA is a legally binding agreement that allows you to “freeze” your debt and agree to pay them back over a specified period, usually 5-6 years. If you cannot afford your IVA repayments it is vital that you contact your IVA provider as soon as possible so that they can help; this is true even if you think the change in financial circumstances is only temporary.
When you contact your IVA provider, they can offer:
- Payment breaks
- Cuts to your monthly payment – these cuts could be higher now due to the cost of living crisis
- Completion of your IVA, depending on funds paid so far
- Termination of your IVA
Given that an IVA can last for 5-6 years it is unsurprising that financial circumstances can change during this time and your IVA provider will be used to it. Therefore, don’t feel embarrassed or concerned about reaching out. The sooner you contact your IVA company, the sooner you can get back on track.
Can’t afford DMP repayments
Unlike IVAS, DMPs are not legal contracts and therefore allow for more flexibility. Still, in the first instance if you are struggling to pay your debt management plan you should contact your provider. You can then both agree to:
- Take a payment break
- Reduce your monthly payments
In some instances, you may decide your DMP is no longer meeting your needs, but this will be decided on a case-by-case basis.
The cost of living crisis will invariably have an impact on your disposable income and what you can pay towards your debts. Regardless of your debt solution, the most important step is contacting your provider who can help find an appropriate solution for your individual circumstances.
If you need further debt advice to help with the cost of living crisis, please use our free online debt advice tool.