THE number of Brits who have fallen behind on their debts is set to jump later this year as families face soaring costs this winter.
More families are expected to default on secured loans – such as mortgages and credit cards – in the last quarter of the year, according to the latest Bank of England figures.
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This means that the number of households who will fail to meet their repayments on time or at all is forecasted to rise – which could land families into hot water.
Missed payments can impact your credit score, making it harder to get accepted for finance in the future.
Borrowers can also find themselves being hit with hefty late fees if they don’t make their repayments.
It comes as a number of government help schemes have ended, leaving Brits and their finances in the lurch.
Universal Credit claimants saw their weekly payments docked by £20 after the government axed the weekly uplift.
The benefit was boosted by an extra £20 a week during the pandemic, amounting to £1,040 a year.
But hard-up Brits stopped receiving the extra cash from October 6 after the government slashed the uplift.
The government’s flagship furlough scheme ended on September 30 – leaving 1.6million workers at risk of redundancy.
Families have also seen crippling rises to their energy bills, with the energy price cap — which was brought in to limit how much consumers can be billed — raised by £139 earlier this month.
That’s at least £400 more than many families on the lowest tariffs – leaving millions of Brits in the cold this winter as they can’t afford to pay bills.
The rising prices will help to push inflation up, which is potentially set to cost Brits an extra £1,800 by the end of the year.
StepChange head of media Sue Anderson said rising bills and the end of certain government help schemes has created a perfect storm causing Brits to struggle to pay their way.
She said: “Many households are braced for lower incomes and rising costs this winter, and we already know that more than 10million people have borrowed to make ends meet since the start of the pandemic.
“The Bank’s survey forecast of rising defaults is likely to be accompanied by rising evictions, problem debt and even homelessness, so it remains vital that regulators and Government work together to mitigate the impact of these threats to household finances.”
How to get help with your debts
If you’re falling behind on your debt repayments, it can feel scary.
Here’s four things Citizens Advice says you can do to stop your debt spiralling and take back control of your finances.
Tell your lender
If you’re falling behind on your repayments, it’s important to tell your lender as soon as possible.
They might be able to put in place more affordable repayments and give you more time to pay off your debts.
Understand what you owe
The first thing to do if you’re falling behind on your loan repayments is to work out exactly what you owe.
Once you’ve got a handle on how much you need to pay back, make sure to calculate a budget based on what you spend on all your outgoings and how much cash you have left over to meet your repayments.
If you don’t have enough cash to cover everything you owe, then prioritise your debts and pay off the most serious ones.
Your rent, mortgage, council tax and energy bills should be paid first because the consequences can be more serious if you don’t pay.
Pay off more than the minimum
If you’ve got more than one credit card debt, then try to pay off more than the minimum repayment amount each month.
This will help to pay off your debt quicker, and also save you cash on interest too.
You should prioritise paying off the most expensive debt – the one with the highest interest rate – too.
This will help you save money on costly interest repayments.
Get advice
If you’re struggling to pay your debts month after month, it’s important you get advice as soon as possible before they build up even further.
There are a number of charities and organisations you can reach out to who will help you tackle your debt and give free advice:
We saved £129k in just 17 months after getting into £458k of debt – we got rid of furniture, slashed meals out and became VERY frugal
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