What is problem debt?

Discover more about problem debt, what it means, the signs and indicators, how to understand if you have problem debt, and how Lowell can work with you.

If you're finding it difficult to keep on top of your debt repayments, you may have problem debt. According to a report from StepChange1, released in January 2022, 51% of Brits are in problem debt.

We know it can be stressful to be in a situation where you're experiencing financial difficulty. But don't worry if you think this might be you, as you're not alone.

At Lowell, we believe that talking about debt shouldn't be awkward or uncomfortable. We want to remove the stigma around those conversations and educate our customers, so that you feel confident when it comes to managing your outstanding debts.

We also know and understand that it's a difficult and worrying time at the moment, with rising goods and energy prices, inflation and cost living pressures. Please contact us, as we are here to help and support you.

Carry on reading this guide to problem debt to learn more and find out how Lowell can support you.

In this guide:

  • What is problem debt?
  • How you can tell if you are in problem debt
  • How to manage problem debt
  • Who else can help with problem debt
  • How Lowell can work with you

What is problem debt?

Problem debt typically refers to when a person can no longer keep up with their debt repayments and it becomes unmanageable. This may be due to a change in circumstances, such as:

  • A loss of a job
  • Experiencing a relationship breakdown such as a divorce
  • Having debt that is hard to keep up with
  • Not feeling comfortable or confident enough to seek any additional advice and support

How you can tell if you have problem debt

Of course, everybody's personal circumstances are different, so being able to spot the signs of problem debt can vary person-to-person. However, there are some general indicators that might mean you are struggling with problem debt, for example:

  • If you're consistently behind on your debt repayments such as credit cards, loans, store-cards, etc
  • If you're struggling to meet your debt repayments on a regular basis
  • If you feel like your debt is a heavy burden and is having a significant impact on your life

Problem debt can be difficult to deal with, and we understand that this can make it feel hard to seek support or even know where to seek support from. But the good news it that there are some things you can do to manage and improve your financial situation.

What happens if I can't pay my debt?

One of the first things that might cross your mind when you're struggling with problem debt might be "What would happen if I can't pay or make payments?"

If you don't make payments or can't afford to pay the full amount, then you may receive a default notice from your creditor. This is to let you know that you have a certain period of time to sort out your missing payments before a default will be applied to your account.

A default will stay on your credit file for up to six years and could impact your ability to obtain credit in the future. If your debt is with Lowell, for more information, you can read our blog on how defaults work.

This is why, if you're struggling with problem debt, it's important to let your creditors know about your situation as soon as possible. Once you let them know, they can look into what they can do to support you.

If you have outstanding accounts with Lowell that you're struggling with, we're always there to listen and understand your individual circumstances so that we can agree to a suitable solution which is tailored to you and your situation.

How to manage problem debt

We understand that having problem debt can feel overwhelming, and you may not think that you can take control of your finances. However, it's more important to remember that there are multiple solutions that may be available to you, and a wide variety of supportive organisations that can help you as well.

How you can deal with problem debt

If you're unsure about what to do when it comes to dealing with problem debt, here are some steps you can take to get started:

  • Take a look at your current financial situation. Includealldebt you have, how much you owe, and how much you're currently paying each month
  • Use our free budget calculator to create a household budget, and see where you're spending. This will give you an insight into your spending habits, too
  • Check your credit report to view your score. Your outstanding debt will also appear on the report. Our blog on how to improve your credit score should help with this
  • Focus on making affordable repayments. If you don't think your current payment plan is working for you, get in touch with us to see what we can do to help
  • If you have debts with multiple creditors, you may find it helpful to seek free, independent debt advice and support. Remember, there's no shame in asking for help when you're going through a tough time. At Lowell, we're able to put you in touch with other companies that can help you with debt solutions and managing your debt

Hopefully, by taking some of the above steps, your problem debt concerns will begin to ease, and you'll feel more confident when it comes to managing your finances and debt.

If you need any further guidance, be sure to reach out. Our supportive team are trained to always be considerate of your situation, and help you on your journey to becoming debt-free with Lowell.

Who else can help with problem debt?

If you feel like you need a little extra support or advice, there are lots of organisations who can help you.

You can get free, independent advice from organisations such as StepChange, Citizens Advice or National Debtline. These organisations are licensed to offer free, independent advice and have many free online tools that you can use.

Citizens Advice:

Citizens Advice give people the knowledge they need to find their way forward, whoever they are and whatever the problem. Citizens Advice can offer support face-to-face by visiting a local centre, but they can also provide advice over the phone and online - all of which is free. Citizens Advice can offer advice on benefits, work, debt and money, housing, immigration and health.

National Debtline:

National Debtline is a charity that provides free, impartial and confidential advice to people across the UK. You can contact them online, through their webchat, or by calling them and speaking to an advisor. They have a range of debt advice fact sheets that you can access online, and they also have a budget tool that you can complete to see what money you have coming in and what you are spending. Their team of expert debt advisors will help you take control of your debts.

StepChange Debt Charity:

StepChange provide free, confidential and expert debt advice and money guidance. StepChange will be able to recommend the best solution for your circumstances and can provide you with money support for as long as you need their help. They offer you flexible debt advice, which is based on a comprehensive assessment of your situation. Debt solutions that they can help you with include debt management plans through to bankruptcy.

There are many 'debt solutions' that may be available to you with the support of one of the above charities. For example, some debt solutions are Debt Management Plans (DMP), Debt Relief Orders (DRO), and Individual Voluntary Agreements (IVA). Our guide on the different types of debt solution goes into each one of these in a lot more detail.

Our customers are our main priority. While the team at Lowell can't directly help with arranging debt solutions, you can still get in touch with us, and we'll give you the details of other, trusted organisations that can help you.

We can also look to hold your account so that you don't receive any contact from us whilst you access help.

At Lowell, we put our customers first

If you're a customer of Lowell and struggling with problem debt, then the best thing you can do is to let us know. We always put our customers and their well-being first, and we are here to support you in any way we can.

You can either call us on 0333 556 550, send us an email or contact us by post. Our live chat service is also open 8am-8pm, Monday to Friday, and 8am-2pm on Saturdays. Alternatively, you can manage your Lowell account yourself via our online portal.

How you can work with Lowell to solve your problem debt

Once you've explained your situation to us, there are certain things that Lowell can do to support you.

For anyone struggling, we understand that you might just need some breathing space to figure out your situation. We can look to pause your payments and hold off contacting you for a period of time, before reviewing your situation again after the breathing space period has ended.

Should your circumstances have changed for the long-term, then we can have another look at the current payment plan you're on together. We want to make the entire debt process hassle-free and affordable. We'll always make sure that your plan is based on your individual circumstances.

For more information, we'd recommend checking out our Next Steps page, which explains how we can work with you depending on your personal situation.

You shouldn't have to struggle with problem debt alone. As a customer of Lowell, our friendly team is always here to listen and support you, whatever your circumstances. As soon as we hear from you, we'll get to work on finding the best way forward.

Problem debt and mental health

We understand the problem debt can lead to poor mental health, including feeling isolated and vulnerable. At Lowell, we take pride in putting our customers first. If you need professional help with debt advice, there are a lot of mental health resources that you can access.

For example, Mind is a mental health charity that offers information and support if you're going through a hard time. Whatever you're going through, the Samaritans can also offer you support; the benefit of this organisation is that they are available 24/7, every day of the year.

If you're interested in more information about debt and how Lowell can work with you, you can find a wide range of helpful guides in our debt guidance hub, as well as on the Lowell blog.

 

Sources:

1 https://stepchange.org/credit-safety-net.aspx