Debt series: How to spot the signs of problem debt

By Marianne Curphey

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For anyone facing debt, the support of people close to them can be invaluable.

In fact, the Money Advice Service, a government body set up to provide free and impartial money advice, is calling on friends and family to be alert to signs that loved ones might be experiencing problem debts that they are worried about disclosing.

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See the rest of the series

Check out the first instalment in this series, "Why we lie about debt" and the third instalment, "How to stay debt-free".

The Money Advice Service's research suggests that around 8 million people in the UK regularly miss bill re-payments or feel overwhelmed by their debts. Of those, fewer than one in five seek advice to improve their situation.

This means 10% of the population could be suffering in silence with serious money problems.

"Our research has shown that there are a lot of people for whom talking about money with their partner is a challenge, even when things are going well, and they are not struggling," says Caroline Hamilton, debt expert at the Money Advice Service. "So, they are not necessarily able to raise the issue if the debt becomes an issue."

Friends and family could make all the difference to break the silence and encourage people with money worries to open up and get help - if they can spot the warning signs.

And if you're the one struggling with debt or money problems, it can take a year or more before you recognise that you can't sort it out on your own and you need professional help. How can you know the difference between a rough patch and a real debt problem?

Here's how you can spot the signs of problem debt - in yourself or others.

Spotting the signs of problem debt
"We know from our research that the journey into problem debt can last a year or longer," Hamilton says. "People start to find money tight and they begin to juggle, moving debt around, perhaps being optimistic that things will get better if they get a new job and start to earn more. Or they start applying for further credit, or rotating credit lines.

"Then it becomes a way of life," she says. "People may not recognise the shift from money being a bit tight to getting to the stage where they need outside help."

She says it can be hard to spot that in yourself (or others), but you should know the red flags anyway. They include:

  • Missing bill payments.
  • Feeling overwhelmed by debt.
  • Using credit to pay for everyday essentials.
  • Worrying about how you are going to make it to next month.
  • Sleepless nights from worrying about money.
  • A suffering relationship.
  • Becoming withdrawn, anxious or depressed.
  • Losing weight.

"When people start to worry about debt, they might be concerned about how much they are spending and so start declining social invitations, or the nature of their food shop changes," she says.

Other red flags that may be easier to spot in others might include:

  • Past problems with debt.
  • A recent life event that has resulted in a loss of income or higher spending; for example, having a baby, being made redundant, illness, divorce or a death in the family.
  • Living beyond your means or overspending.
  • Becoming more secretive about finances.
  • Changed spending habits.

If you spot any of these habits or changes in yourself or a loved one, it's time to get help.

Overcoming the stigma of debt
Many people are shy about getting professional help, but you shouldn't be ashamed.

"What we have noticed in our focus groups, and where family and friends can really help, is that people with problem debt really want to be able to open up and talk about it, because it is a big worry for them," Hamilton says. However, "there is a massive shame around debt and so at the same time they are reluctant to talk or open a conversation," she says.

"They find it difficult to admit to themselves that they have a problem and they try informal alternatives first because they are often not clear what other options are available," says Michael Agboh-Davison, debt advice co-ordinator at debt charity StepChange.

The most important thing, Hamilton says, is to go for help before the situation becomes critical.

"By getting help, you are taking positive action and are dealing with it, and you can then go to your partner and explain what has happened, and that you already have a solution," Hamilton says.

People tend to bury their head in the sand and may be struggling for a year or more before they decide to get help, says Agboh-Davison.

 "If people come to us earlier, we can help avoid a crisis," Hamilton says.

See related: How 'no-consequences' credit can lure you to debt, Extreme, creative ways to clear debt, 4 wrong ways to pay credit card debt

Published: 29 September 2017