A North East insolvency expert has drawn up a ten-point action plan to help people in the region with money worries avoid a New Year “debt hangover”.

Alexandra Withers, North East Vice Chair of R3 and an Associate Solicitor in the Insolvency Department of Short Richardson & Forth Solicitors, is urging people in the North East to take proactive steps towards recognising, reviewing and addressing their money issues, so that they don’t cause them pain throughout 2019.

The North East has had the highest rate for personal insolvency of any part of England and Wales for each of the last ten years.

Alexandra Withers says: “Dealing with a festive hangover can feel hard, but while a couple of paracetamol and a few hours’ more sleep usually deals with the problem, there is sadly no such quick fix for financial problems and they can be a lot more painful for a lot longer if you ignore them.

“Concerns over rising levels of personal debt in what remains an unstable economy have been very clearly expressed by many experts this year, and we could well see more personal finance issues arising in 2019.

“The North East consistently has the highest rate of personal insolvency of anywhere in England and Wales, and the first few months of any new year are often the time when overspending catches up with people.

“There are a number of measures that people facing money worries can take to try to resolve this issue, but to give themselves the best possible of re-establishing control over their finances, these individuals need to recognise their situation and proactively decide to do something about it as early as they can.”

R3’s top ten tips for managing a debt hangover are:

  1. Act today. Putting off the problem is far more dangerous than dealing with it.
  2. Ask for help. Much professional advice is free, whether it’s an initial consultation with a licensed insolvency practitioner, the National Debtline, Citizens Advice, or the Insolvency Service helpline.
  3. Start by working out how much you owe right now with everything combined. Work out your income and expenditure too. Do not be vague.
  4. Prioritise the payment of your debts. Identify your essential financial commitments and cut down on luxuries. Identify outstanding debts with the highest interest charges and prioritise paying these. Maintain minimum monthly credit card payments to retain your credit rating.
  5. Communicate with your creditors. This will give them an opportunity to help, whilst silence on your part could see goodwill from your creditors evaporate further down the line.
  6. Learn about your options. Bankruptcy, Debt Relief Orders (DROs) and Individual Voluntary Arrangements (IVAs) provide solutions appropriate to various levels of debt. These solutions are both statutory and highly regulated procedures administered by professionally qualified specialists, and not the “debtors’ prison” of Dickens. It will cost you time and money if you start in the wrong solution, so make sure you take professional advice from a qualified and reputable source about all of the options available to you.
  7. Be transparent. Give full details about your financial situation to both creditors and the person from whom you’re receiving advice.
  8. Take a breath and choose. Don’t allow yourself to be pressurised and make sure you are talking to a regulated professional such as a licensed insolvency practitioner, rather than an unregulated provider, who may seek upfront costs, worsening the position you’re in.
  9. Don’t use your credit card or ‘payday’ loans to plug the gaps in your day to day finances – this is a sure sign of financial trouble, and only likely to make your financial situation worse, rather than better.
  10. Spend sensibly. Retailers are still desperate for your cash or credit card payments, but try to resist the temptations they’re offering if you know you can’t afford them.

Alexandra Withers concludes: “Above all else, if you’re facing financial difficulties, seek advice early from a professionally qualified and regulated source, much in the same way as you would think of seeing a doctor if you were ill.

“Making sure your personal finances are in the best possible condition for the next 12 months should be a New Year’s resolution we can all stick to and can all benefit from.”