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

Andrew Haslam, North East chair of insolvency trade body R3, is urging people across the region to take proactive steps towards recognising, reviewing and addressing their money issues in 2020 before they cause them potentially avoidable pain.

According to the latest annual figures from the Insolvency Service, North East England retained its unwanted place at the top of the national table for personal insolvency for the eleventh successive year in 2018, with a rate of 33.2 individual insolvencies per 10,000 people.

Research carried out by R3 earlier this year found that one in six of those surveyed across the North East, Yorkshire and the Humber (16%) spent up to £100 more than they received in income over the past month, with 6% spending between £100 to £300 more and 2% spending over £300 more.

In the same survey, nearly one in five (18%) of these adults also said they do not have any savings at all at the moment.

Andrew Haslam, who is also head of specialist business advisory firm FRP Advisory LLP’s Newcastle office, says: “Dealing with a festive hangover can feel hard, but while a bit more sleep usually makes things better, 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.

“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.

“Concerns over rising levels of personal debt in what remains a challenging economic situation remain very clear, and we could well see more personal finance issues arising here in 2020.

“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 and address their situations as early as they can. Talking to a professional and qualified advisor, who can give an objective and informed perspective, may well be key.”

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 Government’s Money Advice Service.
  3. Start by working out how much you owe right now with everything combined. Work out your income and expenditure too, and don’t 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) are forms of individual insolvency procedures which are appropriate to various levels of debt, and are highly regulated and administered by professionally qualified specialists.
  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 before you 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, while ‘buy now, pay later’ offers are becoming increasingly common, but try to resist the temptations they’re offering if you know you can’t afford them.

Andrew Haslam concludes: “The most important thing for anyone with money worries is to not put their head in the sand in the hope that they go away.

“Just as you would see a doctor if you were feeling ill, seeking early advice from a professionally qualified and regulated source is crucial in giving yourself the best possible chance of putting your finances back on an even keel.”