Debt awareness: Helping families who are feeling the pinch

The global economic slowdown - sparked by the US housing slump - is impacting on markets around the world, and the UK is not immune to its effects.

British families will have noticed the increased prices of fuel and food on their weekly shop, no matter how large or small their household income. And whether you rent or own your home, you may be concerned by stories about house prices, mortgages, and repossessions.

Today the Council of Mortgage Lenders (CML) reported 18,900 homes were taken into possession by banks and building societies during the first half of the year, up by 41 per cent on the second half of 2007.

In today's world, many households carry some kind of debt - from mortgages through to credit card bills. In a period of economic change, debts which were previously manageable may now seem less so.

That is why the government has acted to make available a range of practical debt advice services. In these tough times, it is the job of government to help your family weather the credit crunch.

“Getting the right advice can make all the difference, helping people to cope with tighter purse strings in the face of rising costs and increasing mortgage repayments,” says justice minister Bridget Prentice.

"In the most serious cases, the right advice can help people who face the threat of repossession from losing their home,” she adds.

Dealing with debt can be frustrating and confusing, and it’s sometimes much easier to sweep the issue under the rug and pretend the problem doesn’t exist. Ignoring your debts won’t make them go away - they only get worse.

Prevention is of course the best way to protect your home, but sometimes that is easier said than done. Bills pile up and creditors come knocking. But one of the most unfortunate results is falling behind on mortgage or rent payments.

Mediation is the key, and court should always be the last option. Addressing your debt concerns and engaging in open communication with your creditors or landlord is the best way to negotiate.

There are people who can help

There is a new initiative which encourages all creditors to engage with people who owe them money prior to taking legal action. The initiative asks creditors to send their debtors information early on how to contact them to discuss problems alongside details of independent free advice that is available.

This gives people a chance to look for ways to tackle their debts, where to go for advice and the different ways repayments can be managed. This initiative has had great success and nearly nine out of ten people surveyed said this early advice would go a long way in helping people find ways to settle their debts.

Advice desk schemes currently operate in many county courts in England, and are available to those involved in housing possession claims and operate on days when possession cases are heard.

“People tend to bury their heads in the sand when it comes to debt, but those who have used advice services have been relieved to sort out what could be a terrible consequence of ignoring debts – losing your home,” says Clare Bayley, a Norfolk County Court worker.

These advice desks provide valuable support and guidance, working towards a positive outcome for those who are faced with repossession. In many cases, they arrange for tenants and homeowners to remain in their home, and assist landlords and home-loan lenders to resolve disputes and problems. Also, posters giving details of free advice providers will be displayed in all county courts.

It is, however, always better to get advice as early as possible rather than to wait until the day of any court hearing.

Extensive changes are also being made to Her Majesty’s Court Services’ Possession Claim Online system to ensure that the information received by tenants and homeowners contains details about local advice providers. This new system emphasises the importance of seeking advice at an early stage.

There is no shame in owing money, but the most important part is prevention. Facing up to your debts is the only way you can get over them. You may be living with debt, but with help you can live through it.