R3, the insolvency and restructuring trade body, has released advice for consumers who are worried about the financial impact of COVID-19.
“The pandemic will have a serious effect on people’s finances,” says Eleanor Temple, chair of R3 in Yorkshire and a barrister at Kings Chambers in Leeds. “People are seeing their income cut, their hours cut, having to take mandatory unpaid leave, and in some cases losing their jobs, while we know it is almost certain that there will be longer-term economic consequences.
“Right now, it’s no surprise people are worried about their financial situation, but there are steps they can take to feel more in control.”
1. Keep calm
R3’s first piece of personal finance advice is: stay calm. The pandemic has affected the lives of almost everyone in the UK in one way or another, and it’s widely accepted this is something that no one can tackle alone.
Eleanor says: “It’s no surprise people are concerned, but there is help and support available. Don’t panic – you don’t have to go through this alone.”
2. Assess your situation
Next, sit down and work out your financial situation. What money do you have coming in? What expenses do you have to pay? Where can you make savings on your current outgoings?
Once you’ve done that, think about what you expect to happen next.
“Taking stock of your finances is a crucial step,” Eleanor says. “Having a clear picture of where you are financially will make it much easier to consider your options and make you feel like you’re taking control of your situation.”
3. Seek advice from a reputable source
R3’s third suggestion is to seek advice – but from a qualified source. Talking to insolvency professionals, or organisations like charities and registered debt advisers is a sensible step, although there is likely to be very high demand for the latter two’s services at present and getting through on the phone may be hard.
Eleanor adds: “A conversation with a qualified and regulated professional about your debts will give you the full picture of your financial situation and the full range of solutions that are open to you to manage and resolve it.
“Most insolvency practitioners will offer an hour of free advice to people in debt, and if you have already self-assessed your situation that discussion alone should be enough to give you a good idea of where you stand and the options that are open to you in terms of resolving your financial position.
“The sooner you seek advice, the more options you have open to you, and seeking advice early will also mean that any decision you take will be far more considered than one you would have if you left it until later.”
4. Start – and keep – talking to those you owe
Talking to the people you owe money to is vital. If you know that a pending bill or repayment will be impossible for you to fulfil, contact the party, whether it’s a business or person in question and explain your situation. In many cases, they are likely to be sympathetic and offer extra time to pay. This is especially likely to be the case for larger financial services companies and banks, as they will have formal systems in place for dealing with people in crisis.
If you are in an Individual Voluntary Arrangement (IVA), a Protected Trust Deed (PTD), or making payments under a Debt Management Plan (DMP), you should immediately contact the supervisor/trustee of your procedure, or the company overseeing it, if your income falls due to COVID-19, and you are unable to make payments as agreed.
“Having these conversations is never easy, but they’re better done sooner rather than later,” Eleanor says. “Go in prepared: gather evidence to show that your income has fallen, fully understand the terms of your procedure and have questions prepared for the person or company that oversees it, and have some idea of what you could do to help make the payments you owe and what you might be able to make in the near future.”
5. See what support is out there
There is a lot of financial support out there. You may be eligible for benefits, payment 'holidays' for mortgages and loans, and support with telecoms and energy bills.
For benefit eligibility, visit: https://benefits-calculator.turn2us.org.uk/AboutYou
For advice on what financial support is available with mortgages, bills and overdrafts, visit: https://www.moneysavingexpert.com/news/2020/03/uk-coronavirus-help-and-your-rights/
Eleanor says: “Government and industry are working together in a massive effort to lighten the pressure on consumers. Do your research and see what’s out there that could help you – you may be eligible for more support than you think.”
Where to find more information
For local sources of personal insolvency advice, try the 'Find a member' tool on R3’s website: www.r3.org.uk/about-r3-insolvency-restructuring/find-insolvency-advice/