Know your options: R3’s new resource about debt solutions

18 December 2020

The pandemic has had a devastating impact on many people's personal finances. Debt charity StepChange found that 2.5 million people "are facing a financial crisis due to the impacts of coronavirus", while 5.6 million are finding it hard to pay for everyday essentials, leading to arrears and borrowing among this group of over £10 billion. Citizens Advice, meanwhile, has estimated that "6 million UK adults have fallen behind on at least one household bill during the pandemic and [...] those households owe £1.6 billion in household bill arrears".

While many working age people have found they are spending less, as they are able to work from home, many of their peers have not been so lucky, with income cuts due to the economic effects of the pandemic - from reductions in hours to job losses - causing widespread financial hardship.

Debt worries can be overwhelming and frightening and can leave those who are concerned about what they owe feeling helpless. The range of possible debt solutions for individuals in these circumstances can equally seem overwhelming, and we want to help people to make informed decisions about these options. So, to this end, R3 has produced a resource for people in England and Wales to provide clear information about the options available to them when it comes to managing their debts and exploring personal insolvency procedures.

New resource for those in debt

"Dealing with money worries - a guide to your options" is available on our website (check the download bar or tab of your browser for the PDF), and we are encouraging our members to make it available to anyone who comes to them for help.

It sets out non-statutory options (negotiating with creditors, budgeting, consolidation loans and debt management plans), which are not within the statutory personal insolvency framework set out by the Insolvency Act 1986, as well as the three types of personal insolvency which are described by the Act.

With flow charts and a comparison table showing bankruptcies, Individual Voluntary Arrangements (IVAs) and Debt Relief Orders (DROs), we hope that it will be useful to people who are facing money worries, and who may be confused about what they need to do to get their finances back on track.

The document also contains a list of organisations which can provide free, high-quality and trustworthy debt advice. Sadly, it is all too easy for people in dire financial straits to be directed towards unregulated advisors offering unreliable advice, often for a fee - a risk which will only grow as the scale of the UK's debt crisis mounts.

We very much hope that our resource will help people find their way to regulated sources of help and support, including insolvency practitioners, many of whom will offer a free initial consultation (our Find a member page can be used to find R3 members across the UK).

We encourage anyone working with people in debt to download the resource, and/or to have the link on hand to pass on to anyone who needs it. With a wave of personal financial problems likely to break in the future, we are hoping it will reach - and help - as many people as possible.

• To download a copy of R3's resource, click here.