Debt doesn’t discriminate. It’s more common than you might think. Yet many of us suffer in silence when financial struggles arise. This culture of shame around money prevents people from seeking the help they need.
In this article, we’ll explore the difference between manageable and problem debt. Additionally, we’ll examine how stigma affects those struggling financially. Most importantly, we’ll discover practical ways to break down barriers and find support.
Insights found in this article are from our interview with Helen Handzel from StepChange Debt Charity for the Smile and Save Podcast. You can watch the full episode at the top of this page.
Understanding the difference: Good Debt vs Problem Debt
Not all debt is created equal. In fact, most of us will carry some form of debt throughout our lives. Mortgages help us buy homes. Meanwhile, car loans help us get on the road. These types of debt can actually support our goals and improve our circumstances.
However, debt becomes problematic when it starts controlling your life rather than serving it. According to StepChange Debt Charity, several warning signs indicate when debt has become unmanageable.
You might be experiencing problem debt if you recognise several of these situations:
- Making only minimum payments on credit cards
- Repeatedly using your overdraft facility
- Using credit to reach payday
- Missing payments on various debts
- Using credit to pay for other credit
- Falling behind on essential bills like housing costs
- Struggling with council tax and utility payments
- Regularly incurring late payment charges
- Using credit cards for basic necessities
Recognising these signs early can prevent your situation from worsening.
Common causes behind problem debt
Recent years have brought unprecedented financial challenges. The cost-of-living crisis has particularly affected households across Britain. Energy bills, housing costs, and fuel prices have risen dramatically. As a result, many people are struggling to make ends meet.
However, cost of living isn’t the only culprit. StepChange regularly sees clients facing debt problems due to:
- Job redundancy or reduced working hours
- Unpredictable income patterns
- Existing debt becoming overwhelming
- Injury or illness affecting earning capacity
- Relationship breakdown creating financial strain
- Major life changes disrupting financial stability
Interestingly, the demographics of those seeking help have shifted. Previously, problem debt primarily affected lower-income households. Now, however, higher-income individuals are seeking support. This change reflects how economic pressures affect everyone.
StepChange data reveals troubling trends. Average debt levels jumped from £16,000 in 2023 to £17,000 in 2024. Furthermore, mortgage arrears increased dramatically from £6,000 to £10,000 in the same period. These figures demonstrate how widespread financial difficulty has become.
The hidden impact of debt stigma
Despite debt being increasingly common, shame and stigma persist. This silence makes the problem worse. When people hide their financial struggles, they feel isolated and alone.
StepChange’s research during Debt Awareness Week revealed concerning statistics. Over one in four people would hesitate to share their debt problems with loved ones. Additionally, 92% of their clients wish they had sought help sooner.
Why debt stigma exists
British culture treats money as a taboo subject. We discuss many personal topics openly. However, financial matters remain largely private. Most people don’t know their best friend’s salary. This secrecy creates an environment where financial struggles feel shameful.
Other countries approach money conversations differently. Some even maintain public registers of earnings. As a result, financial discussions can feel more natural and less loaded with judgment.
The silence around money creates a vicious cycle. People assume they’re alone in their struggles. Therefore, they delay seeking help. This delay often makes their situation worse.
How employers can help
Employers have a unique opportunity to reduce debt stigma. Workplace conversations can normalise financial difficulties. They can also provide valuable resources to struggling employees.
Employers can support their workforce in several ways:
- Participate in campaigns like Debt Awareness Week
- Include debt resources in internal communications
- Partner with organisations like StepChange
- Create safe spaces for financial discussions
- Provide access to free debt advice services
These initiatives benefit everyone. Employees receive support when needed and employers see improved wellbeing and productivity.
The importance of seeking free debt advice early
Timing can be really important when dealing with problem debt. Unfortunately, most people wait too long before seeking help. StepChange finds that 50% of clients wait approximately 12 months after recognising their problem.
This delay happens for understandable reasons. People often think their situation isn’t “bad enough” for help. They compare themselves to others who seem worse off. Because of this, they often feel unworthy of support or resources.
However, seeking help early prevents problems from escalating. Additionally, more options remain available when you act quickly. Debt problems rarely resolve themselves and typically worsen without intervention.
Budgeting as your first line of defence
Budgeting serves as an excellent starting point for managing finances. This applies whether you’re dealing with debt or simply wanting more control of your finances. Modern cashless transactions can make spending easy to overlook. That’s where budgeting helps by tracking where your money actually goes.
Effective budgeting involves the following:
- List all household income sources
- Detail every expense, large and small
- Include annual costs like insurance or licensing
- Identify areas for potential adjustment
- Monitor spending patterns regularly
This process often reveals surprising insights. You might discover spending patterns you hadn’t noticed. Subsequently, you can make informed decisions about changes.
When dealing with problem debt, budgeting becomes even more crucial. It helps identify exactly where money goes and can also reveal opportunities for debt repayment. Understanding your complete financial picture enables better decision-making.
How StepChange supports those struggling with problem debt
StepChange offers comprehensive, free debt advice tailored to individual circumstances. Their support comes in formats that suit different preferences and needs.
- Online Debt Advice Tool: This self-guided resource operates 24/7, allowing users to work through their situation independently. At the end, you will receive personalised debt solution recommendations.
- Telephone Advice: Those preferring human interaction can call StepChange’s helpline on 0800 138 1111. Here you will find friendly, trained advisors who can provide personalised guidance and support.
Before contacting StepChange, it’s useful to gather the following three essential pieces of information:
- Income details: Include all money coming into your household
- Expenditure list: Detail all spending, from major bills to small purchases
- Debt inventory: List everyone you owe money to and the amounts
With this information, StepChange can build a complete picture of your circumstances. They’ll then discuss possible solutions and next steps.
Your next steps
Problem debt affects millions of people across Britain. However, it doesn’t have to control your life. Help is available, and it’s completely free.
If you recognise the warning signs of problem debt in your own life, don’t wait. The sooner you seek help, the more options remain available. Remember, speaking to a debt charity won’t affect your credit rating and you’re not alone.
StepChange Debt Charity offers free, confidential advice when you need it most. Visit stepchange.org or call 0800 138 1111 to start your journey towards financial freedom.
At Serve and Protect Credit Union, we understand that financial difficulties can happen to anyone. We’re here to help our members build emergency savings through salary deduction, while providing an affordable and secure option to borrow and consolidate existing debt. Don’t let shame or stigma prevent you from getting the help you need.
- The information provided is for guidance and educational purposes only. Serve and Protect CU does not offer regulated financial advice. Please seek independent financial advice.
