Making sure a small debt problem doesn’t become an unmanageable problem
By Mr Bankruptcy
30th January 2025
Fans of Ernest Hemingway might be familiar with the following from his 1926 novel, The Sun Also Rises:
“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually and then suddenly.”
Some things never change, and it’s just as true for businesses and even nations as it is for individuals. A small trickle of events and gradual changes suddenly turns into a torrent.
We all have debt; it’s an important enabler in modern life, and it’s fine while you can manage it. But spotting the signs before you start accelerating to that tipping point when ‘good’ debt flips into bad debt can save you from a financial and mental health crisis which can affect not only you but those around you.
Spotting the early signs of a debt problem
The warning signs are always there, even in the early stages. The important thing is to have the right information in front of you, not to ignore it when you see it and acknowledge the writing on the wall when you see it.
Some of those early warnings that your debt is becoming a problem include, but aren’t limited to:
- You no longer know how much you owe in total, or how much your debt is growing through interest every month
- The amount of debt you owe is rising
- You are having arguments at home or with business partners about money and spending
- You depend on your credit card or loans just to cover routine living and running costs
- You can only make minimum monthly payments on your credit cards
- You avoid opening the mail or dread unexpected knocks on your door or phone calls
- You’ve received a visit or letter from a debt collection agency
What can I do about worsening debt?
The first thing is to notice and acknowledge the problem and to decide to tackle it. If you’ve already done this then you’ve probably taken the hardest step. Whether it’s personal or business debt, you can then take some initial actions yourself to start dealing with the problem.
Business owners need to get back to familiar and basic good practices and look at reviewing budgets, cutting costs and ways of increasing income.
Individuals should do something similar at the personal level, sitting down, being honest with themselves and writing out a list of income and outgoings to see where changes can be made to bring the bottom line into a better balance.
Creditors can be approached to explore ways of making repayments more manageable. They usually recognise it’s in their interests for you to continue repaying what you owe them.
It may get to the stage that you need professional advice. A debt advisor will be able to look at your circumstances, prioritise debts and identify options you may not have been aware of.
Also, if formal, legal action becomes necessary, a debt advisor can help you to negotiate with creditors and deal with courts and official receivers, which can be stressful if you aren’t familiar with the processes.
Throughout all of this, it’s important to tell your nearest and dearest, whether they are business partners or friends and family. Your problem may be caused by bad decisions or habits or an unexpected setback such as losing your job or an unexpected tax demand but they could also be affected by your debt. However, they can also offer both practical and emotional support and will appreciate your honesty with them.
Looking forward
Everyone is likely to experience debt of some kind, whether it’s a standing overdraft, a mortgage to buy your home or a student loan.
Debt isn’t necessarily a bad thing if you’re able to manage it, but it can quickly get out of hand and become a full-blown crisis. I’ve seen it happen in many clients and even experienced it myself.
By identifying the warning signs early on, it’s easier to get on top of debt before it becomes a problem. Even when there seems to be no clear way forward, there’s always support available to help you understand and deal with your options confidently.
James Rosa Associates
James Rosa associates is a firm of debt advisors and debt adjustors. With a supportive, non-judgemental and friendly approach, we offer a full range of advice and professional services to individuals and business owners and directors facing problem debt and are actively seeking a solution. We also help clients involved in a civil or commercial dispute.
Our range of services include:
As you would expect, we are fully authorised and regulated by the Financial Conduct Authority (FRN665061) to work with clients and are qualified to produce bespoke solutions to suit their unique and personal circumstances.
Do you qualify for a free consultation?
If you need to deal with an unmanageable debt, or bring a dispute to a swift and cost-effective resolution, then contact James Rosa Associates, ring 0845 6807217 or email enquiries@jamesrosa.co.uk today for a discussion to find out whether you qualify for our free consultation service.
Please be advised that all views expressed in these posts are those of the author and not of James Rosa Associates ltd.