Most adults constantly worry about debt; 1 in 3 have defaulted in past year

Debt worries are never far from the minds of most UK adults, even after going to bed, new research suggests.

Of the 2,000 people surveyed by the Debt Advisory Centre at the start of July, 71 per cent of them worry about their debt all or most of the time and for more than half of those people (54 per cent) these concerns have caused sleep disruption.

A similar proportion (53 per cent) revealed that their mental health had suffered as a result too.

For around a third of these debt worriers, it had impacted their physical health (30 per cent) or their relationship with their partner (31 per cent).

More than a fifth (22 per cent) said family relations had suffered while a sixth (15 per cent) had seen their friendships come under strain due to debt problems.

So how can you shake off these lingering debt-related clouds?

Well, ignoring it will only fuel the problem because lenders could add extra interest and charges to what they already owe.

In fact, speaking to your lenders is one of the most effective ways of tackling debt problems. By explaining your financial difficulties and outlining what you can afford to repay, your lender may withhold from shovelling on additional interest and charges.

Discussing your options with an expert debt advisor may reveal the most suitable solution for your circumstances. They’ll also look at your income and outgoings to help draw up a realistic budget.

Use those closest to you to talk it over too. Bottling up your worries only ramps up the stress so talking about the problem with family or friends will act as a form of relief.

It has also been revealed that more than a third of UK adults have defaulted on a credit agreement in the last 12 months.

Defaults

The same round of research found that more than a third (38 per cent) have been issued with a default due to a late or missed payment on a credit card, mobile phone contract, or utilities bill in the past year.

A tenth of these defaults were in relation to addressing credit card balance, while an identical proportion were over missed or late payments for gas or electricity.

A default is issued by a credit provider if a number of monthly payments – usually three or six – are missed, paid late or in part. Defaults typically precede legal action from the creditor where they will try to recover the balance owed.

Any default has lasting repercussions, appearing on your credit history for six years. This blemish will have a negative effect whenever applying for future contracts and cause creditors to think twice before accepting you.

Receiving a default notice should be treated like “a wake-up call” that your personal finances are getting out of control, a spokesperson for the Debt Advisory Centre said.

They added that lenders will continue to add interest and charges to what you owe after sending the notice, so ignoring the missed payments will only see the owed amount grow over the coming months.

“If you have been sent a default notice, it makes sense to seek debt advice before your creditor starts legal action – which usually results in a County Court Judgement,” they added.