Publications from ODSW Social Insights: Letters by DSW (Vol 1) | Page 82

Helping Those with Debt

How to help those with unplanned debts
What counts as a debt crisis depends on who we talk to, but one useful
definition is when a person can’t afford to make even the minimum repayments
on all their debts. Therefore even if the person’s debts are big, if he can
service them - even at the minimum level - the person is not in a debt crisis
and different solutions are available.
So how can we help? First, the person should want to take charge and get
help for the debt payment. Second, the person needs to be in touch with how
he is coping with the problem. If the person feels that things are getting out
of hand and feels that he can’t cope, he should see a GP or call SOS. Third,
the person should commit to a plan which, as a start, will stop the debt from
growing.

Stop borrowing
It sounds obvious, but there’s no point in the person trying to sort out his
existing debts if he keeps adding to them. The most important thing therefore
is to ensure that the person is not borrowing more.
The way to start doing this is by having the person look at the bank statements
and draw up a budget which adds up whether the person spends more than
he earns, so that he can see where his salary and savings, if any is left, are
going. The next thing is to see where he can cut the bills and where he can
cut back.

Cut interest rates
With debts that incur interest rates, this is the first target to stop further
bleeding. The less interest the person pays, the more his repayments can
go towards clearing the actual debt and not just servicing the interest. Some
debt counselling will advise using a balance transfer which is when the person
gets a new credit card that pays off the debts on old cards, so that the person

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