Dreading energy bills this year? Worried about the end of furlough? Advice NI offers some sound guidance

The conclusion of the furlough scheme at the end of this month could place many of the 60,000 workers across Northern Ireland who are currently on furlough at risk of redundancy.

The impact of this potential loss of income will be compounded by the withdrawal of other government Covid support measures. Mortgage, personal loan and credit card Covid payment holidays, for example, have all come to an end recently, whilst bounce back repayments have begun.

With energy bills set to increase significantly and Universal Credit cuts predicted in early October, families across Northern Ireland could find themselves struggling financially and accruing household debt in order to get by.

For over 25 years, registered charity, Advice NI has been providing advice to those who need it most across Northern Ireland. In July 2021 alone, the organisation’s debt advisory service dealt with 303 cases involving debt issues, covering £1 million of debt. The top three debts were credit cards, personal loans and mortgage shortfalls.

Sinead Campbell, head of the award-winning Money, Debt & Quality team at Advice NI, said: “During 2020, our debt service dealt with over £28m of debt in more than 7,500 agreements and we anticipate that this could become worse as 2021 progresses.

“The withdrawal of government Covid support measures, along with an increased cost-of-living will put many vulnerable households across Northern Ireland under unbearable financial stress. The close of the furlough scheme at the end of September could see many households suffering from a loss of income, the impact of which will be exacerbated by an increased cost of living.

“The cost of living is rising considerably. According to the Office for National Statistics, private rental prices in the 12 months to July 2021, increased by 3.4 per cent in Northern Ireland.

“With the average annual household gas bill set to soar by over £100 and a proposed £20-a-week cut to universal credit, there is a real risk that many could be plunged into poverty this autumn.”

Advice NI was recently approached by a client with over £26,000 of unsecured debt, ranging from personal debts on credit cards to a personal loan, interest free finance, buy now pay later agreements and a bounce back business loan.

A small business owner, the client had been earning £2000 per month pre-Covid, but their income was severely impacted by the pandemic, dropping to just over £550 per month.

Having found that their reduced income wasn’t enough to cover credit repayments, the client had placed all of their debts on payment holidays but was incredibly concerned that they may not be able to resume payments when these expired.

Advice NI‘s debt advisers assessed the client’s individual circumstances and worked with them to formulate a repayment plan that has helped to bring the situation under control and reduce their anxiety.

Sinead said: “The pandemic is an unforeseen circumstance that has rendered countless households across Northern Ireland financially vulnerable.

“We have seen many clients who were financially healthy pre-pandemic and have since become financially stressed and are falling deeper and deeper into debt in an attempt to make ends meet.

“Debt can often make people feel like they have no options and to resolve it, they can resort to illegal sources of activity. Some of our clients had fallen prey to illegal money lenders as a last resort, without first considering the serious consequences that occur from not being able to repay the debt. In many cases, those who were unable to repay have encountered threats of violence and/or physical attacks and some have even had to leave their homes.”

She continued, “Debt has long been a taboo subject and for many it still evokes feeling of stigma and shame. The pandemic has helped to normalise debt. The reality is that almost all of us have some form of debt and the more that we ignore it, the more problematic it becomes.

“When it comes to tackling debt, time is of the essence, and we would urge anyone who is finding it difficult to manage financially to seek free and confidential debt advice from our expert debt advisers. Many of our clients have told us that they wish they had spoken to us earlier.”

Sinead said many people may be unaware of debt solutions like Debt Management Plans, Debt Relief Orders, Individual Voluntary Arrangements and Bankruptcy.

“Some may also be unaware of the different types of debt and how they can be prioritised and managed. Creating a budget is a good starting point, noting all income minus your expenditure. Reviewing your expenditure can help identify your essential bills and potential areas of overspending.

“Regularly reworking your household budget in response to a fluctuating income and outgoings could significantly improve your financial health over time and prevent a spiral into debt.

“Our member organisations are situated throughout Northern Ireland, with a presence in almost every town, and are committed to delivering free, independent, and high-quality advice to those who need it most.

Sinead concluded: “If you do find yourself concerned about managing your finances or struggling with debt during the pandemic you don’t have to face it alone. You can contact Advice NI by calling the Freephone helpline on 0800 915 4604 to speak directly to an adviser between 9am and 5pm Monday – Friday.”