Christmas in a Cost of Living Crisis

Debt Solutions

Dec 07, 2022    5 min

christmas debt

As December begins, it’s clear that Christmas 2022 isn’t looking as bright as usual for people across the UK. With the Cost of Living Crisis looming over us, many people are cutting back on their usual expenses this year, from presents for others to Christmas food & drink shopping. According to a recent survey carried out by The Salvation Army, two-thirds of adults are worried about what they’ll be able to afford this Christmas compared to other years.1

Christmas Borrowing

With the financial worry more prominent this year than previously, it’s expected that even more consumers will be in debt as a result of borrowing over Christmas. Major companies are anticipating a rise in credit card use this month, as well as people taking advantage of ‘buy now pay later’ schemes. However, it’s important to consider the impact of any of these types of options. Taking out credit leaves you at a higher risk of falling into debt which can quickly spiral, especially for those already struggling financially.

Will You Be Able to Afford it in January?

It’s also important to remember that any loans specifically advertised for the Christmas season often come with high interest rates, and could potentially leave you owing more than usual. It’s crucial to anticipate how well these payments can be kept up with when January comes around. If you’re already struggling with debt, then it’s also always a good time to consider debt solutions that could help you. Finding a suitable solution at this stage can help in many ways; not only can it put your mind at ease know that you’re getting support, but it can also help for when the festivities dies down and January does arrive, along with incoming bills. With the right debt solution, you’ll know you’ve got things covered.

Debt Solutions

A few of the debt solutions available to UK consumers include:

  • Individual Voluntary Arrangements – IVAs are available to people who qualify in England, Wales and Northern Ireland, involving you making regular affordable payments towards your unsecured debts, and your creditors agree to write off the remainder.
  • Trust Deed – Similar to an IVA, a Trust Deed involves monthly payments being made by you in return for a portion of your debt being written off. Trust Deeds can also be ‘Protected’ if the majority of creditors agree to the arrangement.
  • Debt Management Plan – A DMP consists of you making affordable payments to your creditors, however, unlike an IVA it’s an informal arrangement, meaning your creditors do not have to agree to it.
  • Bankruptcy – This is a court order that involves your assets being sold to cover your debts.
  • Debt Relief Orders – Similar to Bankruptcy, a DRO is the alternative solution for those with no assets, as well as low affordability.

Christmas Budgeting

At this particular time of year, many people will be offering cost-saving tips and tricks to help make it through Christmas. Whilst these can be very useful, most people also admit to exceeding their planned budget for Christmas, so it’s always important to be as realistic as possible.

It’s also crucial that regardless of the festive spending, you must still prioritise your main bills such as mortgage and utility payments. Keeping up with these will mean that you’re not as likely to come into trouble later with your leading suppliers. It’s also always important to consider an emergency fund, for any unexpected costs such as a breakdown, or boiler break.

Getting the Right Support

If you are already in debt and concerned about your financial situation, we’d advise reaching out for help before things have a chance to worsen. Here at Money Advice, we can offer support with your debts, by talking you through solutions that may be suitable for you in order to get on top of things so you can start 2022 on a path towards getting debt free.

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1 Salvation Army: ‘Millions Could Miss Out On Christmas Dinner This Year’,