The number of businesses and individuals coming to me over the last few years with debt and mental health issues has worryingly increased. The damage I have seen to people’s lives because of mental health issues caused by debt can be heart-breaking. But with the right help and action plan that doesn’t need to be the case.

Most of the time these businesses and individuals have been in denial and embarrassed about their debts. Not asking for help sadly leaves debts to spiral and get out of control. The sooner debts are acknowledged and dealt with the better the outcome will be for businesses and individuals, not only for their debts, but also for their mental health.

Drawing on my 30 years’ experience of working with businesses and individuals in debt, my five-point plan can help those in debt to acknowledge the problem and start to put in place a plan to help overcome debts. Professional advice is an important part of that, but it’s not just about dealing with the debt, it’s about listening and taking a holistic approach to the business and individual who needs help.

It’s important to remember that there is a solution for every single debt problem. That solution will ensure that those in debt come out the other side with those debts dealt with, allowing businesses and individuals a fresh start.

#1 Don’t hide from your debts – acknowledge the problem

Unfortunately, many feel the impact of social stigma attached to a failing business, or being in debt. The stigma doesn’t encourage people to stay out of debt. It often stops them from getting much needed help.  I tell my clients that losing a business, or having individual debts, is not a personal failure, and is something that can be overcome to allow you a fresh start.  Be honest with yourself and address the facts as soon as possible. The sooner you acknowledge the problem with your debts, the easier it can be solved.

#2 Ask for help to reduce the burden – all debt problems are solvable

Getting professional advice is extremely important but having family support in dealing with debt in daily life is an essential first step. Fear of letting loved ones down remains the top reasons why people keep quiet about their business troubles. But all debt problems are solvable, as long as you ask, so share your worries with them and they will help you through.

With a high level of misinformation about everything from director’s disqualification to insolvency procedures on the internet, seeking advice directly from regulated professionals, such as insolvency practitioners, is essential.

I take a holistic approach with my clients, listening to the person sitting in front of me, offering them emotional support as well as the best possible solution. To me, it’s not just about the debt, it’s about the person and helping them get through the situation.

As I talk clients through a range of available options, I can see how their body language changes, the burden they have been living with reduces, and they leave the meeting feeling less stressed and more positive about how to overcome their debts.

#3 Budget. Budget. Budget to help plan your finances going forward

Create a budget plan that you can stick to.

I work with my clients by starting with their income and expenditure sheet and looking at the total amount of debt. Only then I advise on how to prioritise the payments and help with shaping up the budget. I offer a free initial consultation, so you can tap into my expertise to get an independent and no-obligation advice very easily.

#4 Communicate with your creditors to see if they might help

Get in touch with your creditors as soon as you can. You never know what opportunities to help they offer if you speak to them early on.

By giving them full details about your financial situation, you will give yourself time to get the best advice and create an action plan. You may be able to negotiate lower interest rates or even consolidate your loans.

Plus, if you suffer from mental health issues, financial creditors are required to abide by the “Treating Customers Fairly” regulatory and supervisory code which sets out fairness outcomes for financial customers.

#5 Learn about your options (and take your time)

What I find often helps with reducing the mental burden of debt is helping to demystify insolvency procedures: CVA, administration, liquidations for businesses, or on the individual front, bankruptcy or Individual Voluntary Arrangements. These solutions may not be suitable to everyone, but in the long run, when applicable, they can lead to regaining financial freedom giving a chance of rebuilding one’s life.

It’s important to properly understand your options as it will cost more time and money if you pick the wrong solution and have to start over.

Ruth Duncan, Insolvency Practitioner Director, Maxwell Davies