New Zealand businesses and consumers have been feeling the pinch recently, with a rise in overdue payments, credit defaults and hardships this year.

If you are behind on your payments, there are some actions that can make your situation worse. In this article, we highlight three key things to avoid if you find yourself at risk of not making a payment on time.

1. Ignoring your creditors
   The worst thing to do in this situation is to ignore the letters, phone calls, and emails from the companies to which you owe money. If you get in touch with them to let them know you’re struggling with making repayments, often they will work with you to develop an alternative repayment schedule. At the end of the day, they would prefer to get paid eventually rather than not at all.
2. Borrowing more
   Taking out another loan to pay off existing debt can lead to a debt spiral, where your debt continues to grow, and payments become increasingly unaffordable.
3. Working it out alone
   It can be overwhelming trying to deal with your financial situation alone, on top of the stress of your repayments being unaffordable. Rather than trying to work it out on your own, there are free budgeting tools available through sorted.org.nz, or services you can reach out to for budgeting advice, such as MoneyTalks.

Taking steps to financial recovery
There are some simple steps you can take on the road to financial recovery. Our advice to consumers is:

• Check your personal credit report here for free to understand what money you owe and which of your repayments are overdue. If you’re a business, you can check your business credit report here.
• Keep track of which payments are due when and any late payment fees so you can make decisions on how to allocate your money. Inform your credit providers in advance if you’re going to miss a payment and negotiate any penalties for late payments.
• If you are struggling to pay your bills and have already missed payments, speak to the people you owe money to sooner rather than later. These businesses have teams to help you in these situations.
• If your current income doesn’t cover your bills, consider ways to increase your income, to help repay your debts.
• Use some of the free budgeting tools available like sorted.org.nz to help you manage your money, or contact MoneyTalks for budgeting advice.

If you are a victim of financial abuse and would like help or advice, please contact Good Shepherd.