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Debt due to overspending

In the modern world, we seem to ‘need’ more things than ever before – a mobile phone, car, wifi, and TV or streaming services just to name a few. Beyond this, there’s an almost constant pressure to look or dress a certain way, meaning that many of us spend far more than we can reasonably afford thanks to societal expectations and social media.

Unfortunately, that means that many people get themselves into debt without really even realising it. It’s easy to put purchases onto credit cards or use pay later options on websites, but these debts quickly build up. Celebrations like birthdays and Christmas can also lead to excessive spending and a lot of money leaving your account at once. 

If you owe money and you don’t pay it back when you should, the creditor (ie the person you owe money to) may take you to court. If you still don’t pay after the court sitting, the creditor may send bailiffs to your home, take money from your pay, or even use your property to secure the debt.

Getting sucked into scams

Our reliance on technology means that there are an increasing number of individuals out there who are scamming people out of their money. Getting scammed isn’t your fault – but if you’re already in a hard financial position, you’re far more likely to accidentally become a victim of a scam. People who have a lot of debt may be so desperate to solve their financial worries that they go along with schemes in the hope that it could be the solution to their problems. 

It’s important to note that you can’t get into legal trouble for being a victim of a scam, and you should always report any suspicious activity to the police. However, if you don’t realise you’ve had your money or identity stolen, you may find yourself tangled up in police matters until it becomes clear that you had nothing to do with it. 

So, make sure you stay vigilant, and try to get into the habit of regularly checking your accounts to spot any unauthorised spending. You should also make sure that you’re not leaving your cards out, have secure authentication on any online payments and double check any purchases you make.

Betting and gambling

Research shows that 31% of surveyed Brits say that betting and gambling is their worst financial habit. A seemingly casual bet on football or horse racing can seem harmless, but it can quickly become a problem, due to betting’s addictive nature. Safeguards have been put in place – for example, gambling businesses must not accept credit cards for many types of betting – but you can still use them for lottery tickets and scratch cards when you buy other items alongside them.

This means it is possible to bet with money that you don’t technically have, putting you in an impossible situation if you can’t pay off the card debt. In addition to this, individuals can still commit themselves to private bets that they don’t have the money to support, for example, via a private poker game. This can result in unpaid debt, which may result in you having to go to court.

The importance of financial education

Widespread financial literacy is crucial to helping people avoid these situations that can get them into trouble with the law. There are some unavoidable types of debt, such as student debt, mortgage payments or debt because of something completely unexpected, such as the coronavirus pandemic, but in many cases, poor financial health could be minimised or avoided with the right support. 

Make the most of free resources such as websites and podcasts to take control of your money and keep yourself on the right track. Remember, there are charities out there who can help if you find yourself stuck in a cycle of debt.

Want to learn more about personal finances? Use Rocket Lawyer’s collection of legal guides on managing personal finances.

Francesca Ellis
Francesca Ellis
Student Support Officer

Francesca Ellis is a Student Support Officer with a passion for safeguarding the rights of higher education pupils. She has an interest in all things consumer law, and enjoys sharing her trusted knowledge with colleagues and students across the country.

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