debt
don't ignore it
Being in debt is one of the biggest worries we face and can lead to stress related illnesses. Debt has to be tackled at some point so it’s best to do it straight away if possible.
Don’t ignore the problem - it won’t go away. The longer you leave it, the worse it gets.
Make the most of your income - check you are claiming all the benefits and tax credits you can. If you’ve lost your job, or are off work because you’re ill, check if any debts are covered by payment protection insurance.
Tackle your priority debts first - for example, debts that could mean losing your home, or having your gas or electric cut off.
Work out your personal budget - show it to your creditors when you contact them.
Get in touch with your creditors straight away - explain your situation. Contact all your creditors. If you arrange to pay some but not others, you may get into difficulty again. You do not need to offer payment straight away.
Work out a reasonable offer for each creditor. Don’t worry if the offer seems small. Creditors prefer a regular small amount to an offer you can’t afford.
Don’t give up trying to agree an offer, even if creditors are difficult. If the first person you speak to is unhelpful, ask to speak to someone more senior. They may be able to agree to what you want.
Always keep copies of letters and papers you send or receive.
Don’t borrow money to pay off your bills without thinking carefully. Get advice first. This kind of borrowing could lead to you losing your home.
Get advice from a Citizens Advice Bureau or other independent advice services. If you get taken to court, do this urgently. Fill in reply forms to court papers, and let the court have all the facts. Always go to court hearings and take your personal budget with you.
Citizens Advice Bureau can offer advice and support
If you are worried about how to deal with your debts, there is free, confidential advice available. Your local Citizens Advice Bureau can give you advice about debt problems. To search for details of your nearest Citizens Advice Bureau call directory enquiries, look in the phone book or go to www.citizensadvice.org.uk
Who else can help with debt?
National Debtline A helpline that provides free, confidential and independent advice on how to deal with debt problems. Contact on 0808 808 40000 or visit www.nationaldebtline.co.uk
Money Advice Plus A registered charity that provides free, confidential and independent money and debt advice services by phone. Contact on 01323 635999 or visit www.moneyadviceplus.com
Four easy steps to help you deal with debt
1 |
Make a list of your debts. Before you can tackle a debt problem, you need to collect together information about your money. Make a list of all the people and companies you owe money to. |
2 |
Work out your budget. List all the income and expenses for your household. Be honest and make sure that the amounts are realistic. |
3 |
What debts need to be sorted out first? - these are known as priority debts.
Don't ignore letters or phone calls from your priority creditors. Get in touch with them as early as possible and explain to them why you are in debt. An advice agency such as your local Citizens Advice Bureau can help you write to your creditors. |
4 |
What debts need to be sorted out next? After dealing with your priority debts, you will need to work out how to deal with your non-priority debts. How you deal with your non-priority debts will depend on whether you have any money left over from dealing with your priority debts and paying for essential household expenses like housing costs and food. |
Citizens Advice Bureau - Case study
A 51 year old self-employed gardener came to see us as his constantly changing income meant that he had problems meeting all of his financial commitments.
He had problems budgeting which meant that his priority payments such as rent and council tax were falling behind involving him in legal action, additional costs and a lot of stress and worry.
There were other debts due, including utility arrears and tax, that were proving overwhelming. By putting together an income and expenditure statement it became apparent that the client was not able to service all of this debt and would be eligible for a debt relief order.
This was processed and relieved the client of unmanageable historical debt from which he could make a fresh start.
Once a budget plan was put together without debt repayments it meant that the client could manage his finances much more effectively in future ensuring that all his priority payments were regularly met. It also improved his sense of well-being and left him feeling in control of his life again.
