If you fall behind with your bills, lenders and service providers have legal powers to recover the debt. These powers depend on the type of debt. If you have several debts, you will need to know which of these must take priority.
- Rent or mortgage
- Secured loans
- Council tax
- Gas and electricity
- Court fines
- Income tax or VAT arrears
- TV licence
- CSA payments
- Unsecured loans
- Credit cards
- Store cards
- Hire purchase
- Benefit overpayments (unless there has been a conviction for fraud)
If you are in debt, it is important to contact the people you owe money to (creditors) at the earliest opportunity.
This may seem daunting but if your creditors are not aware of your financial situation they will assume you do not want to make payments and start taking action against you.
Where do I start?
- Make a list of all your expenditure - the amount and when payment is due
- List all of your income, including all benefits
- Check you have claimed all the benefits you are entitled to. Citizens Advice Bureau can assist with this
- Look at ways to increase your income, for example, getting an additional part time job or taking in a lodger. Ensure you check if/how this affects any benefits that you may be claiming
- Work out if you can reduce your non-essential expenditure. There are a number of good websites offering tips on money saving
Once you have worked out how much you can afford to pay your creditors, you will need to contact your priority creditors and try to make an arrangement to pay back what you owe. If there's money leftover you can make offers to non-priority creditors.
You should ensure that offers are affordable and that you are not persuaded to offer more than you can manage to pay. Some creditors may agree to freeze interest on loans. You should ask them to consider this.
If you have mortgage arrears you may be eligible for assistance for the government mortgage rescue scheme. More information can be found at www.gov.uk/mortgage-rescue-scheme/overview
If you think you may be eligible, you can either contact the council direct on 01256 844844 or you can contact Victoria James on 01256 845604 to discuss your case.
What if I do not have enough money to make payments?
If you have a large amount of debt or lots of creditors, it can be difficult to negotiate repayments. If you are on a low income and the situation is unlikely to improve you may need to look at alternative debt resolution strategies. it is important to seek immediate advice on your options.
Debt Management Plan
There are organisations that can negotiate debt repayments on your behalf. One payment is made to them and they will distribute the funds to your creditors. Many of these organisations are for profit and charge a fee for their services. There are some free companies listed below.
Bankruptcy is a court order which can free you from overwhelming debts so you can make a fresh start, subject to some restrictions, and ensures your assets are shared out fairly among your creditors. If you are declared bankrupt you have a duty to provide information to the official receiver and the trustee. Your finances will be investigated and you may still have to make some payments to your creditors.
Debt Relief Order (DRO)
DROs are a cheaper alternative to bankruptcy. You may be eligible if you owe less than £15,000, are on a low income and do not have assets/savings exceeding £300. A DRO must be applied for through a competent authority. Details can be found at www.bis.gov.uk/insolvency
ContactsCitizens Advice Bureau (CAB)
The Discovery Centre
19-20 Westminster House
0844 245 1283
0300 330 0650 (from mobiles)www.basingstokecab.co.uk Citizens Advice Bureau (CAB)
0118 981 7660www.tadleycab.org.uk Money Lifeline
01256 351 026
Email: email@example.com www.bccnet.org.uk/money-lifeline Step Change (CCCS)
0800 138 1111www.stepchange.org Payplan
0800 280 2816
0207 760 8980 (from mobiles)www.payplan.com National Debtline
0808 808 4000www.nationaldebtline.co.uk