Having trouble paying bills?
Many people have difficulty with their finances. This can be for a number of reasons such as redundancy, having to leave work through ill health, problems with budgeting or dealing with debt.
If you are worried that you will be unable to keep up with rent, mortgage or council tax there is help available.
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||Benefit overpayments
(unless there has been a conviction for fraud)
|Secured loans||Unsecured loans|
|Council tax||Credit cards|
|Gas and electricity||Store cards|
|Income tax or VAT arrears||Catalogues|
|TV licence||Hire purchase|
If you are in debt, it is important to contact the people (creditors) you owe money to 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.
On this page
Where do I start?
- Make a list of your expenditure and include amounts owed and when payments are due.
- List all of your income including all benefits you receive.
- 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 and 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.
- You may find the online budgeting tool useful. This can show you if you are claiming the right benefits, whether you are paying more than average on utilities and possibly highlight areas where you could reduce your non-essential expenditure.
What happens next?
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.
Do you have rent arrears?
If you are having problems paying the rent speak to your landlord as soon as possible. You may be able to make an arrangement with them to clear any arrears in instalments.
If you are a housing association tenant your landlord will be able to advise you on debt problems and offer you support. Contact your landlord immediately.
First Point provides housing support and advice services to people at risk of losing their home, including those falling behind on the rent. For more information call 01256 423805
If your issues are caused by a reduction in income, you may be eligible for assistance with your housing costs. You can check you entitlement by viewing our claim housing benefit and/or council tax support webpage.
What if I do not have enough money to make payments?
If you have a large amount of debt or multiple creditors it can be difficult to negotiate repayments that you can afford. You may need to look at alternative debt resolution strategies. It is important to seek immediate advice on the options available.
Bankruptcy is a legal process that can free you from overwhelming debt that you have little hope of repaying in a reasonable amount of time. In some cases creditors can choose to make you bankrupt.
Debt Relief Order (DRO)
A DRO is an alternative to bankruptcy but you will need to meet certain criteria in order to qualify.
Individual Voluntary Arrangement (IVA)
An IVA is an agreement with your creditors to pay all or part of your debts. You agree to make regular payments to an insolvency practitioner who will divide them between your creditors.
Debt Management Plan (DMP)
A DMP is an agreement with your creditors to pay all of you debts. There are organisations that can negotiate this on your behalf or you could contact your creditors directly to make an agreement.
Information on the options available to you can be found at www.gov.uk/pay-off-debts