Debt and debt management

Being able to manage your money is more important than ever with the current financial situation and changes through Welfare Reform. Most people cannot manage their finances without borrowing at some stage of their life whether it be credit card, bank loan or from family and friends.

If you do get into a position where your repayments become unmanageable and you are in financial difficulty the Advice Services team can help you. We can advise you about budgeting, maximising your income, claiming benefits (including help with form filling) and dealing with creditors (the people you owe money to).Couple Paperwork

Alternatively, there are some immediate steps you can take to help tackle the problem:

  • Create a budget and use it to work out what you can afford to pay
  • Contact your creditors and offer a repayment amount and set up a payment plan. See our jargon buster for explaining some of the terms that may be useful when contacting your creditors
  • Sort out your priority debts (see table below)

Types of Debt

Cost PhotoPriority Debt – This debt has serious consequences if you don’t keep up with repayments. These could include eviction from your home or being sent to prison. You should use more of your available money to pay these debts off first

Emergency Debt – you must give urgent attention to an emergency debt to stop things getting worse. An example of this would be an outstanding utility bill which could result in disconnection.

Other Debts – if you don’t keep up with paying back other debts, you could still end up being taken to court or having to return goods.

The table below summarises the main types of debt and their resulting consequences:

Debt

Category

Possible consequence

Rent arrears

Priority

Eviction

Council tax arrears

Priority

Court fines, bailiffs, possible prison sentence

Fine default

Priority

Extra costs, bailiffs, possible prison sentence

Gas/electricity arrears

Priority

Disconnection of supply

Maintenance (child support) arrears

Priority

Attachment of earnings, possible prison sentence

Income tax arrears

Priority

Fine, possible county court judgement, bankruptcy

Hire purchase arrears

Depends on importance of item

Repossession of item, added costs

Telephone arrears

Depends on importance of phone line

Disconnection

Water arrears

Non-priority

Charges, attachment of earnings/benefits, credit rating will be affected, possible county court judgement

Credit cards

Non-priority

Charges, attachment of earnings/benefits, credit rating will be affected, possible county court judgement

Personal loans

Non-priority

Charges, attachment of earnings/benefits, credit rating will be affected, possible county court judgement

Charge cards

Non-priority

Charges, attachment of earnings/benefits, credit rating will be affected, possible county court judgement

Catalogues

Non-priority

Charges, attachment of earnings/benefits, credit rating will be affected, possible county court judgement

Personal debts to family and friends

Non-priority

Family problems, loss of friends

Doorstep collected loans

Non-priority

Charges, attachment of earnings/benefits, credit rating will be affected, possible county court judgement

We understand the stress that being in debt can cause but the important thing is not to ignore the problem. Our advisors will be happy to help you manage your debt.

To contact the Advice Services Team you can complete and send the self-referral form, or alternatively, you can visit our Contact Us page.

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