Dealing With Debt
Lots of people are in debt for all sorts of reasons. Debt has many forms and once it happens, it can be difficult to get out of.
This page gives you advice on how to get help before debts become unmanageable, particularly priority debts like your rent and Council Tax.
What is a Priority Debt?
Some debts are more important than others. The law gives different creditors (the people you owe money to), different ways of getting their money back. With priority debts, some creditors could take your home away (repossession or eviction) or send out bailiffs to take items from your home to sell (called distraint). It is therefore important to sort out your priority debts first.
Examples of priority debts are:
- Mortgage or rent arrears
- Council Tax
- Secured loans
- Gas or Electricity
- Magistrates court fines
- Maintenance or Child support
- Hire purchase or Conditional sale agreements
- Income Tax, National Insurance or VAT arrears
This is not an exhaustive list
Ten steps to help you deal with debt:
- Don't ignore the problem - it won't go away and the longer you leave it the worse it could get.
- Contact the people you owe straight away and explain your circumstances. Try to get a contact name if you can.
- Deal with your priority debts first.
- Always fill in the reply forms to court papers and give all the facts and copies of your financial statement (sometimes called a personal budget sheet)
- Check with the Council to see if you are entitled to Housing or Council Tax Benefit. See our on-line calculator for an estimate of what you could be entitled to.
- Go to Court hearings and take your financial statement with you. Don't think that going to court makes you a criminal,most hearings are in private.
- Don't borrow more money to consolidate or pay off debts without thinking very carefully. Sometimes doing this can change a non-priority debt into a more serious one
- Don't let creditors harass you. Legally, they can send reminders and information about the debt but may be acting illegally if they make threats or harass you to pay.
- Seek help from the Citizens Advice Bureau or National Debtline who can help you to negotiate with the people you owe and prepare a financial statement with you. They may also help you in court or at appeals. See below for more information.
- Don't panic! you cannot go to prison for most types of debt.