Dealing with Debt
Lots of people are in debt for all sorts of
reasons. There are many types of debt, some more serious than
others, once it happens and you find yourself in debt, it can
be difficult to get out of.
This page gives you some useful helpoints to get
help before debts become unmanageable., particulary 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
- Dont let creditors harrass you. Legally,
they can send reminders and information about the debt but may be
acting illegally if they make threats or harrass 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.
The Citizens Advice Bureau has a useful website - http://www.citizensadvice.org.uk