Tackling debt

Debts tend to grow and there can be serious consequences for not paying them back. It is important to face up to them as quickly as possible.

Before your outgoings get out of hand and become debts, you might like to cut back on your spending for a short while. Is there something you can do without - cigarettes or cable TV? If you have a small debt, try not to spend money on non-essentials and you may be able to pay your debt off quickly before too much interest is charged or it becomes a problem.

• First of all, make a list of all your debts.

• Then go back to your budget and see if you’ve got any extra money that you can use to pay them off.

• Next, prioritise your debts. That means working out which ones you must sort out first. This is important because you get into more trouble for not paying off some debts than others. For example, if you don’t pay your bills at home your gas or electricity supply could be cut off; or if you don’t pay tax or your TV licence you could end up being sent to prison.

• The debts we need to tackle first are known as priority debts. They include:
  • TV licence
  • Rent and mortgage arrears (arrears means money you owe)
  • Council Tax
  • Gas and electricity bills
  • Magistrates’ Court fines
  • Maintenance _ Hire purchase agreements
  • Taxes, such as Income Tax, National Insurance and VAT

You must get in touch with everyone you owe money to and explain why you’re in debt. Then you must negotiate how you’re going to pay back the debt. To help you do this, it’s a good idea to get in touch with your local Citizens Advice Bureau or another advice organisation. Some of these organisations are at the end of this section.
Don’t be tempted to borrow more money to try and pay off your debts before getting some good advice.

Once you’ve sorted out a plan for your priority debts you need to tackle any other debts you have. How you do this really depends on whether you have any extra money to pay back the debts. If you do, you can try to come to an arrangement with the people who you owe money to, to freeze the interest added to your debt, which means it won’t get any bigger. Then you can arrange to pay back a little bit every month.

Again, the Citizens Advice Bureau and other advice organisations can guide you through your options and help you talk to the people you owe money to. They can also explain your best options if you don’t have any extra money to pay back debts.

Helpful contacts

There are a number of agencies who can offer advice and help on how to tackle debt and other related issues, but before you contact any of them, gather together all the paperwork that relates to the issue you want to discuss, proof of your income, outgoings, and the benefits that you get. Don’t forget to provide full details of all money owed as well. This will give the adviser an idea of how they can help you.

• The Citizens Advice Bureau is a service that helps people resolve their legal, money and other problems by providing free information and advice. You can find your local branch and their telephone number from a phone book, and visit their website where they also offer an online advice service: www.adviceguide.org.uk
  

• The National Debtline provides free, independent advice to people with debt problems. Visit
  www.nationaldebtline.co.uk Their helpline is open Monday to Friday 9am to 9pm; Saturday 9.30am to 1pm (24-hour voicemail – please leave a message to request an information pack or factsheet). Freephone 0800 808 4000.

• Consumer Credit Counselling Service (CCCS) to speak to a Debt Counsellor.Online debt counselling is available at www.cccs.co.uk Telephone: 0800 138 1111 (freephone).

• Credit Action is a national money education charity www.creditaction.org.uk
  Telephone: 020 7436 9937.
  

• Community Legal Advice (CLA) will help provide free legal advice on how to deal with problems such as County Court Judgements or understanding your rights under a hire purchase agreement, plus debt advice online - www.clsdirect.org.uk or over the phone.
  Telephone: 0845 345 4345 – local rate call

• National Association for the Care and Resettlement of Offenders (NACRO) can help with disclosing a criminal conviction, CRB checks, finding housing or a job. Contact Nacro’s Resettlement Plus Helpline, open from Monday to Friday, 9am to 5pm on 0800 0181 259 (freephone) or email: helpline@nacro.org.uk

• Advice UK works in some of the poorest parts of the UK, helping people to solve legal and social welfare problems. Visit www.adviceuk.org.uk Telephone: 020 7407 4070.