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.
The best way to tackle debts is to make a plan.
- 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 to idea get in touch with your local Citizens Advice Bureau or another advice organisation. You’ll find their details 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.
Here are a few of the agencies who can offer advice on how to tackle debt:
The Citizens
Advice Bureau is a service that helps people resolve
their legal, money and other problems by providing
free information
and advice from over 3,000 local branches. There
is also an online
and telephone service. Before you go to your
local office gather
together proof of your income, outgoings, the
benefits that you get
and any debts. This will give the advisor an
idea of how they can
help.
www.adviceguide.org.uk
Each
office has its own telephone number under C in
your local phone book.
Money
Advice Trust is a national
debt helpline that provides free,
independent advice to people with debt problems.
The service
employs trained telephone advisers to give confidential
advice
tailored to your needs.
www.nationaldebtline.co.uk
Freephone 0800 808 4000.
Offices open from 9am–9pm Mon-Fri and 9.30am–1pm
on
Saturdays.
There is an answer machine to take
messages when the
offices are not open.
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 or over the phone.
www.clsdirect.org.uk
Telephone: 0845 345 4345 – local rate call
National
Association for the Care and Resettlement of
Offenders (NACRO) can offer information
and advice on a range
of resettlement issues including debt.
Freephone number 0800 0181 259
email helpline@nacro.org.uk
