The key things to remember if you are struggling with debts are:
- don’t feel guilty — millions of people throughout the country are in the same position
- don’t ignore the problem — it won’t go away
- don’t panic — your first steps may be here.
Dealing with your debt
The first step towards dealing with your debt is to face the issue, read all your letters and then make a list of everyone you owe money to. Include the amount you owe each person or organisation.
Then prioritise your list as to what level of action can be taken to recover monies owed. Be realistic and make a list of all the money you have coming in and then a list of all your outgoings. Start with priority debts, then work your way down your list.
The table below may help:
| Debt |
Potential consequences of non-payment |
|---|
| Rent or mortgage arrears |
Eviction/repossession |
| Second mortgage arrears/secured loan arrears |
Eviction/repossession |
| Council tax arrears |
Imprisonment |
| Utilities |
Supply cut off (except water) |
| Benefits overpayments |
Deductions from benefits/wages |
| Unpaid Magistrates' Court fines |
Imprisonment |
| Maintenance arrears |
Imprisonment |
| Income Tax arrears |
Imprisonment |
| VAT arrears |
Bailiff |
| Hire purchase arrears |
County Court judgement |
Payment planner - click here to download a printable calendar to use for marking when your important payments are due.
Mortgage problems
If you
are experiencing financial difficulties, your first priority should be your mortgage payments, so you must get advice as soon as possible to avoid repossession.
For advice and help on how to keep your home, use this link: mortgage worries – get advice to keep your home. Borrowing
Taking out more credit to cover existing debts can seem a quick-fix but is a bad idea in the long-run, as you end up paying extra charges on top of your existing debts.
- Payday loans and doorstep lenders - these lenders charge very high interest rates and administration fees and you can get stuck in a vicious cycle of repaying one debt with another. Failing to make repayments could affect your credit rating and you could incur numerous fees and charges.
- Loan sharks - avoid unlicensed money lenders such as loan sharks as the interest you pay will rapidly escalate what you owe and you could be harassed if you get behind.
If you are the victim of loan sharks you can contact the Illegal Money Lending Unit at Norfolk County Council, who will treat the information that you give in confidence:
Debt collectors and bailiffs
Know who is knocking at your door. Always check identification. Debt collectors are employed by creditors to recover monies owed and are not court officials and cannot force entry to your home. Bailiffs are authorised by the courts and sometimes have the power to force entry to your home.
Self-help
If you feel confident in dealing with your debts yourself, then try making contact with your creditors offering them a repayment plan. Maintain any payment offer made but review if after six months. Always keep copies of letters you send and receive and do not ignore letters and telephone calls from creditors.
Use this creditor’s letter to make contact with your creditors to let them know you are aware of your debts and that you are taking steps to prevent the situation worsening.