However, what happens when you are finding it difficult to pay your debts? Do you ignore the problem hoping it will go away? Unfortunately, this will only make the debt issue worse. Instead, it is time to get debt help. But where do you get help with debt?
Before you reach out to contact a debt advisor, make a start by reading through some of our most frequently asked questions regarding debt and debt help in the UK.
To make a start, collate together all your contracts, bills, and statements. Make a list of all your debts and write down the details of your debts.
You might want to obtain details on:
If it is helpful, download the Money Advisor budget planner, so you can input all your financial figures into one document.
Seeing it in black and white might look scary, but this is crucial to building up a picture of your debt and whether you need debt help.
Spot signs to see if you need debt help.
There are no clear answers as different lenders use different credit scores, however, paying off your debt can improve your credit score:
However, here is where paying off your debts don’t improve your credit score:
Find all you need to know about debt and your credit score.
Depending on the stage of your debt problem, it is important to speak to your creditors and see if you can come up with a solution to help you manage your debt problem.
Emailing them would be the best solution as you will have a record of your correspondence. There are plenty of templates on the internet to help you do this but some of the points you may want to add to your email could include:
Find out what to do if a debt collection agency contacts you.
Deal with your priority debts first
Priority debts are the debts which you need to tackle first as these are the ones that are likely to cause you some serious problems. Here is a list of priority debts:
Rent arrears have been classed as a priority as a landlord has the right to evict you if you have missed rental payments.
However, before the eviction happens, a landlord will need to issue you with a possession order obtained by the court to set a date on when they can evict you.
Find out how to get rent debt and arrears help.
Your home is probably the biggest purchase you will make in your lifetime so act responsibly when making mortgage payments. If you get into debt, a bank or building society can move quite quickly and issue you with a possession order by the court.
Find out how to get mortgage debt and arrears help.
If you need help paying off your council tax debt, then it is important to act as soon as possible. Your council tax is classed as a priority debt and failure to pay could lead to court action or even imprisonment.
Find out how to get council tax debt help.
Then deal with your non-priority debts
Once you have paid your priority bills or come up with a payment arrangement for them, it is time to tackle the non-priority debts. These include:
You will be responsible to pay a debt if you have signed a contract or the law says you will be liable to pay the debt.
If you feel you are not responsible for paying the debt, then you can contact your creditor and challenge the claim.
Some of the reasons which may mean that you are not responsible for paying a debt are:
Yes, PPI can help you if you have a debt problem. People often take out payment protection insurance on a mortgage, loan, or credit card. This is an additional fee that is attached to your credit agreement and is usually paid monthly.
It is important to check if PPI on a particular credit agreement covers you if you suddenly become unemployed, fall ill, or have an accident.
Most unsecured debts can get written off or become statute-barred after six years. This predominantly applies to credit cards, payday loans, personal loans etc…
Secured debts such as mortgages have limitation periods of twelve years, usually because the loan amount is considerably more, and the term is a lot longer than other credit agreements.
You can also be legally contacted for council tax bills even if your last payment was six years ago.
After the limit has passed, the debt might be statute-barred which means you don’t need to pay. Your debt could be statute-barred if, during the time limit:
It is important to check the date of your last payment to find out whether it is out of the time limit
As much as people in debt would be happy that their debt has been written off, it is highly unlikely that priority debts such as the council tax or HRMC tax will allow your mispayments to exceed for such a long period of time.
It is essential that you treat your priority debts seriously or you could face fines as well as imprisonment.
Government debt help schemes include various debt solutions. These could include:
Individual Voluntary Arrangements (IVA) – An IVA is making one agreed payment of your debts over five or six years. At the end of the term, your unsecured debts are written off. Find out more about IVA debt help.
Bankruptcy – This is a type of insolvency that writes off your debts. Any assets or income you may have may be used to pay off your creditors. Find out more about Bankruptcy debt help.
Debt Relief Order (DRO) – This is dependent on whether you qualify for a DRO, but if you do then all your debts could potentially be written off. Find out about Debt Relief Orders debt help.
See more solutions on our debt plan page here.
If you live in Scotland, find out what debt help is available in Scotland
In May 2021, the government introduced a government debt help scheme, called Breathing Space also known as the Debt Respite Scheme. The aim of the scheme is for the government to help people with debt problems and relieve some of the pressure when they’re in debt and dealing with creditors.
Not everyone is eligible for the scheme so there are certain criteria that you need to meet. You must:
You must not:
To apply you will need to speak to an advisor that has been authorised by the FCA. The debt advisor will make an application for you. National debt help charities such as National Debt Helpline can help with this.
You might be able to claim certain benefits which could help you get out of debt. For example, if you are on a low income, you are looking for work, a carer or are pregnant. These could all be potential benefits if you are eligible.
The Turn2us benefits calculator can help you find out which benefits you can get and how to get them.
It is important to check this as you might be eligible for benefits you are unaware of, that could potentially help you with your debt situation.
There are some longer-term ways to keep yourself out of debt and increase your income, however, it might be worth checking some of the more instant ways to help you get out of debt:
On the gov.uk website you check the minimum wage calculator and see if you are being paid the correct amount.
If you are not being paid the correct amount, then it is important to first have a conversation with your employer. It may be an oversight on their side in which case they should agree to pay the shortfall.
If your employer disagrees with your claim then you should contact your local Citizens Advice to ask for advice on the matter.
Getting paid the right amount could help you cover your expenditure and help you get out of debt quicker.
Quite often employers may take money out of your wages to:
If you think your employee is making deductions they shouldn’t, then get advice from the Citizens Advice.
Did you know that you could be paying less tax if?
You might be able to get help with children who are of school age. For example, if you earn a low income then the school can provide free school meals and discounts on school uniforms.
Energy bills are a major cost in most households; however, you might be able to get grants, benefits or help from the government to help you pay your bills.
Currently, to help with the rising cost of living, Rishi Sunak announced in his Spring Statement that he would offer a £150 rebate from your council tax as well as other incentives. Look at the details of the Spring statement here.
If you have some money after your essential costs to pay your debts, then you could look at a few options to pay your creditors over a few years.
Before considering any debt solution it is important to work out what you can realistically pay. Working out your income and expenditure will give you a clear idea of what you can afford.
Once you have done this speaks to your priority creditors and start making arrangements to pay the debts as soon as possible.
If you have money left after paying your priority debts, then you may want to consider the following options:
The DMP provider is an independent company that will deal with the creditors for you. All you will need to commit to is paying the repayments each month.
Find out more about Debt Management (DMP) debt help in the UK.
Administration Order – If you have an unpaid County Court Judgement (CCJ) then you might be able to apply for an administrative order which will mean you pay an agreement debt amount to the court. The court will then pass the money onto your creditors and deal with them for you.
Individual Voluntary Agreement – An IVA is when you agree to pay off your debts with one monthly payment over a period of 5 years. An IVA is overseen by an insolvency practitioner who will help you agree on a monthly amount and deal with your creditors for you.
Find out more about IVA debt help in the UK.
If you have no money to pay your priority debts, then you might want to consider the following:
Check to see if a Debt Relief Order will help you pay off your debts.
Check to see if Bankruptcy is the right debt solution for you.
Visit our debt help pages to find out more information on how to deal with your financial challenges.
Money Advisor is committed to providing you with the best possible service to help deal with your finances.
If you are struggling to make ends meet or you have experienced a change in circumstances, please contact us as soon as possible. We can offer you the right help and support so you can lead a better and brighter financial future
Simply complete the form to see if you qualify for any of the available debt solutions.
A friendly & experienced advisor from Money Advisor will contact you to discuss your circumstances.
We will refer you to FCA Regulated Advisors who will explain all your options, so that you can decide which solution works best for you!