Dealing With Your Debts

  • Ensure that your 'priority' debts are paid. These are housing costs, secured loans, utilities, Council Tax etc. You may be under pressure from other people you owe money to, but keeping the roof over your head and having enough money to pay for heating and food is more important. Contact your other creditors and let them know that you are having difficulties if you think you are going to be unable to pay your ongoing instalments or payments. Hopefully, most of your creditors will be sympathetic to your problems and if you are unable to pay due to loss of employment or ill health, you may be able to make a claim on your payment protection insurance. If the people you owe money to refuse to listen to you or you feel you are being treated unfairly, you can make a complaint to the company. Many of your creditors will be governed by Codes of Practice and examples of these can be found on the internet on the British Bankers' Association or Finance and Leasing Association websites.

  • If you have a car, or a household item such as a washing machine, on Hire Purchase (check your credit agreement as there is a difference between Hire Purchase and credit) then you must try and keep up the payments on this, as the company can reposses the item if you default on payments. Always seek legal or money advice if a company does try and reposses any item however.

  • Do you pay the minimum payment to your credit cards and store cards? This makes borrowing very expensive and the interest you are paying to these companies would be better used in your own household budget. You may want to consider checking if a loan to consolidate your debts might be cheaper, but do look at how much you will pay overall and compare it to the cost of paying your credit card payments. Useful information about this can be found under the Money Made Clear section of the Financial Services Authority's website. This site has links to loan and credit card calculators amongst lots of other useful information. Do make sure that you can make the repayments to the loan though; too many people miscalculate how much they can pay on a monthly basis and end up with a loan and more credit card debt that they can't repay. If you are finding that you need to use a credit card or overdraft to meet household or travel costs, and these debts are creeping up, then you may need to seek advice or assistance to help you get things back on track.

  • Check if you are paying for any payment protection insurance on any of your credit commitments. Payment protection is a very good thing to have in case of illness or unemployment, but we do find that sometimes people are paying for insurance that won't actually protect them. This may be because of your age, current long term illness or self employment, so check out the terms and conditions of this insurance and make a decision. Again, the Money Made Clear webpage has useful information about payment protection insurances. The Financial Ombudsman Services also has very useful information on this topic and also deals with complaints about payment protection insurance and other financial products.

  • If you, or someone you live with or support, suffers from a mental illness, then there are guidelines setting out how creditors should behave if they are collecting debts. These guidelines are published by the Money Advice Trust and can be accessed by clicking here.