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Council taxDebt adviceHelen Rodger - March 2011council.recovery@kirklees.gov.uk
Are you struggling with debt?Being in debt can be a frightening experience which can quickly get out of control.
Don't ignore letters or calls from your 'creditors', the people you owe money to. It's important you deal with the problem, because it won't go away. You should contact each creditor as soon as you start experiencing problems, to explain your situation. Most organisations will be understanding of your circumstances, especially in the current economic climate, and will try to help you. What to doFirst, make a list of all your creditors and how much you owe each one.
Then, work out which debts are priority. This isn't necessarily the ones you owe the most to. A priority debt for example would be your rent or mortgage, because if you don't pay you will be made homeless. Whereas things like overdrafts, loans and hire purchase agreements may have less serious consequences if they are not paid. That's not to say that these debts should be ignored. Your creditors may still take you to court which could add costs to your debt. If you need help to work out your priority debts, see the 'For help and advice' section below. Next work out how much you can afford to pay, before contacting your creditors. Working out how much you can afford to payMake a list of all the income and expenses for your household. Your income should include things like wages, benefits and maintenance payments. For expenditure, include all your household bills like food, gas, electric, water, and even nursery fees and travel expenses.
Check your income and see if there are any benefits or tax credits you are entitled to that you are not getting. You can get help to do this. See the 'For help and advice' section below. Look carefully at your spending and see if there is anything you are able to cut down on. Simple things to cut down on include gym membership and mobile phones. To help reduce your expenditure you could also shop around for a cheaper gas or electricity provider, or look at cheaper mortgage or insurance providers. We do not recommend you take out any loans to repay your debts, as you may be paying back a lot more than you borrowed. Contacting your creditorsWhen you've worked out how much you have left over after paying your expenses, contact each of your creditors, starting with the priority ones. Most creditors will be more helpful if you contact them before they have to contact you.
Explain your situation, show them your budget and try to make an arrangement to pay back what you owe. The sooner you contact your creditors the more time you may have to spread your payments. Ask your creditor to explain their money recovery process so you know what to expect and what costs will be involved, if any. If you've managed to come to an arrangement, ask them if they can stop any action they plan to take against you, like court action. Make sure you get your agreement in writing so you are clear about what they expect you to do. It will also help you to keep track of what you've agreed with your different creditors. Your confirmation letter should tell you:
It's important you try to keep to your arrangement as your creditor has probably allowed you to pay a lower amount over a longer time. However, if you find you cannot keep to your agreement, recontact the creditor immediately to explain. Can't afford to pay anything?Do not ignore your situation. Get advice straight away.
Be very careful about taking out further loans to pay off existing debts. You may end up paying back a lot more than you borrowed and the interest rates may be extremely high. Some loans can be secured against your home and you could end up losing it if you fail to make repayments.
For help and adviceThere's plenty of free help and advice available, for example, the Citizens Advice Bureau can help you with every step and can deal with your creditors on your behalf.
This is not an exhaustive list and other agencies are available. Remember…You will not be the first person to owe money to your creditors.
By contacting your creditors as soon as you've worked out what you can afford, you may give yourself more time to repay your debt and stop any action they may take against you. Be very careful about taking out further loans to pay off existing debts. You may end up paying back a lot more than you borrowed and the interest rates may be extremely high. Some loans can be secured against your home and you could end up losing it if you fail to make repayments. If you want to discuss a loan, the Castle and Minster Credit Union may be able to help you with a flexible, low cost loan. |
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