Debt FAQ in England Wales

Here are some of frequently asked questions regarding debt in England, Wales.

My debts are getting out of control and I can’t possibly pay them all. What can I do?
If you're in debt, don't panic. But it's important to do something, because the problem won't just go away. Don’t ignore calls or letters from the people you owe money to (your creditors). Contact them to explain why you’re having problems. Most organisations will be more helpful if you approach them first.

The first thing you need to do is make a list of all your creditors.

Once you've done this, you need to work out which ones are priority debts. A priority debt is one that could have serious consequences if unpaid. Not paying your rent or mortgage would leave you homeless, or not paying your gas or electricity bill could leave you being cut off and taken to court.

Non-priority debts are ones which have less serious consequences if you don't pay them. They include things like overdrafts, loans, hire purchase, credit card accounts and catalogue debts. However, if you don't pay your non-priority debts your creditors may take you to court.

When you have decided which are priority debts, work out how much you can realistically afford to pay back. To do this, you will need to make a list of all the income and expenses for your household.

In England and Wales, you can print off a budget sheet to help you do this. See Budget sheet in Credit and debt fact sheets.

Check your income and see if there are any benefits or tax credits you are entitled to that you are not getting. Look carefully at your spending and see if there is anything you are able to cut down on. For example, you could shop around for a cheaper gas or electricity provider, or look at cheaper mortgage or insurance providers.

An advice agency can help you draw up a budget and help you increase your income if this is possible.

When you've worked out how much you have left over after paying your expenses, contact each of your priority creditors. Show them your budget and try to make an arrangement to pay back what you owe.

If you can’t afford to pay anything to your priority creditors and your situation isn’t likely to get better, the outcome may be very serious. Get advice straight away.

How you deal with your non-priority debts will depend on whether you have any money left over from dealing with your priority debts and paying for essential household expenses like housing costs and food. If you have money to spare, you may have several options for dealing with your non-priority debts. However, if you have little or no money left, have nothing of value to sell and think your situation isn't likely to get better, your options will be very limited.

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.

I have been refused credit to buy a new washing machine. What can I do?
If you have been refused credit, you can re-apply to the same company or try somewhere else. If you are still refused credit, it may be that you have a low credit score. This means that the shop selling the washing machine has used a credit reference agency to look at your credit rating. The shop should have told you that they would use this method to decide whether or not you can have a washing machine on credit.

You can ask the shop which credit reference agency it has used. Write to them and ask for a copy of the file they hold on you. You will have to pay a fee for this, but it is usually quite low. If you think your record has incorrect information about you on it, you can ask the credit reference agency to correct it.

You might also want to look into other methods of paying for your washing machine.

I have a county court judgment against me over an unpaid credit card debt and the card issuer has threatened me with bailiffs. What can I do?
The first thing to do is to try and negotiate with the company. Even if you can't pay the debt in full, you could try to agree a set amount to pay weekly or monthly.

If you cannot come to an agreement with the company, they will need to get a warrant of execution from the courts before they can send in the bailiffs to remove property from your home in payment of your debt. If they already have the warrant, you should apply to the court to have it suspended.

If the bailiffs arrive, you do not have to let them in and they cannot generally force their way in. However, they are allowed into your property without your permission if they can enter without breaking in. This is called 'gaining peaceful entry' and includes getting in through an open window, or a closed but unlocked door.

Bailiffs are not allowed to take basic clothing, bedding, furniture or household goods, and any goods they do take will be sold at auction in order to pay off your debt.

Please take note that all of these Frequently Asked Questions applies to England Wales.

SOURCE : Frequently Asked Questions About Debt