COPING
WITH DEBT
It’s not difficult to get credit and
all too often, people are persuaded to buy things they can’t
really afford. But more people who get into debt, do so because of
an unexpected drop in income due to illness, redundancy or marital
breakdown. The sooner you face the problem, the easier it will be
to solve it.
Are you in debt? Follow
these simple rules
What the law says
Acting as guarantor
Secured Loan
If you have a complaint
Organisations who can help
Are
you in debt? Follow these simple rules
| 1.
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Don't
Panic - Keep Calm and don't ignore the problem, it won't
go away. |
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| 2.
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Don't take out any further credit
- you'll only get yourself in worse trouble. |
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| 3.
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Gather
together all the documents you have about your debts
and make a list of all the people you owe money to, how much
you owe to each one and what type of debt it is (mortgage, rates,
fuel bill, overdraft, credit card, bank loan). You should do
this for all your credit commitments, even if you're up-to-date
with some accounts. |
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| 4.
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Work
out your most important debts - these are the ones
where the creditor has a drastic sanction like repossession
(mortgage arrears), cutting off your supply (gas or electricity
bill) or imprisonment (child support). You need to agree repayments
on these debts first before tackling your credit debts. |
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| 5. |
Work
out your total income from all sources
(use either monthly or weekly figures - don't mix the two).
You may be able to increase your income by checking you are
paying the right amount of tax or claiming benefits. Seek advice
from your local CAB if you would like us to check whether you
are receiving all you are entitled to. |
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| 6. |
See
if there is any way you can cut down on your expenditure,
but don't underestimate the amount you spend on essential items
like food and fuel. Find out whether you can spread payments
for fuel by budget schemes where you spread the amount over
the year. This may help you pay your bills more easily. |
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| 7. |
Subtract
your expenditure from your income - if you have any
money left over, this can be split between your creditors. If
you don't have any money left over, contact your local CAB for
advice about what you can do next. |
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| 8. |
Negotiate
repayments on your most important debts,
then split any remaining money between your credit debts. CAB
advisers do this by working out repayments according to how
much you owe each creditor. This is called pro-rata distribution. |
What the law says
Lenders
have a right to get back what you owe them - but you have rights
as
well. It’s illegal for moneylenders, debt collectors or
bailiffs to threaten you by phoning you late at night or too
frequently at home or at work. They must not use violence or
harass you. They can’t prosecute you in a criminal court
so don’t let them intimidate you with this threat. If you
are being harassed, you can complain to the Trading Standards
Service or the police.
Acting as guarantor
Did
you know that if you act as a guarantor for somebody else’s loan,
you must pay back all they owe if they stop paying. Don’t
be a guarantor unless you can afford the risk,. If you agree
to be one, make sure than you see all the papers.
Secured Loan
You
might be able to get a cheaper loan if you put your house up
as security,
but if you can’t keep up the payments the loan company can
sell you home to pay what you owe. Be sure you can afford this
risk.
If
you find yourself I debt, don’t ignore it. Work out exactly how much
you owe, who you owe it to, and what you can pay back. Tell your
creditors ( the people you owe money to) as soon as you have
a problem. Don’t ignore letters of demands. If you can warn
creditors of a change in your circumstances which will affect
your ability to keep to your credit agreement. The earlier they
know about the problem the more sympathetic they are likely to
be.
Creditors may
add the cost of phone calls and written reminders to the interest
you are already paying. Sort things out quickly to stop costs
piling up. Write out a list of all the money you have coming
in each week or month. Next, for the same period, write down
all the things you spend your income on and how much you spend.
Once
you’ve
done that, you should be able to see whether you need to look
at ways of increasing your income. Are you sure you’re getting
all the social security benefits you’re entitled to? could
you take on a part time job till you’ve cleared your debt.
Next
step is to see whether you could cut down on your spending.
Be prepared
to make sacrifices and cut down on things which aren’t essential.
Some
debts can cause trouble than others. These are priority debts.
You
must deal with these first. These include, electricity, rates
and fines or other court orders. You can then decide how much
you can afford to give any other creditors. Contac the lender
but don’t make offers you can’t afford to repay.
If
you can’t
tackle your debt problems yourself or if you feel you would like
help, ask at your local Advice Centre or Citizens Advice Bureau.
Some of these will have specially trained Money Advisers and
if necessary they will contact your lenders on your behalf.
If you have a complaint
If
you think that you’re paying "sky high" interest charges,
it might be worthwhile to go to court and ask for the agreement
to be changed in order for you to pay less. This is tricky however,
and you’ll need expert advice. Ask for help from your local
Advice Centre or Citizens Advice Bureau.
If at any stage
you feel that the lender is generally trading unfairly, you should
contact Trading Standards Service. If they agree with you they
will inform the Office of Fair Trading which issues credit licenses
to all authorised lenders.
If you have a problem with
debt you can contact your local Citizens Advice Bureau.
The CAB money and debt advice service aims to provide a free, confidential,
impartial, independent and non-judgemental service to the public.
Organisations who
can help:
The Northern Ireland Association of Citizens Advice Bureau can be contacted
at:
11 Upper Crescent
Belfast BT7 1NT
Tel. No: (028) 9023 1120
or
211, Antrim
Road
Belfast
BT
15
Tel No: (028) 9075 2114
East Belfast
Independent Advice Centre
85 Castlereagh Street
Belfast
BT5 4NF
Tel: 028 9096 3003
Fax: 028 9096 3004
Consumer
Credit Counselling Service/Debtline NI
Tel: 0800 138 1111
National
Debt Line
Tel: 0808 808 4000
Financial
Services Authority
Tel: 0845 606 1234
Fax: 0207 676 1099
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