If you’re experiencing a problem with debt it’s important not to ignore the situation, but to get advice as soon as possible.
By acting early on you can avoid some of the added stress and expense of court charges, bailiff fees and penalties, as well as unnecessary damage to your credit status.
In working out how much money you owe, you or a debt adviser may want to work out whether you’re liable or not for all of your debts.
You can be liable because:
You can be jointly and severally liable with someone else if both or all have signed the agreement. For for some debts, such as Council Tax and water charges, you ca be liable if you’re part of a married couple, a civil partnership or living together as husband and wife or as civil partners.
You may not be liable for a debt if you are a minor - if you are under 18 in England and Wales or under 16 in Scotland.
You may also be able to challenge liability for a debt if you think that the amount is wrong, if you are in dispute (for example buying faulty goods or services) or if the debt is unenforceable.
There are a few circumstances in which you may not have to repay a debt.
A debt adviser can help you to establish whether or not your debts are enforceable.
A priority debt is one that could result in:
You should always deal with these debts first before trying to repay your non-priority debts.
Examples of priority debts which can result in you losing your home are mortgage or secured loan arrears and rent arrears.
Priority debts which can result in you losing your liberty and facing a prison sentence include:
Non-priority debts are those which have a less serious effect if not paid. The creditor can generally sue the lender for money or repossess goods.
However, if the creditor has a court judgement against you which you fail to meet, they may be able to take enforcement action against you or make you bankrupt. This could have more serious consequences, such as losing your home if you are a homeowner.
Once you’ve worked out how much you owe and which are priority and non-priority debts, you will need to work out your budget. This involves making a list of your income and expenditure. You would only include essential expenses in this list. You can use the Citizens Advice Bureau online budgeting tool to help you with this.
Once you have calculated your total income and expenditure, you should be able to see whether there is anything left over to pay towards your debts. If there is, you would need to:
If you don’t have any spare money left over to pay towards your debts, you’ll have few options and may need to seek advice on maximising your income and reducing your spending. A debt adviser will also be able to explain other options such as debt relief orders, administration orders, individual voluntary arrangements and bankruptcy.
You can get help with debt from several sources including Terrence Higgins Trust’s online advice service, your local Citizens Advice Bureau and the My Money Steps website, which is run by the National Debtline service.
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This article was last reviewed on
by C. Berry
Date due for the next review: 24/9/2017
Content Author: G. Arrindell
Current Owner: D. Anyanwu
Citizen's Advice, Advisernet - Dealing with people you owe
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