Debt Advice
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Regularly reviewing personal finances such as bank accounts, mortgages, pensions and savings is a good way to stay out of debt, however it is easy to over commit on your monthly payments for example, hire purchase orders, mobile phone contracts and changes in personal circumstances, such as losing a job, having an accident or separating from a partner, can send peoples finances spiralling out of control. Students too are often faced with massive debts on finishing university.
In the UK, debt advice is provided free of charge. If you find yourself in debt, do not ignore the problem and try not to panic. Our debt advice pages have been set up to inform the various options available to anyone facing unpaid debts and where to get help. |
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Where do I start?
Priority and Non Priority Debts
Some unpaid debts can have serious consequences; such debts are known as priority debts and they are classed as priority because they are debts where serious action can be taken against you if you don't pay what you owe. Examples of priority debts include not paying the rent or mortgage, your gas or electricity bill and taxes or payments ordered by the courts. Not paying these debts could lose you your home or put you in prison. The first step for anyone trying to get out of debt is to decide what their priority debts are and how much you can realistically afford to repay.
Non-priority debts include credit card payments, bank loans, catalogue repayments and money borrowed from family or friends. Non priority debts should not be ignored but they are not your first priority.
Working out a Budget
Working out a budget will help you work your priority expenses, highlight things that you may be able to cut back on and things that you may be able to get for less by shopping around, for example gas and electricity providers, mortgages and insurance.
Benefits and Tax Credits
Do you know if you are entitled to benefits or tax credits? If your circumstances have recently changed, you may be losing out on your entitlement.
Bankruptcy
A court can declare you bankrupt by issuing a 'bankruptcy order'. Bankruptcy is a legal status that usually lasts for a year is one way of clearing debts you can't pay.
Important
- Think carefully before taking out a loan to pay off your debts.
- Interest rates on loans can be secured against your home, meaning you could lose your house if you fail to make the repayments.
- Rates can also be extremely high and you could end up paying back considerably more than you borrowed.
- If you are unable to repay a debt, most organisations, will be more helpful if you approach them early on, than if you allow the debt to grow.
Where can I obtain further information?
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