The cost of living crisis has made things harder for a lot of people. It’s important to seek help if you’re worried about money. Our advice is always free, confidential and non-judgemental. 

We know that dealing with your debt situation can be an off-putting and intimidating experience. Understanding how to go about dealing with your debts can help you take the first step towards addressing your situation and getting your finances back into shape.

Priority vs. non-priority debts

Debts can be split into priority and non-priority debts, and it is priority debts you should address first, as not dealing with them can cause particularly serious problems.

 Priority debts include: rent arrears, Council Tax arrears, energy debts, phone or internet debts, and court fines, amongst others. Non-priority debts include credit card and store card debts, unpaid water bills, and benefit overpayments. 

You can find a full list of priority and non-priority debts on the Citizens Advice website.

Figuring out how much you owe

Credit reports can show you what money you’ve borrowed and paid back. You can get free copies from Experian, Equifax and TransUnion. Your credit reports won’t include all your debts however, such as council tax arrears or unpaid income tax, so you should look at any information your creditors have sent you. 

There are instances where you should not contact your creditors, because they have a limited time to take you to court to repay a debt. Don’t contact your creditor if: it’s been over 6 years, because they might not be able to force you to pay; or if it will soon be 6 years, because contacting them might restart the time limit. 

Find out more about checking if you need to pay a debt or not.

Your options for getting out of debt

It’s important to talk to your creditors before exploring debt solutions as you may be able to come to an agreement with them, or get more time to work on your situation. You can find out more about making a plan to pay your debts on the Citizens Advice website. 

If you can’t make an agreement with your creditors, you should still pay them what you can afford and if you have money left after paying your priority debts, you may be able to set up a debt management plan, apply for an administration order, or set up an individual voluntary arrangement. Find out more about these debt solutions on the Citizens Advice website.

If you have little or no money to pay your debts, you may be able to get a Debt Relief Order, or apply for bankruptcy

The Breathing Space scheme could give you extra time if you’re not ready to use a debt solution or can’t afford to right now. The scheme can give those eligible 60 days of breathing space where creditors can’t contact you, take action to make you pay, or add interest and charges to your debt. You can talk to one of our advisers to see if breathing space is right for you. 

Maximising your income

Looking for ways to maximise your income can really help you with your debt situation, and there are multiple ways you can try and do this. You may be entitled to claim specific benefits or grants and you can use a benefits calculator to find out what you could get. Make sure you have handy information about your savings, income, pension, childcare payments and any benefits you or your partner get.

It is also worth double checking you’re paying the right amount of tax, such as income tax and council tax. You can check you’re paying the correct amount of income tax online, and you can check your council tax band on the government website.

If you need help or advice, reach out to our money advice team today – call us free on 0808 278 7804 or visit one of our drop-ins. 

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