DEBT AND MONEY ADVICE

Transcription

1 DEBT AND MONEY ADVICE A GUIDE FOR EMPLOYERS Opportunity Sheffield is supported financially by Yorkshire Forward and the European Union. The project has attracted 7.2 million investment from Yorkshire Forward, including 1.8million from the European Regional Development Fund as part of Europe's support for the region's economic development through the Yorkshire and Humber ERDF Programme.

2 Contents Page Employee debt and how it affects your business 2 Support for your employees 3 How to identify potential debt or money management issues 4 How to deal with debt or money management issues 5 Dealing with debt The First Seven Steps 7 Strategies flow chart 9 Where to find debt advice in Sheffield 11 Other resources 12 1

3 Employee debt and how it effects your Business How can supporting your employees who are experiencing financial difficulties help your business? Supporting your employees has potential benefits for you as employers by: Reducing staff absences by removing stress caused by financial worry Improving staff retention and loyalty Improving output and productivity Enabling employees to work to their full potential Reducing the need for overtime working Should overtime be required, ensuring productivity increases in line with hours worked Expanding your Corporate Social Responsibility agenda The benefits for your employees Enabling them to manage their debts better Reducing the likelihood of incurring future unmanageable debt Increasing their financial awareness to better understand and manage their finances Enabling them to be more financially capable consumers Enabling them to seek assistance, knowing when and where to go for help Enabling them to improve their budgeting skills and avoid crisis situations Helping them to keep track of their finances and plan ahead GOOD DEBT MANAGEMENT PLANNING ALLEVIATES STRESS 2

4 Support for your employees Educate Employees Be aware of services and options available to them. You may wish to implement Financial Awareness Sessions. Research Debt Advice - You may chose to provide employees with details of free impartial debt advice agencies such as Citizens Advice Bureaux and local advice centres. As part of the Opportunity Sheffield package we will provide this information Be Aware Few people are keen to talk about their financial problems. If someone shows a dip in performance it could be money related, deal with this sensitively and confidentially. Typical warning signs of debt problems are doing a large amount of overtime, asking for an advance on wages/salary, taking a large number of personal phone calls at work and any of the usual signs of stress such as short temperedness, excessive tiredness and absences may also be an indicator. If you suspect that debt might be an issue don t be afraid to offer your support. Ensure Confidentiality Employees are more likely to want to seek advice if they know that their situation will be treated in confidence by their manager. Indirect Debts - Debts within the household or family can have as much impact on the employee as their own personal debts. Effective employers can spot the tell tale signs and by swift intervention can help their staff through a difficult time in their lives and reduce the negative effects on your business. FOR EVERY DEBT PROBLEM THERE IS ALWAYS A SOLUTION 3

5 How to identify potential debt or money management issues If a member of staff is experiencing debt or money management difficulties there are probably going to be indicators which may help you to recognise that there is a problem. Possible signs to look out for: They may be on edge, tearful or defensive They may not put into office collections They may be reluctant to join in office social events They may not join the company pension scheme They may take personal calls and is upset or in a panic afterwards They may take time off at short notice They may work regular and often excessive overtime They may take time off sick with stress or other related reason They may return to work early when they should be off sick (cannot afford to be off) The employee may have a second or even third job They may have deductions taken out of their salary for Administration Order They may ask for an advance on their wages They may ask if they can have their wages paid through cash or cheque rather than by BACS If paid by cheque they may be getting cheques cashed through a third party You may receive phone calls from creditors or letters regarding the employees employment status 4

6 How to deal with debt and money management issues Each organisation will have different systems set up to manage their employees through appraisals, supervisions or one to one sessions. We would recommend that during these sessions the issue of debt is dealt with in a sensitive and supportive way but do not be embarrassed or afraid to speak about the subject. Doing some background research before these sessions is essential if you think there may be a debt problem e.g. Has an Administration Order been made? Have any enquiries been made on the employee regarding credit checks or employment status? Check the employee s annual leave, flexi time, time off in lieu and sickness records, is there a pattern such as: o Is the employee away from work just before payday maybe they can t afford to get to / from work? o Do they regularly take time off to undertake a second job? Monitor the employee s performance o Do they work excessive overtime? o Are they working to full capacity? You may well have picked up that there is an issue through informal conversation, or another member of staff might indicate that there is a problem. What you can do Once you have evaluated the situation, if you think there is a debt problem it is important to think about what kind of support that you as an employer are able to give. You need to decide your ground rules and set your parameters before you talk to the employee e.g. would the business be prepared to help them financially and if so on what basis? Although you want to support them, your employee s debts are their responsibility and you need to protect both your employee and yourself as an employer. The parameters already set up will help understanding on both sides. If you have a staff handbook you might want to think about including something in that to ensure that the support the business is willing to provide is solidified in the form of a policy. Here is a list of some different types of support that you may be able to offer Time off to seek independent advice Time off to prepare financial statement and deal with creditors 5

7 Help with drafting letters to creditors Use of company computer and or stationery for contacting creditors A list of resources and sources of information Contact details for Citizens Advice Bureau and other independent advice centres Financial support, although this should be carefully considered and only under exceptional circumstances After you have spoken to the employee it is important that you confirm and agree your conversation in writing outlining what you have discussed, the outcome and any agreed course of action / solution. It is vital to reiterate confidentiality. It may be the case that your employee will need further supervision sessions or follow up to see how they are getting on. For further information about options for dealing with debt see the strategies flow chart on page 9 6

8 Whichever strategy is adopted the employee may find it helpful to follow the seven steps as outlined below Dealing with Debt The First Seven Steps For every debt problem there is a debt solution. If you owe money it can be very stressful and can affect many areas of your life. Just by taking some simple steps to address the issue you will find you feel much better. Below are seven initial steps to get the ball rolling and enable you to deal with your debt issue. This is not a substitute for specialist debt advice, but it is a good starting point and will help ease your stress. You can get free and independent advice from organisations like Citizens Advice and local advice agencies. Step one - write down all of your debts and that of your spouse/ partner, no matter how small and be honest with yourself. List of all creditors ( companies/ people that you owe money to) o Write down how much you owe o Agreed/ contracted weekly/ monthly payments ( do not include arrears) o Write down how much you are in arrears with each one Step two - prioritise, prioritise, prioritise! Divide your debts into priority and non priority Priority debts are those that if you do not pay may result in loss of your home, goods, services ( utilities) or liberty such as: o Rent or mortgage arrears, secured loan arrears, council tax arrears, gas or electricity arrears, magistrates court fines, maintenance / child support Non priority debts, only sanction available is to take action in a County Court to recover money owed. Court should make order in line with your ability to pay o E.g. credit and store cards, unsecured loans, catalogues, loans from family and friends etc. Step three from step two identify emergencies An emergency is when you may lose your home, a utility, and your freedom or have a judgment entered against you a situation where a creditor is only threatening action would not be an emergency, but may require immediate action Step four - work out your personal budget This helps you to put all your, outgoings and debts into a logical format. 7

9 List your and that of your spouse/ partner Be honest and realistic with your expenditure. Your housekeeping expenses should include not only food but also toiletries, cleaning materials, cigarettes (if applicable), pet food and something to cover reasonable leisure expenses. Step five look again at your budget sheet Can you reduce your expenditure? E.g. can you shop around for cheaper insurance? do you need more than one mobile phone?, have you looked at a cheaper package for gas and electricity? Possible swop provider? Have you double insurance? can you move your credit cards for a better deal? Do you need your credit cards? Step six - consider the best way for you to deal with your debts From the budget sheet, money for creditors, work out how much you can offer your emergency and priority debt creditors. There are lots of different options available please see attached flow chart and you can read an overview of them in our leaflet Dealing with Debt ** There are sometimes extra costs involved depending on which option you choose and as such it is important to get independent advice. You could discuss your options with an independent adviser. You do not have to pay for this advice you can get free advice from organsiations like Citizens Advice and local advice agencies. Step seven - be honest with your creditors Once you have worked out your budget sheet, you can talk to your creditors or write to them about your situation. It is best practice to provide them with a copy of your budget sheet. Please note if you are in a marriage / partnership creditors will usually require a joint budget sheet. If you prefer, you could get a debt adviser to talk to your creditors for you.. Don t offer what you cannot afford even if it much less than you are currently paying or what the creditor wants. Remember to deal with emergencies and priority creditors. It's important to follow up a phone call with a letter confirming what you said and agreed. You may have little or nothing left to offer your non-priority creditors, but you should still talk to them, explaining the situation. You may be able to tell them that you will pay them back at some point in the future - but don't make promises you cannot keep. For a more comprehensive list of options along with instructions and sample letters see Money Management A basic guide for the employer and employee Remember, for every debt problem there is always a solution 8

10 This chart shows options for dealing with debts under different circumstances but should be used as a basic guideline only. Available DMP through free provider if owe more than 5,000 Bankruptcy with Income Payments Order IVA but debts may need to be over 15,000 Pro rata offers to creditors Administration Order. Must owe under 5,000 and have a CCJ No assets Debt Relief Order if debts under 15,000 and assets 300 and available less than 50pcm Bankruptcy if debt over 15,000 No available Moratorium or token offers of payment to creditors Debt Relief Order if debts under 15,000 and assets 300 and available less than 50pcm Tenant or boarder Write offs Pro rata offers to creditors Available IVA but debts may need to be over 15,000. Beware how assets will be treated DMP through free provider if owe more than 5,000 Full and final settlement using assets Assets Administration Order if owe under 5,000 & CCJ No available Administration Order if owe under 5,000 & CCJ based on small monthly payment with Composition Order Moratorium or token offers of payment to creditors Full and final settlement using assets No available Moratorium or token offers of payment to creditors Administration Order if owe under 5,000 & CCJ based on small monthly payment with Composition Order Equity IVA but debts may need to be over 15,000. Beware equity clause Available Administration Order. Must owe under 5,000 & CCJ DMP through free provider if owe more than 5,000 Home owner Pro rata offers to creditors Bankruptcy No available Moratorium or token offers of payment to creditors Administration Order if owe under 5,000 & CCJ based on small monthly Composition Order No equity DMP through free provider if owe more than 5,000 IVA but debts may need to be over 15,000 Available 9 Administration Order. Must owe under 5,000 & CCJ Pro rata offers to creditors Bankruptcy with Income Payments Order

11 Key to Flow Chart DMP = Debt Management Plan There are some services that will negotiate reduced payments on your credit debts and administer payments on your behalf you make one monthly payment, which they then distribute to creditors. These services will only provide limited advice on your priority debts. There are organisations that provide this service free of charge (Payplan and CCCS see other resources). IVA = Individual Voluntary Arrangement If you have a significant amount of monthly to offer your creditors and/or you can raise a lump sum of money in some way, you may be able to obtain an individual voluntary arrangement. This can provide release from your debts after a specified period of time often five years. CCJ = County Court Judgement An order made by the county court for the payment of money from one party to another. If payments are not maintained, the creditor has further sanctions available. 10

12 Where to find debt advice in Sheffield Castle Advice Service Darnall and District Advice Service 207 Duke Street 626 Staniforth Road Sheffield. S2 5QP Sheffield. S9 4LN Tel: Tel: Firth Park Advice Centre Foxhill & Parson Cross Advice Service 9 Stubbins Lane Wordsworth Avenue Sheffield. S5 6QG Sheffield. S5 9JG Tel: Tel: Pitsmoor Citizens Advice Bureau Heeley Advice Centre 30 Spital Hill Heeley Green Centre Sheffield. S4 7LG 344 Gleadless Road Sheffield. S2 3AH Tel: Tel: Hillsborough and Area Advice Service Proctor Place, Hillsborough Sheffield S6 4HF Manor Right and Advice Service 300 Prince of Wales Road Sheffield S2 1FF Tel: Tel: Sharrow Citizens Advice Bureau S. E. Sheffield Citizens Advice Bureau London Road 77 Queens Street Sheffield S2 4ND Sheffield. S Tel: Tel: Woodseats Advice Centre 714 Chesterfield Road Sheffield. S8 0SD. Tel:

13 Other resources Money Advice Trust, National Debtline and Business Debtline National Debtline (NDL) is a helpline offering free, expert professional advice over the phone and by . Clients can deal with their debts in an informed and active way. NDL offers both self help solutions and debt management plans to people in a lot of debt. Call or visit nationaldebtline.co.uk This line is open Mon-Fri 9am to 9pm and Saturday 9.30am -1pm Consumer Credit Counselling Service (CCCS) CCCS is a registered charity their services include help over the phone or on line; there is no charge for any of its services. Call or visit cccs.co.uk The line is open between 8am and 8pm Monday Friday Payplan Payplan is a company which provides a free debt management service Call or visit payplan.com Charitable Organisations and Trusts It may be worthwhile contacting charities and trusts who can sometimes offer help. Some utilities providers have trusts for their customers e.g. British Gas Trust and Yorkshire Water. Some larger employers have trust funds for ex employees and sometimes their dependents. Also the armed forces have grants available to ex servicemen and their families Opportunity Sheffield Debt Support Website To access up to date resources on money management and tackling debt related problems visit our website at To log in use the user name OSuser and the password access, then click on the Opportunity Sheffield link that appears on the left hand menu. 12

14 Disclaimer Citizens Advice (the operating name from The National Association of Citizens Advice Bureaux) has tried to ensure that the information in this toolkit is accurate. However Citizens Advice will not accept liability for any loss, damage or inconvenience arising as a consequence of any use of or the inability to use any information in this toolkit. Opportunity Sheffield is supported financially by Yorkshire Forward and the European Union. The project has attracted 7.2 million investment from Yorkshire Forward, including 1.8million from the European Regional Development Fund as part of Europe's support for the region's economic development through the Yorkshire and Humber ERDF Programme. Opportunity Sheffield Debt Support Package is provided by Sheffield Citizens Advice Bureau Debt Support Unit. Contact us at: E mail at: os@debtsupportunit.org.uk Jun 11/04/GFE 13