Debt advice leaflet. You can find all the 'your housing options' leaflets at or contact Housing Options for a copy.

Transcription

1 Debt advice leaflet You can find all the 'your housing options' leaflets at or contact Housing Options for a copy.

2 Debt advice leaflet Dealing with your debts can be difficult and very stressful. If you are struggling to manage your debts, you should get advice as soon as possible to try to avoid falling into further arrears. Are you legally responsible for the debt? You should always ask the organisation you owe money to (the creditor) to provide documents that prove you are legally responsible for the debt before you agree to make any repayments. Joint liability You will only be responsible for another person s debt if you have joint liability. This might happen if: specific laws make you jointly responsible, for example, for council tax; you have both signed the agreement; or you have stood as a guarantor. You may not be legally responsible for a debt if someone signed an agreement in your name without permission, or you signed without understanding the implications of doing so. If so, you should get legal advice. Death You will not be responsible for the debts of someone that has died no matter what your relationship to them, unless you are jointly liable. Important note You should always check if your debts are covered by an insurance policy. This may be paid out if you are ill, become disabled or are made redundant. Priority debts Priority debts are those where if you do not pay them, you could lose your home, essential goods and services or be put in prison. The debts shown below are normally considered as priority debts and you should give them priority over other repayments. Rent, mortgage and secured loans (for example, on a car) Council tax Electricity and gas Magistrates court fines Maintenance (child support) Hire purchase Unpaid fines Car insurance, which must be paid by law and if your home is uninsured, you could lose everything if there is a fire or burglary. Repaying priority debts If you re behind with priority creditors, you should contact them and try to agree a monthly or weekly repayment plan. The monthly or weekly amount should be equivalent to the regular payment plus an added amount which contributes towards the arrears. The amount you offer should be based on how much you owe and how much you can pay to each priority creditor without missing a payment. If you miss a payment, you may lose your right to pay by instalments. In some cases the creditor may set a weekly or monthly repayment plan. If you are not able to afford this, you should contact the creditor and try to reach another agreement. If you cannot reach an agreement, you should get more advice. 2 3

3 Non-priority debts Unsecured creditors have no right to take your home or goods and you cannot be imprisoned for not paying non-priority debts. Examples of non-priority debts include store cards, credit cards, catalogues, money owed to family and friends, payday loans, bank loans and overdrafts. Repaying non-priority debts A number of creditors will be willing to negotiate with you if you cannot repay the debt. Some options for dealing with nonpriority creditors are listed below. Pro-rata payments An offer of repayment which treats each creditor equally is known as a pro-rata payment. After dealing with priority debts, you should divide your spare income (your income minus your total spending) among non-priority creditors, in proportion to how much you owe them. You can work this out as follows. Spare income X each debt Total debt When offering a pro-rata repayment to a creditor, you should ask them to freeze interest on the account and any extra charges. You should review your pro-rata payments every six months to make sure they are affordable. If a creditor does not accept your pro-rata payment, you must get more advice. See the contact details at the end of this leaflet. Selling assets If you have non-essential assets, including valuable household items such as TVs, you may want to sell these to make a lump sum available to your creditors. Place the account on hold If you have no spare income available, ask the creditor to freeze the account for three to six months and then review the situation. Partial write-off If you have some money available to offer the creditor but this does not cover the full debt, you can ask the creditor to reduce the amount you owe. They are only likely to agree to this if you are not likely to have spare income or capital in the future. Ask them to write off the debt If you have no available income or capital and your circumstances are unlikely to improve (for example, due to permanent disability), you may ask your creditor to write off the debt. Preparing a financial statement You must provide a financial statement, which shows your monthly or weekly income and expenses, with any proposed repayment plan. This will give a creditor or court an idea of your financial circumstances. It should be a realistic estimate of your spending and income, and include possible future costs for example, repairs to your home. County court A number of debt actions are dealt with through the county court. If a creditor does not accept an offer of repayment, they may issue a claim form through the county court. If you want to defend the claim, you must get legal advice. If you accept that you owe the debt, you must return an admission form to the creditor (similar to a financial statement). This allows you to make a repayment offer. The court will only need to make a judgement if the creditor does not agree to the repayment. 4 5

4 County-court judgements This shows the detail of the claim and the amount which is owed and states the rate for repaying the money. Making the most of your income and reducing your spending You should consider what you can do to make the most of your income and reduce your spending. You may be able to increase your income if you are eligible for certain benefits. You should visit and search for benefits adviser to get an estimate of the benefits you may be entitled to. A financial statement may highlight areas where you can reduce your current spending on non-essential goods. It is important that any reductions are realistic and you can maintain them over time. You may also have non-essential goods which you are able to sell to find a lump sum. Other debt options In the long term you may be interested in other debt options, for instance: administration orders; bankruptcy; debt relief orders; or individual voluntary agreements. The above may have implications on your home, job and future credit. If you think you might be interested in any of the above, you must get more advice and information. Contact us By phone: By housing.options@dacorum.gov.uk In person at: The Civic Centre, Marlowes, Hemel Hempstead, HP1 1HH Online at: or For information about our other housing options services and other agencies, please see our leaflet Your housing options. Specialist money and debt advice National Debtline Phone: Visit Community Legal Advice Phone: Visit: Payplan Phone: Visit Illegal Money Lending Team Phone: reportaloanshark@stoploansharks.gov.uk. 6 7

5 Housing Options Dacorum Borough Council The Civic Centre, Marlowes, Hemel Hemsptead and ask for Housing Options or