The Money Maze How to Escape the Poverty Trap
2 I The Money Maze In a national survey, the Bassetlaw district has been ranked 61st out of the 326 council areas for being at risk of poverty, and 64th for being at risk of child poverty. The current financial climate and on-going economic recession is causing financial hardship for residents across the district and people are finding harder to make ends meet. The number of pawnbrokers and moneyshops has increased in the last year, with shops now operating in Worksop and Retford. Mortgage repossession attempts have also increased and the level of homelessness in the district is rising. Bassetlaw District Council is helping to deal with some of the consequences, but the Council also wants to encourage people to take action before problems begin or start to mount up. > Who Are We Trying To Reach? This leaflet is aimed at people who are finding life financially harder than they used to. It doesn t matter if you already claim benefits or have a job. Money issues can affect anyone. Households may be able to breathe in for a short time if the budget is getting tighter but sometimes your money won t stretch far enough. People may get to the stage when they are tempted to go for a payday loan, or worse be taken advantage of by a doorstep lender or a loan shark. If this happens then interest payments take up an increasing amount of the weekly income. Another loan may be taken out and the situation worsens, which can lead to serious financial problems. This leaflet shows you where to go to get help and advice if you are facing money worries. Financial problems can affect anybody and in the current economic climate more and more people are beginning to struggle. This is a growing concern for all of us and the Council are already working with partners such as the Credit Union, Bassetlaw CAB and A1 Housing to provide the best advice and support possible to our residents. This guide may help some people avoid getting into difficulties, or let them know where to go to get help, if they are experiencing trouble. If you find yourself with debt worries and financial problems then it is what you do next that is crucial. Don t ignore the situation, it will only get worse and there is plenty of free and unbiased help available. Don t delay, get help today. Councillor Sylvia May Cabinet Member for Revenues and Customer Services Bassetlaw District Council
The Money Maze I 3 > The Triggers There a number of different events that can occur in a person s life that might affect their ability to manage financially. These include: > Bereavement > Divorce > Injury > Redundancy and Unemployment > Illness > Old Age. People who have been affected by one of these triggers events may see their grasp on personal finance start to slip. If you find yourself in this position now is the time to act and get help. Do not put it off and stick your head in the sand and hope the problem will go away. > Some National Facts > The CAB nationally dealt with 8,652 new debt problems each working day over the last year > 1,797 people were made redundant every day between September and November 2011 > During the same period 857,000 had been unemployed for over a year > Every 14 minutes, 17 seconds a property is repossessed in the UK The lack of growth in the economy and cuts in Government spending can make this situation worse. > Some Local Facts In the Council s June 2011 Scrutiny Study on Poverty Issues, statistics obtained by the local Citizens Advice Bureau showed that in Bassetlaw: > 4,160 (18%) live in workless families > 5,620 (24%) live in families that receive Working Tax Credit > 9,780 (42%) live in low income families. Bassetlaw District Council wants to put in place a strategy that will help, advise and protect our residents as much as possible.
4 I The Money Maze > Five Simple Steps to Help 1. Don t ignore the problem - it won t go away and the longer you leave it the worse it will get. 2. Get in touch with your creditors straight away and explain your problems. Try to get a contact name you can use in future. 3. Don t borrow money to pay off debts without thinking very carefully. This kind of borrowing sometimes makes matters worse. Get advice before making a decision. 4. Deal with your priority debts first - the debts that can mean losing your home or having your gas or electricity cut off, or even going to prison. Don t panic! You can t go to prison for most types of debt. 5. Remember - ask for advice. The organisations listed in the What Help Can You Get section all offer free and impartial advice. > What Help Can You Get? If you have debt or money worries, the following organisations offer free, confidential and impartial help and advice. Bassetlaw Citizens Advice Bureau (CAB) The CAB can help with budget plans and can make sure you are getting the right benefit entitlement. As soon as you get into arrears with rent, mortgages or debt repayments, make sure that you ask for their help. The CAB has a 95% success rate when they get involved at an early stage. They can help you budget plan, but you must not wait for problems to pile up! Central Ave Worksop Notts S80 1EJ 17b The Square Retford Notts DN22 6DB Tel: 0844 8563 411 and calls are charged at 5p a minute. Worksop Opening Times: Monday, Wednesday (9:30am - 3pm) and Friday (9:30am - 1pm) Retford Opening Times: Tuesday and Thursday (10am - 2pm) Video link services are available from Bircotes, Langold, Misterton and Tuxford Community Points.
The Money Maze I 5 2 Shires Credit Union The local Credit Union can offer loans of up to 1,000. These are generally for things like urgent repairs, essential items or school uniforms. 2 Shires Credit Union Queen s Buildings (Annex) Potter Street, Worksop S80 2AE 2 Money Advice Service Shires C R E D I T U N I O N The Government backed Money Advice Service offers free and unbiased advice. They offer good money management ideas and also produce a number of factsheets for those just managing to get by, people who are struggling and how to deal with debt. Money Advice Line: 0300 500 5000 Tel: 01909 500 575 Opening Times: Monday, Wednesday, Friday & Saturday (10am - 2pm) Opening Times: Monday to Friday (8am - 6pm excluding bank holidays) www.moneyadviceservice.org.uk Christians Against Poverty Christians Against Poverty have helped over 45,000 people to find a way out of debt, completely free of charge. They can help anyone living near one of their centres, regardless of belief, background, race or any other factor. They will not judge you and offer support to work your way out of debt. 94% of clients say the service was either life transforming or a great help. Freephone 0800 328 0006 to arrange a visit by one of the team. www.capdebthelp.org National Debtline National Debtline offers free confidential and independent advice on dealing with debt problems. They have sample letters to write to creditors and you can see if you can pay your debts via a Debt Management Plan, or qualify for a Debt Relief Order. Freephone 0808 808 4000 Opening Times: Monday to Friday (9am - 9pm) Saturday (9:30am - 1pm) www.nationaldebtline.co.uk
6 I The Money Maze Consumer Credit Counselling Service Get free anonymous debt advice from the UK s leading debt charity, who have been helping people in debt since 1993. Each year their debt counselling experience helps over 500,000 people with their debt problems, with over 100,000 on a debt management plan. If you re worried about debt, CCCS Debt Remedy will help you find the best solution. It is completely free and anonymous. It will provide you with expert debt advice from Consumer Credit Counselling Service debt counsellors, including a personal budget and practical help. Freephone: 0800 138 1111 Opening Times: Monday - Friday (8am - 8pm) Saturday (9am - 2pm) www.cccs.co.uk A1 Housing s Financial Advisor Service Offering free and confidential advice A1 Housing have an advisor available one morning per week in Worksop, Harworth and Retford to deal with all residents concerns. A1 s Money Advisor has already helped hundreds of tenants to make sense of their money through financial health checks, ensuring they receive all the benefits they are entitled to, and advice on how to manage debts to make their money go further. There is also plenty of advice for future tenants on the housing waiting list, especially those who will be living independently for the first time and may not be aware of the costs of setting up and running a home. Tel: 01909 533 744 A1 Housing Offices Opening Times: Retford: Tuesdays One Stop Shop, 17b The Square Harworth: Wednesdays (fortnightly) Information Centre, Scrooby Road Carlton: Wednesdays (fortnightly) The Gateway, 24-28 Sycamore Road Worksop: Thursdays Queen s Buildings, Potter Street
The Money Maze I 7 Bassetlaw District Council Bassetlaw District Council can help point you in the right direction if you are not sure what help you need. > Council Tax If you are worried about Council Tax payments, a bill or reminder or a summons, please contact the Council Tax team. Options include a longer term payment arrangement including the full 12 months to pay a yearly Council Tax account. Tel: 01909 533 234 > Debt Recovery > Benefits The Council s benefit team can help with entitlements for rent rebate, rent allowance and Council Tax support. If you are on a low income you may be surprised to find high thresholds for benefit entitlement especially for families and pensioners. It is a well-known fact that thousands of residents don t claim these entitlements, yet it is your right to do so. Tel: 01909 533 710 The team in the Debt Recovery Unit can help you with the sharper end, for example if your account has been passed to bailiffs or an attachment of earnings that you may be struggling to cope with. Tel: 01909 533 465 Queen s Buildings Potter Street Worksop Notts S80 2AH One Stop Shop 17b The Square Retford Notts DN22 6DB > Homelessness The Housing Needs team can help if you are in danger of being evicted and being made homeless. Opening Times: Monday to Friday (8:45am to 5pm) www.bassetlaw.gov.uk Tel: 01909 533 455
8 I The Money Maze > Thinking of Taking Out a Loan If you are thinking about borrowing money or taking out a loan of any sort, think about these two most important questions first: 1. Do I really need the money now? 2. Can I really afford to take out the loan? When borrowing money always check the interest and charges you have to pay back. Ideally, only borrow responsibly from regulated financial service providers. Avoid loan sharks and take care if borrowing from regulated High Street Money Lenders and Payday loan shops. A guide to lenders is set out below with a rough idea of risk and interest they may charge using a traffic light system. Banks and Building Societies The safest way to borrow is still through a bank or building society if you have a bank account. But, you need to be careful - an unauthorised overdraft can be more costly than a payday loan. Credit Unions Credit unions are run by their members and they may lend you money straight away. Others may lend only after you have shown you can save. A good place to start some small savings, if you haven t got a bank account. Other Licensed Lenders You will see many of these in any high street. They will usually lend money to people who can t get credit form mainstream lenders. They often charge higher interest rates than banks. Doorstep Lenders Money lent to you by doorstep lenders (who will collect repayments at home) can be expensive. Make sure that they are licensed and remember lenders cannot call on you uninvited to offer cash loans. Payday Loans A payday loan is a small, short-term, loan secured against your next pay from your employer - sometimes referred to as cash advances. They are easily accessible and only rely on the borrower having previous payroll and employment records. Payday loan repayments need to be carefully explained. For example, if you need to borrow 120 in 4 weeks, it might cost you 150 using the pay day loans as advertised on TV. However, missing that deadline by a single day could cost you more. Some examples are: 1 month + 240 2 months + 360 12 months 15,000
The Money Maze I 9 > Loan Sharks Loan sharks should be avoided at all times. A loan shark is an unlicensed moneylender. Licensed moneylenders are regulated by the Office of Fair Trading (OFT). Because they re not licensed, loan sharks operate outside the law. If you borrow from them it s likely you ll: Directgov s Stop Loan Sharks To report a loan shark in confidence: 24 Hour Helpline: 0300 552 222 www.direct.gov.uk/stoploansharks > get a loan on very bad terms > pay an extortionate rate of interest (rates as high as 131,000 per cent APR have been recorded) > be harassed if you get behind with your repayments > be pressured into borrowing more from them to repay one debt with another If you have borrowed from an illegal money lender, you haven t committed a crime, they have, and they could receive a prison sentence. How to Spot a Loan Shark? Loan sharks will often: > start out being friendly - their behaviour only changes when repayments are missed > offer little or no paperwork > increase the debt or add additional amounts > Don t get Trapped in the Money Maze > Poverty, and the risk of poverty, is increasing locally. However there is always a way out. > There are plenty of support organisations who offer free and confidential help and advice. They can, and want to help, but you must make the first move and get in touch with them. > Always think carefully about what you are doing before you take out any loans and avoid Loan Sharks at all costs. > Do not put any problems off and bury your head in the sand. They will only escalate! > take items as security - for example, passports, bank cards or driving licences > resort to intimidation, threats or violence
10 I The Money Maze > Case Study Paul Salisbury (not his real name) is 36 years old and living in Worksop. He is recently divorced with two young children and he has debts to several creditors, including water debts from the home he used to share with his wife, two credit card companies and a large overdraft with his current account provider. Over the phone our adviser went through Paul s situation, explaining the difference between priority and non-priority debts, and why it was important he pay whatever he could towards his rent arrears. The adviser also explained to Paul that with less than eight weeks arrears and under an assured tenancy agreement like his, the landlord would have to go to court to evict him, and the court may decide this was unreasonable. Paul was helped to fill out a complete personal budget sheet detailing all his income and expenditure, so that both Paul and the adviser could get a good idea of what his financial situation was and what he could offer to his landlord. The adviser explained to Paul that he should write to his landlord and ask them to negotiate a repayment plan. He lives in a privately rented property and was just about managing all his credit commitments until he was made redundant. In an effort not to fall behind with the water debts he had agreed with his ex-wife he would repay, he stopped paying his rent and cancelled the relevant direct debit. After six weeks he owed his landlord 630. Paul s landlord threatened to evict him, if he didn t pay him the money in the next week. Fortunately Paul happened to read a newspaper article which listed the National Debtline phone number at the bottom. He decided to give us a call. Paul sent his landlord a letter with a proposed plan for repaying his arrears and enclosed a copy of his budget, with a little tinkering here and there, his landlord agreed.
The Money Maze I 11 Having completed a robust budget sheet, Paul could see that his new plan for paying off his rent arrears meant he had a surplus income of 55 per month which he could use to pay off his non-priority debts. Paul was advised to offer payments on a pro-rata basis, so each creditor got their fair share. He was directed to template letters he could download from the National Debtline website, which would help him negotiate new repayment plans. Paul agreed to keep creditors updated if his financial situation changed, and so when he managed to get a new job and increase his income, he upped his repayments and hopes to be debt free in just two years. Case study provided by National Debtline. Paul has now made agreements with all his creditors that sit within a sensible and sustainable budget. The creditors agreed to freeze interest and charges on debts so that his repayments would eat into the capital of those debts.