DEALING WITH YOUR DEBT Information pack BRISTOL

DEALING WITH YOUR DEBT Information pack BRISTOL

Bristol Citizens Advice Bureau Contents Welcome to the Bristol Citizens Advice Bureau Dealing with your debt Pack 3 Basic debt advice 4 Income and expenditure sheets 7 Your creditors 11 Negotiating with priority creditors 12 Mortgage arrears 15 Rent arrears 18 Council Tax arrears 20 Court fines 22 Negotiating with priority creditors 24 What happens if you are taken to court for money you owe? 26 Bailiffs 28 Sample Letter-Holding letter 30 Sample Letter-No offer letter 31 Sample Letter-Pro-rata offer to non priority creditors letter 32 Sample Letter-Token offer to creditors letter 33 Sample Letter- No reply to your offer letter 34 Sample Letter-Still no reply to your offer letter 35 Sample Letter- Pro-Rata/token offer refused 36 Common Financial Statement 37 Further help 39 Welcome to the Bristol Citizens Advice Bureau Dealing with your debt Pack People get into debt for all sorts of reasons. Losing a job, splitting up with a partner, taking on too much credit, and living on a low income are amongst the many reasons why people struggle to keep up with their financial commitments. This pack is a step by step guide to assist you to address your debts. It includes information about: Basic debt advice. Negotiating with priority creditors. Mortgage arrears. Rent arrears. Council Tax arrears. Court fines. Negotiating with consumer creditors (non priority debt). What happens if you are taken to court for money you owe. Bailiffs. Sample Debt Letters. Financial Statement (personal budget). This pack is intended to provide basic money advice on debt and should not be taken as a full statement of the law. If you feel your debt issues are more complex and would like further advice, please contact the Bureau: Bristol Citizens Advice Bureau 12 Broad Street Bristol BS1 2HL Telephone: 0117 926 8770 Fax: 0117 934 9829 2 3

Bristol Citizens Advice Bureau Basic Debt Advice Many people fall into debt at some point in their lives, often through no fault of their own. The steps described in this section will help you deal with your debts and regain control of your finances. For more in depth information about your specific debts, take time to look at the relevant section in this pack. 1. Contact your creditors Don t ignore the problem, it will only get worse. Contact the people you owe money to (your creditors) as soon as you realise you cannot keep up with your payments and explain your situation. Be sure to keep copies of each letter you write. 2. Increase your income You may be able to increase your income by: Claiming additional benefits and tax credits. You can obtain further advice from your local CAB. Finding additional work. Make sure to check how this may affect your benefits. Taking in a lodger. You may need permission from your mortgage lender, and home contents insurer and this may also affect your benefits. Check your tax code and whether you are entitled to any tax allowances or relief. Your local tax office will be able to advise you. 3. Draw up a personal budget Work out a weekly or monthly budget so that you know where your money is being spent and how much you can afford to offer your creditors. You can use the income and expenditure sheets provided. You want to have more money coming in than you are spending but make sure that the budget is realistic and you have included the following items. All your household income Wages or salaries for yourself and your partner. If the amount varies make an average from 3 to 6 months wages. Benefits you receive. Contributions from lodgers or friends and family. All your expenses Housekeeping. Include what you spend on food, cleaning products, children s pocket money and school dinners, cigarettes etc. Housing costs. Include your mortgage, rent, home/contents insurance, service charges, second mortgage/secured loan and life/endowment insurance. Council tax. Fuel. Bills such as water, gas electricity etc. Telephone. Child minding. Travel expenses. Both public transport and the costs involved in running a car such as tax, insurance petrol etc. TV rental/licence. Clothes and contingencies. Other essential expenses such as medical expenses or support to a relative. Your priority debts These include mortgage or rent arrears, fuel arrears, council tax arrears, court fines, child maintenance/ support. These are priorities because the consequences of not paying them are serious and can lead to homelessness and even prison. Your non priority debts These include benefits over-payments, credit debts such as overdrafts, credit cards, catalogues and loans. These creditors can take court action to retrieve the debt but you cannot be imprisoned for not paying them. 4. Tackle your priority debts first When you have worked out how much money you have left after your expenses; contact each of your priority creditors and make an arrangement to repay your arrears. If the creditors are threatening to take action against you and you need more time, send them a holding letter explaining the situation and asking for 2 or 3 weeks to sort out your finances. Some creditors will want the arrears cleared within a specific time. If you are unable to agree a repayment schedule with them, contact your local CAB for further advice. Make sure you are claiming all the benefits you are entitled to and if you are receiving income support, job seekers allowance or pension credit, consider repaying arrears through small deductions from these benefits each week (direct deductions). Contact your local benefits office for more information and also make sure you have claimed any tax remit you are owed. Contact the Inland Revenue tax credit helpline on 0845 300 3900 for more information. 5. Your non Priority debts Any money you have left after paying your expenses and priority creditors (available income) should be distributed to your non priority creditors. You will need to ensure each creditor is paid fairly by offering a percentage of the available income, based on how much you owe them. This is called a pro rata offer. Add up all your non priority debts (total debt) and use the following formula to work out each pro rata offer: For example: Mr. Smith owes in total, 5000 to non priority debts. After completing a budget sheet, he calculates that after his expenses and priority debt payments have been paid, there is 100 of available income to distribute between his non priority debts. To work out a suitable pro rata 4 5

Bristol Citizens Advice Bureau Income and Expenditure Sheets Weekly/Monthly offer to make to a credit card company he owes 200, he multiplies the 200 he owes the credit card company by the 100 available income. He then divides this total by the 5000 debt he owes to all his non priority creditors. The answer is the pro rata offer that he should suggest to the credit card company, as below: Name: Address: Partner: Y N Number of Children: 6 This is the system used by the courts to work out what you can afford to pay and is accepted by most creditors. It is essential that you include all your non priority creditors, whether you are in arrears or not. Otherwise the creditors may not accept the offer because you are not treating all the creditors equally and some will include interest and others will be frozen. 6. Financial Statement Once you have worked out your budget and the offers you will make, draw up a financial statement (see enclosed) using your completed budget sheets. List your income, expenditure and the amounts you are paying towards your arrears. You should also list your non priority creditors, the amounts you owe and the offers (if any) you are making. It is important your financial statement is as accurate as possible. Use the additional comments box to explain any unusually high expenditure, but explain your overall situation in your covering letter that you send with the financial statement. 7. Contacting your non priority creditors Once you have calculated how much you can afford to pay, write to each creditor explaining why you have fallen behind with your payments with a copy of the financial statement. Explain if the offers have been calculated on a pro rata basis and ask that the interest is frozen to prevent the debt increasing further. If you don t have any money available, you may want to make a token offer of 1 a month as a gesture. Let them know if your circumstances are likely to change or if you will be able to make payments at a later date. If you have store cards or credit/debit cards, cut them into pieces and let the creditor know you have done so. Start making payments as soon as your offer is accepted and be sure to let the creditors know if your circumstances change and you need to change the payment agreement. If you offer is refused, try to get them to reconsider and let them know if other creditors have accepted the offer. Don t be persuaded to increase an offer as this is giving them priority over your other creditors and may not work with your budget. If you are having difficulty getting offers accepted, talk to your local CAB. Reviews Most non priority creditors will only accept an offer for a limited time, usually 3 or 6 months. They may want to review your situation and make changes to your payments. Provided you make regular payments they will contact you at the end of this time to find out if your circumstances have changed. You should always reply to letters and keep an eye on the outstanding balance, to make sure it is not increasing. You may need to ask for it to be frozen and send further updated financial statements. Postcode: Income Wages/Salary (net) Client s Wages/Salary (net): Partner s Wages/Salary (net): Total Wages/Salary: Benefits Income Support/Job Seekers Allowance: Tax Credits: Housing Benefit: Council Tax Benefit: Incapacity Benefit/Employment Support Allowance: Disability Living Allowance/Attendance Allowance: Other: Total Benefits: Pensions State Pension: Works/Private Pension: Total Pensions: Other Income Maintenance: Board From Family/Lodgers: Other: Total Other Income: Expenditure Rent: Mortgage: Secured Loan(s): Council Tax: Ages: 7

Income and Expenditure Sheets Weekly/Monthly Housekeeping Food: Housing Costs Cleaning/Toiletries: Mortgage Payment Protection: Papers/Magazines: Ground Rent & Service Charge: Pets: Contents & Buildings Insurance: Alcohol: Mortgage Linked Life Assurance: Meals at Work: Repairs & Maintenance: Clothing: Total Housing Costs: Cigarettes: Utilities Total Housekeeping: Gas: Children Electricity: Child Care: Water: Nappies/Baby Items: Total Utilities: School Fees: School Meals/Dinners: Court Fines: Pocket Money: Maintenance/CSA: Total Children: Pensions/AVC: Health Other Life Assurances: Dentist/Prescriptions/Glasses: HP/Conditional Sale: Care Costs (Non Childcare): TV License: Health Insurance: Telephone Total Health: Landline: Other Expenditure Mobile: TV Satellite/Cable: Total Telephone: Hair: Travel Tools for Work: Public Transport: Entertainment: Road Tax: Other: Vehicle Insurance/Breakdown: Total Other Expenditure: Fuel: MOT/Maintenance: Total Travel: 8 9

Income and Expenditure Sheets Weekly/Monthly Your Creditors sheet Creditors Priority Debts Debt Arrears Payment/Offer Rent: Mortgage: Other Secured Loan(s): 0 VAT: Inland Revenue: Council Tax: Maintenance/Child Support: Gas: Electricity: Water: Total: Available Income for Other Creditors: Non Priority Debts Name of Creditor Outstanding Balance Debt Outstanding Balance Payment/ Offer County Court Judgement Total: To convert a monthly figure into a weekly figure, you need to multiply by 12 and then divide by 52. If your income is benefit income, divide by number of weeks paid, i.e. Child Benefit 4-weekly, divide by 4. 10 To convert a weekly figure into a monthly figure, you need to multiply by 52 and divide by 12. Do not mix weekly and monthly figures. 11

Bristol Citizens Advice Bureau Negotiating with priority creditors Council tax arrears If you have council tax arrears, you will need to contact your local council and make an arrangement to repay them. You will normally be expected to clear your arrears within the current financial year, which ends on 31st March but you may be able to arrange a slightly longer repayment period. Check whether you are entitled to a discount because you live alone, or if you can claim second adult rebate. If your income is below a certain level, you may be entitled to council tax benefit and should obtain a claim form from your council (unless you have recently completed a housing benefit application, which included an application for council tax benefit). Contact your local council or CAB for more information. If you fail to pay off your arrears, or to reach an agreement, your council can apply to the local magistrates court for a liability order to prove you are liable for the debt. This will make you liable to pay the whole sum of council tax for that year. You will be sent a summons and should try to make an arrangement before the court hearing. If you do so they may be willing to waive the court fees provided you keep to the agreement. Once the authority has obtained the liability order they can: Ask the department of work and pensions (DWP) to deduct money from your benefits. Authorise your employer to deduct money from your earnings (deduction of earnings). Employ bailiffs to visit your home and seize your belongings. If they believe you are willfully refusing to pay, apply to the magistrates court for a warrant committing you to prison. Issue a bankruptcy petition. If you are a homeowner, apply for a charge on your property. 12 If you are in debt, it is important to keep in contact with your creditors. If they are unaware you are having financial difficulties they will assume you simply don t want to pay and will take action to have the debts repaid. It is rarely too late to start negotiating and most creditors will appreciate you contacting them. The following rules will help you in negotiating: Don t ignore the problem. It won t go away. Contact your creditors as early as possible and explain your situation. If the person you speak to at the creditors is not very helpful, ask to speak to someone more senior. Work out what your income and expenses are and know how much you can afford to offer the creditor. Don t borrow money to repay your debts, it will only add to your problems. Speak to your CAB if you don t know what to do. Don t ignore letters or phone calls. Keep negotiating even if the creditor seems difficult. Keep copies of all the letters you send and receive. Also make a note of phone calls including who you spoke to and what was agreed. Always reply to court letters within the time limit and take advice if you are unsure about how to complete court forms. Mortgage and Rent arrears If you are in arrears with your mortgage or rent, you should contact your lender or landlord immediately. Explain why you are in arrears and how you are going to repay them. If your circumstances have changed, check if you are entitled to help. You may be able to negotiate reduced payments for a period of time or have the arrears added to the amount you borrowed for your mortgage (capitalised). You need to be able to pay the current instalments as well the arrears and you will need to clear the arrears within the remaining period of the mortgage. Check your mortgage contract and see if there are any penalties for falling into arrears and see if they will consider waiving these, at least for the first few months. If you have mortgage protection insurance make sure you claim. If you are on a low income and renting you may be entitled to housing benefit and should contact your local council for a claim form. You should immediately make an offer to your landlord and get advice on how secure your tenancy is. Social landlords like councils and housing associations will accept quite small offers regularly. You may also want to consider having small weekly deductions from you benefits to pay off your arrears (third party deductions). If you are unemployed, over 60, or unable to work due to illness or disability and have a mortgage; you may be entitled to housing costs. The amount you are paid may not cover the whole mortgage interest as it is calculated at a fixed rate, whatever your mortgage. Any financial support you claim will not be received immediately and you will need to make arrangements with your lender about paying any shortfall in your monthly payments. Fuel arrears If you are having difficulties in paying your electricity or gas, you may find it easier to change your method of payment. You can: Try to negotiate to pay your bills over 2-3 months, if your difficulties are temporary. Arrange to pay in monthly installments. Your arrears are added to your yearly consumption and averaged to work out a monthly payment. The supplier will expect the arrears to be cleared in 12-18 months. Ask to have a pre-pay meter installed. The meter is topped up at a shop with a key or card and set to collect a weekly sum of your arrears. You must top up the meter weekly to prevent the arrears increasing. If you cannot afford the weekly amount set by the supplier, try to negotiate a smaller sum. Bear in mind the cost of fuel is more expensive if paid for in this way. Ask the DWP to make deductions from your benefits. Contact your fuel supplier and see if you are eligible for a Social Tariff, which could reduce the cost of your fuel. Magistrate court fines If you are summoned to appear at the Magistrates' Court you must complete all the forms you are sent including the one asking for your financial circumstances. Whatever you plead, you must take information about your financial circumstances, unless you have already provided this 13

Bristol Citizens Advice Bureau information. If you are fined you should ask to have your circumstances considered or to pay by instalments. If you can pay a court fine in the set time, you should contact the clerk to the court and ask for a means enquiry. This will involve completing a form about your circumstances and attending a hearing where you will be questioned to decide how you should pay the fine. The clerk may refuse to grant you a means enquiry until bailiffs have been instructed. In some circumstances Bailiffs can use reasonable force to enter your home and if they are unsuccessful in obtaining your goods, the clerk may summon you to court for a means enquiry. Child support arrears If you cannot keep up your child support you should contact your child support agency (CSA) and ask to be reassessed. If you are in arrears, the agency will try to make an arrangement to pay the arrears off but if you don t keep to the agreement they can make deductions from your wages/ benefits and/or apply to the magistrates' court for a liability order. Once the child support agency has a liability order it can employ bailiffs or apply to the county court to record the order as if it were a judgment debt. This means it can use the court s enforcement proceedings such as putting a charging order on your house or seizing money from your bank account. If these methods are unsuccessful the child support agency can apply to commit a non resident parent to prison or disqualify her/him from driving. In addition the CSA can also impose a penalty payment(s), which increases the amount owed. For more information contact your CAB. If your circumstances change and you are unable to pay the amount ordered by the court, you can apply to the same court to vary the order. You should send a financial statement with the application and you may be ordered to attend a means enquiry. Depending on your circumstances the court can: Write off (remit) the arrears, if they are satisfied you have good reason to fall into arrears and cannot afford to repay them. Direct you to pay the arrears by standing order or direct debit. Order a warrant for bailiffs to seize your goods (distress warrant). Income tax or VAT arrears If you are self employed and have fallen behind with your income payments, it is important that you contact HM Revenues and Customs (HMRC) as soon as possible as interest will be added. If you believe tax has been wrongly assessed or has been based on estimates you should contact your accountant, if you have one. You can get free advice and help with tax matters from a tax enquiry centre. You can find details in your local telephone directory under Inland Revenue or from your local inspector or tax office. If you are on a low income, you may be able to get advice from the TaxAid helpline on 020 7803 4959 between 10am and 12 noon, Monday to Thursday. If you ignore a tax demand or don t come to an arrangement with HMRC they can: Apply to the magistrates court for a repayment order, if your arrears are below 2000. If you fall behind with your payments the court will instruct Bailiffs. Instruct bailiffs for arrears of 2000 and under. If the bailiffs can t get into your property, they can apply for a warrant to break into your property. Make a claim in the county court against you. If you have been in arrears for a long time or owe 750 or more, issue a statutory demand, which is the first stage of making you bankrupt. As you collect VAT when your customers pay you, HMRC are unwilling to allow arrears to be paid over a long period of time and you should contact them as soon as you get into arrears. If you have VAT arrears you should check you are earning enough to be registered for VAT and if not, contact your local VAT office and de-register. If you can t pay the arrears you may be sent a statutory demand, which is the first step to making someone bankrupt. Mortgage Arrears If you are in mortgage arrears, your mortgage lender will want you to clear them. If you don t do this, they will take action through the courts to get you evicted from your home (seek possession). This will allow them to sell the property and use the money from the sale to help pay off the debt. However, if your lender knows that you are trying your best to stop the debt increasing, they might allow you more time to sort the problem out. Depending on your circumstances, there may be several things you can do, but you must act quickly. Cutting down your monthly mortgage costs You will need to be able to keep up with payments on your current instalments, as well as make payments off the arrears. If your financial difficulties are only short-term, you could think about asking your mortgage lender if they will agree to cut down your monthly mortgage costs for a limited period of time. Depending on the type of mortgage you have, you may be able to: Reduce your monthly interest payments. Increase the period of time over which the mortgage is paid. This would mean paying more interest in the long term. Suspend repayment of the amount you borrowed (the capital) and make interest-only payments. Find a cheaper mortgage deal with another lender. You may have to pay charges for changing your Mortgage lender and you will still have to pay off any arrears. The Financial Services Authority (FSA) Website has information about switching your mortgage at: www.moneymadeclear.fsa.gov.uk. Reduce the payments on your endowment policy. Stop making payments into your endowment policy, if you have an endowment mortgage. You will have to make up these payments at a later date. Making any changes to an endowment policy can be complicated and financially risky. You should seek independent financial advice first if you are thinking of doing this. Paying off your arrears You will need to try to come to an agreement with your mortgage lender about how to pay off your arrears. Before you do this, you should first work out how much you can afford to pay. Work out how much money you ve got coming in and what your other outgoings are - including 14 15

16 Bristol Citizens Advice Bureau other debts. Use the Basic Debt Advice Section in this pack to help you. You may find it helpful to ask an experienced debt adviser to help you do this. You will also need to decide how to pay off the arrears. You may have several options for doing this, including: Paying an extra amount towards the arrears each month on top of your regular monthly payments. Arranging to have the arrears added to your capital (capitalising the arrears) and paid back over the remaining period of the mortgage. You will end up paying a much larger amount in total. Give up your endowment policy or sell it off to an investor. This will provide you with a lump sum of money which you can use to help pay off your mortgage arrears. However, you should think very carefully before doing this. You will need to find another way to pay off your mortgage loan and you will also need to find alternative life insurance cover. Get independent financial advice first. Raise a lump sum to pay off all the arrears in one go. You could do this, for example, by borrowing money. Increasing your income If you are in mortgage arrears, you should also see if there are ways you can increase your income to help you deal with these and other debts. You should: Make sure you re getting all the welfare benefits and tax credits you re entitled to. Some benefits entitle you to an allowance which will pay some of your mortgage costs. You will need to make up any shortfall. Check whether you have any mortgage protection insurance and make a claim on it. Think about taking in a lodger. This may have some drawbacks and you may need your mortgage lender's permission. Get advice about this. Think about moving out of the property and letting it. This may have some drawbacks and you may need your mortgage lender's permission. Get advice about this, and make sure you have somewhere else affordable to live. Dealing with your mortgage lender Once you have worked out a way of dealing with your mortgage arrears, you should contact your mortgage lender as soon as possible and make them an offer. You may want to get the help of an experienced adviser to do this. Write a letter to your mortgage lender, clearly setting out your offer. Your offer should be one which you can realistically keep to, and which will clear the arrears within the period of the mortgage. It should be based on how much you can afford to pay. Include a financial statement with your letter which shows your mortgage lender how you have worked this out. Try and persuade your mortgage lender that accepting an offer worked out in this way is in both of your interests, because you are more likely to keep to it. Start to make regular payments, however small. Even if your lender doesn t accept the offer, it may help your case if you are taken to court later on. If you are not happy with the way your lender deals with your case, you can make a complaint. Find out about your lender s internal complaints procedure. If this doesn t work, you can complain to the Financial Ombudsman Service. For more information about this service, visit www.financial-ombudsman.org.uk, or phone 0845 080 1800. If you haven't been able to agree with your mortgage lender on how to pay off your arrears, they will probably take you to court and try to get possession of your property. If you argue your case in court, the Judge may allow you to stay in your property as long as you keep to an agreement to pay. If you are in this situation, get help from an adviser. What if you can t pay your arrears? If you aren t able to clear your arrears, a court will probably give your lender permission to evict you from your home. Your lender will sell the property. If they don t make enough from the sale to cover the money you owe on your mortgage, you will have to pay the difference (shortfall). If you can't find any other way of clearing your arrears, it would be better to try to sell the property yourself, rather than wait to get evicted and let your mortgage lender sell it. This is because they are likely to get a lot less for it than you would, leaving you with a debt to pay. Properties which have been taken back from the owner (repossessed) often sell for a lot less. Also, lenders often sell at auctions where sale prices tend to be lower. Selling the property yourself would give you a lump sum of money which you could use to pay off your mortgage, and which, if you have enough left over, you may also be able to use to pay off other debts. You might need to get permission from your lender to sell the property. Don't be tempted to just leave the property and hand back the keys to your mortgage lender unless you've sold the property or there is a court order to evict you. You won't gain anything by doing this. You will still be responsible for mortgage payments and buildings insurance until the property is sold, and will still have to make up any shortfall if the sale doesn't make enough to cover what you owe. If your lender asks you to give up the keys, you don t have to do this. If your lender wants to repossess the property, they have to get a court order first. Arrears on second mortgages You may have taken out a second mortgage on your home, for example to pay for repairs, home improvements, or to pay off other debts. If you get into arrears on a second mortgage, the mortgage lender will usually try to get possession of your property. Get help from a specialist debt adviser. Getting into rent arrears can be distressing and you can end up losing your home. Remember, it's your responsibility to make sure your landlord gets the rent in time. This applies whether you pay all your rent yourself or whether it's paid through Housing Benefit. You're responsible for paying your rent even if your tenancy agreement doesn't tell you when or where to pay it. There are a number of things you can do to prevent yourself from losing your home if you get into rent arrears. If you are in serious difficulties, you should get advice from a housing specialist. Also, if you have rent arrears, you might have other debts too. If this is the case, it might be best to get advice about all of your debts in one go. You should get help from a specialist debt adviser. 17

Bristol Citizens Advice Bureau 18 Rent arrears Getting into rent arrears can be distressing and you can end up losing your home. Remember, it's your responsibility to make sure your landlord gets the rent in time. This applies whether you pay all your rent yourself or whether it's paid through Housing Benefit. You're responsible for paying your rent even if your tenancy agreement doesn't tell you when or where to pay it. There are a number of things you can do to prevent yourself from losing your home if you get into rent arrears. If you are in serious difficulties, you should get advice from a housing specialist. Also, if you have rent arrears, you might have other debts too. If this is the case, it might be best to get advice about all of your debts in one go. You should get help from a specialist debt adviser. Contact your landlord If you are getting into arrears, it can often help to contact your landlord and let them know you're having difficulties. Write a letter, explaining why you're having problems paying the rent. This could be, for example, because you've lost your job or have made a benefit claim that hasn't been dealt with. Ask if you can have more time to pay or if you could pay a reduced amount of rent for a certain period of time. Keep a copy of your letter. Don't wait until arrears build up - contact your landlord as soon as you start having difficulties. Check the figures If you can't sort out things informally with your landlord, get prepared for the matter being taken further. Start off by checking that the amount of rent owing is correct. Has your landlord recorded all your payments? You may have been asked to pay rent in advance before you moved in if so, has this been taken into account? Have the figures been added up correctly? Are you responsible for paying all the arrears or should someone else also be paying? If you have a rent book, you can check the figures in this. Otherwise, ask the landlord for a breakdown of the figures and check them against your own records. Get financial help If your circumstances have recently changed, you might have become entitled to welfare benefits that would help with your financial situation. You might, for example, have been ill, or be working fewer hours. Some benefits that you might be able to get include Working Tax Credit, Child Tax Credit, Council Tax, and Housing Benefit to help you pay rent. This applies whether you're a council tenant or in private rented accommodation. If you have arrears of rent and you are claiming Income Support, Pension Credit or income-based Jobseeker's allowance, you can ask the Department for Work and Pensions (DWP) to take off a fixed weekly sum direct from your benefit and pay it to the landlord. This is called a third party deduction. Come to an agreement with your landlord Once you're sure how much you owe and that you're getting all your benefits, try to come to an agreement with your landlord. They might agree to let you pay back the money you owe in instalments at so much a week, on top of your normal rent. Be realistic about how much you can afford to pay each week so you know that you'll be able to keep up the payments. If you're a council tenant, the local authority will have a policy about how they collect rent arrears. They have to be reasonable. Get hold of a copy of their policy from the housing department before you start trying to make an agreement with them. Even if you do owe rent, it is a criminal offence for your landlord to do anything they know is likely to make you leave your home. This includes, for example, stopping you from getting into your home or disconnecting supplies of water, gas or electricity. This is called harassment and if you're being harassed in this way, you could report it to the council or to the police. However, it's best to talk to an experienced adviser before you do this. What to do if your landlord wants to evict you If your landlord wants to evict you because of your rent arrears, there are rules about how this can be done. The rules depend on what sort of tenancy you have. Your landlord usually has to apply for an eviction order from court. In most cases, they have to serve a special notice on you before they can apply for an eviction order. In some cases, more than one notice is needed. If you get a written notice that your landlord wants to evict you (called a notice seeking possession), you should talk to an experienced housing adviser straight away. If you're a council or housing association tenant, your landlord has to follow certain steps before they can start court action to evict you. These include trying to come to an agreement with you to make affordable repayments and helping you to claim Housing Benefit. Your landlord isn't allowed to start court action to evict you for rent arrears if you have a housing benefit claim which hasn't been sorted out, providing certain conditions are met. Your landlord wants their money back Your landlord might not want to evict you, but they might want to get their money back. In this case, they could go to court to try to get their money back. If they win their case, the court will order you to pay back the arrears of rent you owe. This is called a court order or a CCJ. If you get a court order against you, it may be difficult to get credit in the future. Your landlord could also take further action against you. For example, they could: Have money taken off your earnings. Send bailiffs to your home to take away goods. These can be sold to cover your rent arrears. If your landlord applies to get a court order against you, you will be sent an official form called a claim form. This will tell you how much rent you owe. If you get a claim form, deal with it straight away. You might be able to argue that you don't owe the money or, if you do owe the money, you can apply to the court to pay it off in installments. Some landlords have the right to send bailiffs to your home to take your goods without needing a court order. If you're threatened with the bailiffs, talk to an experienced adviser as soon as possible. Another thing a landlord can do, if you owe more than 750, is to apply to make you bankrupt. This could be very serious for you as you might lose your home and business. The first stage is for your landlord to send you an official demand for the money. This is called a statutory demand. You must deal with a statutory demand as a matter of urgency. Talk to an experienced adviser about what to do. If you are evicted because of rent arrears If you are homeless because you've been evicted for rent arrears, you can ask the council for help. The council may be able to re-house you in some circumstances, for example, if you have children or are pregnant. If you're homeless because of rent arrears, talk to the housing department at your local council. You should also get advice from an experienced housing adviser. 19

Bristol Citizens Advice Bureau 20 If you have nowhere to stay at all, you can phone Shelter line on: 0808 800 444. This is a free helpline run by the charity Shelter, which offers emergency housing advice over the phone. The helpline is open seven days a week from 8am to midnight. Council tax arrears If you have council tax arrears, you will need to contact your local council and make an arrangement to repay them. You will normally be expected to clear your arrears within the current financial year, which ends on 31st March. If you can t afford this, work out what you can afford and tell the council. You may be able to arrange a longer repayment period if you are on a low income or have special circumstances, for example, if you have a short term drop in your income due to illness. You will need to pay an amount off the arrears on top of your usual monthly council tax payment. Check your council tax bill is right Depending on your situation, you may be entitled to a discount or reduction in your council tax bill. If you live alone or are the only person responsible for the council tax, you should get a discount. You may be able to claim Second Adult Rebate if you have to pay council tax and you live with someone else, other than your partner. The other person must be 18 or over, not paying rent, not responsible to pay council tax, and have income below a certain amount. If your own income is below a certain level, you may be entitled to Council Tax Benefit instead. When you claim, the council should work out which benefit will give you the most help with your council tax. You can get a claim form for Council Tax Benefit and Second Adult Rebate from your council. If you, or someone living with you, has a disability, you may be able to get help to reduce your council tax bill. If you are a full-time carer or someone in your home has severe mental impairment, you may get a discount. Severe mental impairment can include things like Alzheimer s disease and serious learning disabilities. If your home has been adapted for a person with a disability, you may be able to get a disability reduction. The person with the disability can be anyone living in your home. It doesn t have to be the person paying the council tax. Ask your council for an application form for a discount for a carer or person with severe mental impairment, or a disability reduction. You can ask for all of these if they apply to your situation. What happens if you don t pay? If you fail to pay off your council tax arrears, or to reach an agreement with the council, your council can apply to the local magistrates' court for a liability order. This is a court order which says that you must pay the whole amount of council tax owed for that year, not just the arrears. The liability order allows the council to take action against you to make you pay. If you owe the council tax jointly with someone else, the council can still ask you to pay the whole amount back. You will be sent a summons. This is a court document telling you how much the council says you owe and the date and time of the hearing where the court will consider whether to make the liability order. The council can add costs to the amount you owe to pay for the liability order. You should contact the council and try to make arrangements to pay off the debt before the hearing. You won't be able to do this at the hearing itself. The council might agree to let you pay off the debt in instalments, if you can't afford to pay it all straight away. If you do make an agreement to pay, the council may be willing to cancel the summons or to cancel (waive) the court costs, provided you keep to the arrangement. If you don't agree you owe the council tax, for example because you've been charged for a period when you no longer lived at that address; tell the council straight away. If they agree, they can stop the court action. If they don't agree or you can t contact the council, you will need to go to the court hearing at the time shown on the summons. What happens at the liability order hearing? At the liability order hearing, the magistrates will decide whether you are the person responsible for paying the council tax and make a liability order. If you agree that you are responsible for paying the council tax, you don't need to go to the hearing. If you don't agree that you're responsible, you should go to the hearing and try and prove this to the court. You will need to bring proof with you, for example a bill showing your name and real address. If the magistrates agree that you don't owe the council tax, they will not make a liability order. If a liability order is made, the council can: Ask the Department for Work and Pensions (DWP) to make deductions from your benefit. Instruct your employer to make deductions from your wages (attachment of earnings order). Send bailiffs to your home to seize your belongings. In some circumstances, bailiffs can use reasonable force to get into your home and seize goods. Make you bankrupt (if you owe 750 or more). Apply for a charging order (if you owe 1000 or more). A charging order gives the council powers to force you to sell your property and pay off the council tax debt out of any money left after the mortgage has been repaid. This doesn t happen very often. Get advice if it happens to you. If none of these things have worked, the council can apply to the magistrates court for a warrant to send you to prison (a committal warrant). The council will do this if it believes you've got the money to pay but are deliberately withholding it, or aren't making an effort to pay. You will be sent another summons, called a committal summons. This time, you should go to the court hearing. If you don t, you could be arrested. If you can t attend the court hearing for any reason, contact the council and arrange another time for the hearing. Try to come to an arrangement with the council that you can afford beforehand, if you can. The council can add further costs to your debt, to pay for the court summons and hearing. What happens at the committal hearing? At the committal hearing, the magistrates must look in detail at your financial situation to see if you can pay. This is called a means enquiry. Tell the magistrates about any special reasons why you haven t been able to pay, for example, a drop in your income or changes within your family. This will help them to decide what order to make. If you are in financial hardship or cannot pay for other reasons, you can ask the magistrates to write off (remit) all or part of the debt. 21

22 Bristol Citizens Advice Bureau If the council can show you have refused or not made an effort to pay, the magistrates could send you to prison. Usually though, they will make an order postponing the warrant to send you to prison, as long as you pay off the debt by regular instalments. You can ask someone to go with you to the court hearing if you need help to explain your situation. The court doesn t have to let the other person speak on your behalf, unless they are a solicitor. You may qualify for help to pay for a solicitor under Legal Aid, or the court may have a duty solicitor you can speak to when you get there. After the committal order has been made After the committal hearing, make sure you understand what you must pay and when the payments are due. If you are not sure, ask the council officer to explain. You must stick to the payments until all the money is paid off. If your circumstances change or you are unable to pay for any reason, contact the council straight away and make another arrangement. Otherwise, they may have you arrested and brought back to the court to say why you haven t paid. Court Fines If you're taken to court in a criminal case and you're found guilty, the court may order you to pay a fine. Some common criminal cases are: Theft. Assault. Drunk driving. Not having motor insurance. Failing to pay your TV licence. It's very important not to get into debt with unpaid court fines because you can be sent to prison for not paying. This section tells you how you can avoid getting into debt with a court fine, and what you can do if you do if you do get into debt. Get advice about all your debts You may have other debts as well as unpaid fines. If this is the case, get help from a specialist debt adviser. An adviser will help you to: Deal with all your debts as a whole. Work out what order your debts should be paid in. Try to come to an agreement with the people you owe money to. When you go to court, make sure they know your financial circumstances before you are sentenced. If you're fined, this will help you avoid getting a fine which you can't afford to pay. Give the court information about how much money you've got coming in, people who depend on you financially (for example your partner or children), your housing costs and anything else you have to pay out for. Sometimes you can plead guilty to a criminal case without going to court in person. If you do this, make sure you send in details of your financial circumstances when you send your court forms in by post. Come to an agreement with the court If you think you can't afford to pay your fine straight away, you may be able to come to an agreement with the court. You can ask the court to pay the fine off in instalments. However, the court doesn't have to agree to this. If you are allowed to pay in instalments but miss a payment, you will have to pay the whole fine in one go. You could be sent to prison if you don't pay up. If you can't afford to pay the fine straight away and don't want to pay by instalments, you can ask if the court will allow you to pay the whole amount at a later date. For example, you might want to pay after your next work pay day. The court doesn't have to agree to this. If you do have to pay the fine straight away but you refuse, you could get sent to prison if the court thinks you're deliberately withholding the money. If you are getting into difficulties with paying your fine tell the court. You could get into difficulties when you're paying a fine off by instalments, or because you've promised to pay on a certain date and can't pay on the date that it's due. Write to the court, explaining why you have a problem paying up. Include proof of your financial circumstances. Depending on your circumstances, you may be able to ask: If you can pay by instalments, or If you can pay smaller instalments over a longer period, or If you can pay the rest of the fine by a certain date, or If you can pay the fine at a later date, or If the debt can be cancelled (written off). The court may agree to let you do what you've asked, or they may ask you to come back to court and explain in person why you haven't paid. This is called a means hearing. If you don't contact the court when you're getting into difficulties, you could be taken back to court. In some circumstances, you could even be arrested and taken back to court. If you have to go back to court, the court will look at your financial circumstances and decide what should happen next. If you're in this situation, you should get a solicitor to go to court with you and present your case. You can apply to the court for help to pay for a solicitor. This is called legal aid. Give the court full details and proof of your financial circumstances. You should try to come to an agreement about how to pay off your fine, or see if the court will agree to write it off. If you can't come to an agreement with the court, there are a number of things they can do to force you to pay up. These include: Arranging for money to be taken from your earnings. This is called an attachment of earnings order. Arranging from money to be taken directly from your benefits, for example Income Support or Jobseeker's allowance. Ordering the bailiffs to go to your home and take away your possessions. These will be sold to pay off your fine. If the court has tried everything it can to get you to pay up and failed, you can be sent to prison. This should only happen if you've got the money to pay but are deliberately withholding it. If you think the court didn't look into your financial circumstances properly before sending you to prison, get legal advice. If you have to go to prison for not paying a fine, the fine will be written off when you're released. 23

24 Bristol Citizens Advice Bureau Negotiating with non priority creditors If you are in debt, it is important to keep in contact with your creditors. If they are unaware you are having financial difficulties they will assume you simply don t want to cooperate and will take action to have the debts repaid. It is rarely too late to start negotiating and most creditors will appreciate you contacting them. You can use the sample letters in this pack and tailor them according to your circumstances. The following rules will help you in negotiating: Don t ignore the problem. It won t go away. Contact your creditors as early as possible and explain your situation. Work out what your income and expenses are and know how much you can afford to offer the creditor. Don t borrow money to repay your debts, it will only add to your problems. Speak to your CAB if you don t know what to do. Don t ignore letters and keep negotiating even if the creditor seems difficult. Don t be persuaded to offer more that you can reasonably afford. Keep copies of all the letters you send and receive. Don t be tempted to try to negotiate by phone with call-centre staff. Always reply to court letters within the time limit and take advice if you are unsure about how to complete court forms. How to negotiate Before you can negotiate with creditors you need to have worked out a financial statement showing your household income and expenditure and arrangements to pay your priority creditors, and calculated pro-rata offers for each creditor. See the basic debt advice section on how to do this. The following tips will help you negotiate successfully: Send a holding letter to each creditor if you need more time to negotiate with your priority creditors or are waiting to hear how much benefit will receive. Explain why you cannot make your payments and ask them to hold action on your account until you have the relevant information. If you are able to make offers immediately, your initial letter should also include your pro rata offer of repayment. Add a request that the interest be frozen provided you maintain regular repayments. You should include a financial statement. If you have sent a holding letter, send an offer letter as soon as you can. If you cannot make an offer, explain why and ask your creditors to accept no payments for 3-6 months. Say you will contact them as soon as your situation changes and you are able to resume payments. You might alternatively make a token offer of 1 a month to all creditors. Don t be put off by any initial refusal to your offer if it is a realistic one based on your circumstances. Be prepared to repeat your offer, maybe several times. Debts often pass to debt recovery units or debt collectors before payment offers are accepted. It may take a while for a creditor to respond to your letter. If you have not heard anything for 6 weeks or so, write again using the No reply to your offer letter as a template. If you still don t get a response, there is a Still no reply to your offer letter you can use. If any item of expenditure is challenged, send a breakdown of what it includes, for example housekeeping includes toiletries, pet food, cleaning materials etc. Ask the creditor to reconsider. Once an offer has been accepted, start making payments immediately. If you cannot reach an agreement with one of your creditors, contact your local CAB for advice. Don t be persuaded to increase any of your offers as this shows priority to a specific creditor and may result in your other offers being refused. If you are offered another loan to repay an existing loan several loans and/or credit debts (consolidation loan) don t agree without taking further advice. This will add interest to interest and show priority over other creditors who may have frozen the interest. Even if interest and charges are not frozen initially, this may happen later in the debt collection process, although this can not be guaranteed. Do not be put off by receiving computer generated letters including default notices. Don t ignore correspondence and be prepared to persist with your offers. If it has been some time since you made a payment or contact, a creditor may issue a claim. A debt-collecting agency or creditor must usually send a default notice before starting court proceedings. If you agree you owe the amount claimed, and any interest built up, you will need to complete an admission form. This is sent with the claim form using the figures listed in your finanical statement. Offer the pro rata amount you have already calculated. If it is refused or you dispute the balance, contact your local CAB for further advice. Don t take out further loans or credit cards. Your creditors will have agreed to accept reduced payments and frozen interest on the understanding that you are trying to reduce your debts. If your circumstances change, draw up a new financial statement with increased or reduced pro rata offers. Write to all your creditors explaining the reasons for your new offer. Reviews Most non priority creditors will only accept an offer for a limited time, usually 3 or 6 months. Provided you make regular payments they will contact you at the end of this time to find out if your circumstances have changed. You should always reply to letters and keep any eye on the outstanding balance to make sure it is not increasing. You may need to ask for it to be frozen and send further updated financial statements. 25

Bristol Citizens Advice Bureau What happens if you are taken to court for money you owe If you owe money to someone, they might take you to court to get it back. To do this, they have to fill in a claim form with the details of what you owe. If the claim against you is for less that 5000, the court will almost certainly decide it is a small claim. The information that follows applies to small claims. If you owe more than 5000, you should get experienced advice immediately. What happens when a small claim is made against you? When a claim is made against you, you will receive a number of documents from the court. The first will be the claim form. There will be a claim number on it, which should be quoted on any letter or document you send to the court. The claim form must be stamped by the court. If yours isn t it may be fake; you might want to report it to police. On the claim form, there will be brief details of the claim and how much the other person is claiming you owe them. There might be fuller details of the claim, either on the claim form, or in a separate document attached. You will also receive other papers in what is called a response pack. These forms are: A form to use if you are saying you do not owe the money (a defence form). A form to use if you accept you do owe the money (an admission form). A form to use to confirm that you received the documents (an acknowledgement of service form). You will always need to fill in the acknowledgement of service form as well as one of the other two depending on your situation. It is very important that you deal with the papers the court sends you by the deadline given. If you don t, a court order can be made against you. If this happens you will have to pay back the money of the claim whether or not you really owe it. You may also have to pay interest and fees on top of this. When you get the papers you may want help to decide what to do. A solicitor can give legal advice but you will have to pay and won t get this money back, even if you win the case. You could consult an experienced debt adviser. You may have other debts as well as this one, so it might be best to get advice about all your debts in one go. What to do when you get the court documents When you get the claim form, you may want to try to reach an agreement with the person who is making the claim for outside of court or you may want to complete it and return it immediately. You will have 14 days to reply to the court. You can agree with the other person to extend this deadline but you will need this in writing and will need to inform the court. It is very important not to miss the deadline. What happens if you disagree with the claim? You must have good legal reasons for disagreeing with (defending) the claim. Sometimes it s easy to show good reasons, for example, if you don t owe the amount claimed. Sometimes the situation is less clear and you will need to get legal advice. If you have good legal reasons for disagreeing with the claim, you should fill in the defence form and the acknowledgement of service form. Sometimes this can be done online but the court will inform you of this and provide a password for secure access. The case then becomes a defended case and you will be sent further court papers, which tell you what happens next. If the court eventually decides you owe the money, a court order (known as a county court judgment or CCJ) will be made against you. This may affect whether you can get credit in the future. If you don t pay what you owe, the court can take further legal steps such as sending Bailiffs to your home to take your goods. You will have to pay for this action which will further add to the debt. What happens if you accept you owe the money? If you accept that you do owe the money, fill in the admission form. You will have to fill in details of your financial situation. If you accept that you owe all the money, then send the admission form to the person you owe the money to. You can ask to pay the debt off in instalments. If they accept the offer, it will be recorded by the court. If they don t, a court official will usually decide what is fair. If you don t make an offer at all, the person you owe the money to will decide how much you pay and when. If you have accepted that you owe the money, a CCJ will made against you, but if you pay the money off within one month of the CCJ, your future credit rating won t be affected. What happens if you accept you owe some of the money but not all? You may accept you owe the money to someone but disagree how much. For example you may disagree with the way the interest has been calculated. In this case fill in both the admission form with details of what you agree you owe, and the defence form with what you don t accept. Send these forms, along with the acknowledgement of service form, to the court. You will need to make arrangements for paying the part of the debt that you do agree with. You can ask to pay in instalments. If the person you owe the money to agrees with this offer it will be recorded by the court. If they don t accept the offer, a court official will decide what is fair. The court will tell you what steps to take about the part of the claim that you don't agree with. 26 27

Bristol Citizens Advice Bureau Bailiffs If you owe money, one of the ways a creditor might try to get their money back is by using bailiffs. The role of bailiffs is to take your goods away and sell them to raise money to pay your creditors. The rules about bailiffs are very complicated and what the bailiffs can legally do depends on what your debt is for. Bailiffs are commonly used if you have council tax arrears or if you have a court judgment against you. They can also be used for unpaid fines, child support arrears, rent arrears, income tax arrears and parking penalties (fines). The bailiffs almost always need a court order to take your goods away. Check with an advice agency whether creditors can threaten you with bailiffs without taking proper legal action. If you ve received notice that bailiffs are going to come and take your goods away, you should get advice urgently. The bailiffs charge fees to come to your property and the debt will just get bigger if you ignore them. Do I have to let bailiffs in? In many cases, you don t have to let bailiffs in and they can t force their way into your property. However, they are allowed into your property without your permission if they can enter without breaking in. This is called gaining peaceful entry and includes getting in through an unlocked door or open window. Sometimes bailiffs are allowed to break into your property, for example, if you have unpaid criminal fines. Bailiffs working for the magistrates court can, in some circumstances, use reasonable force to get into your home to seize goods. Also in some circumstances bailiffs can, with the court s permission, force their way into a commercial property if there is no living accommodation attached. However, it is unlikely that a bailiff will be allowed to break in to your property in other circumstances. If this happens, you should get urgent legal advice. Will they take everything away? There are rules about what the bailiffs can take and these rules depend to some extent on what the debt was for. For most debts, bailiffs are not allowed to take basic clothing, bedding, basic furniture and basic household goods. What is meant by basic varies but it usually doesn t include things such as microwaves and DVD players, which can be taken. Bailiffs might, in some circumstances, clamp your car and take it away. Can they take things that don t belong to me? Again, the rules are very complicated. The basic rule is that bailiffs can only take things that belong to the person who owes the money but they could take goods that are jointly owned by you and someone else. As a general rule, goods on premises where there are rent arrears can be taken away, whoever they belong to. But there are many exceptions to this. What happens when the goods are taken away? They will be sold at auction. The money raised will pay first of all be used to pay the bailiffs fees; and the rest will be given to creditors. Remember that the second-hand value of goods can be very low and so you may still owe money, even if the bailiffs have taken away most of your things. Can I negotiate with the bailiffs? This depends. Sometimes the bailiffs say that you must negotiate directly with the creditors. Sometimes it can be difficult to get hold of the bailiffs. If the bailiffs do get in, you may have to sign a walking possession agreement. This means that they make a list of the goods that they will take away if you don t pay within the time set out in the agreement or if you miss an instalment. You usually have to pay a daily fee and you can t remove the items on the list from your property. Signing the walking agreement may give you breathing space to get the money together to pay the debt, but it does mean that the bailiffs could break in to remove your goods if you don t keep to the agreement. Local authorities collecting council tax often have codes of practice instructing the bailiffs to accept very small repayments if you are on income support or job seekers allowance. How can I complain about the bailiffs who come to my house? There are rules and policies about how bailiffs should behave. For example, they should not threaten you and should come to your home at a reasonable time of day. Depending on the sort of debt you owe, you may be able to complain: To the person you owe money to (the creditor). To the professional body the bailiff belongs to. There are several professional bodies so ask the bailiffs if they belong to one and if so which one. To the court. To the police if the bailiffs are committing a criminal offence such as threatening or assaulting you. If you have reasons to complain about the bailiffs, it s best to get expert help. Don t be ashamed to get help about bailiffs, it is a very common problem. 28 29

Sample Letter Sample Letter Holding letter No offer letter Name of creditor Address/postcode Date Dear Sir/Madam Re: Name, Address, Account No. I regret that I am unable to maintain my current monthly payments because explain your reasons. I am writing to all my creditors requesting details of the balance outstanding on my accounts and would be grateful if you would let me know how much I owe you. Once I have obtained this information, I will contact you again with a pro rata offer for repaying the above debt; or I have applied for.. Benefit and will contact you again as soon as I start to receive it; or I have been sick/unemployed since. and am due to start/return to work on date and will contact you again once I have started/returned to work. Meanwhile I request that you hold action on my account for two months and suspend interest and other charges to prevent my indebtedness from increasing. Yours faithfully Name of creditor Address/postcode Date Dear Sir/Madam Re: Name, Address, Account No. I regret that I am unable to pay my current monthly payments because.. Explain your reasons. I am enclosing a copy of my financial statement, which gives details of my income and expenses. You will see from this information that I am unable to make you an offer of payment at this time as I am on a low income/ dependent on income support/job seeker's allowance/working tax credit/pension credit, which is a subsistence benefit only intended to cover my/my family's basic needs. I request that you hold action on my account for six months and suspend interest to prevent my debt from increasing. I am making every effort to increase my income/find work, and will contact you again as soon as my financial circumstances improve. I thank you for your co-operation and look forward to hearing from you. Yours faithfully Sign your name, then print your name in capitals underneath. If you have a joint agreement, both partners need to sign. Sign your name, then print your name in capitals underneath. If you have a joint agreement, both partners need to sign. You should amend your letter to suit your individual circumstances.

Sample Letter Sample Letter Pro Rata Offer letter to non priority creditors Token Offer Letter to Creditors Name of creditor Address/postcode Date Dear Sir/Madam Re: Name, Address, Account No. Further to my letter dated date, I am now able to make an offer to repay the above debt; or I regret that I am unable to maintain my monthly payments at their current level because.. Explain your reasons. I am enclosing a copy of my financial statement which gives details of my income and expenses and makes pro-rata offers to all my creditors. You will see from this information that I am able to offer you per month. I propose to make my first payment on I trust you will accept my offer as realistic given my circumstances and agree to suspend interest and other charges on my account provided regular payments are made. I shall of course keep you informed of any changes in my circumstances. I thank you for your co-operation and look forward to hearing from you. Yours faithfully Name of creditor Address/postcode Date Dear Sir/Madam Re: Name, Address, Account No. I am writing to explain that I am no longer able to afford to make the payments due on my account with you. This is because explain your circumstances. I have worked out a Financial Statement which describes my/our present situation. Unfortunately, after essential household expenditure I have no funds available for my creditors at present and I am only able to offer token payments of 1.00 per month on my account with you. Please will you accept this offer of payment for 6 months to give me an opportunity to stabilize my situation and to give me time to improve my circumstances. Will you please also freeze all interest and charges accruing on my account. Please will you send me (a Standing Order Mandate/Payment book) in order for me to make these payments to you. If my circumstances improve I will inform you, and I will either resume my normal payments or send you a further Financial Statement with an increased offer of payment. If you need further information in order to consider this request, please let me know. Sign your name, then print your name in capitals underneath. If you have a joint agreement, both partners need to sign. Yours faithfully Sign your name, then print your name in capitals underneath. If you have a joint agreement, both partners need to sign.

Sample Letter Sample Letter No reply to your offer letter Still no reply to your offer letter Name of creditor Address/postcode Date Dear Sir/Madam Re: Name, Address, Account No. I am writing further to my previous correspondence. I note that I have not had a response to my previous letter in which I made a (token/pro-rata offer). I enclose another copy my financial statement and offer of repayment. I look forward to hearing your views about my repayment proposals. Yours faithfully Name of creditor Address/postcode Date Dear Sir/Madam Re: Name, Address, Account No. I refer to my previous correspondence in which I requested your views regarding my repayment proposals. I note that I do not appear to have had a response from you. I trust my proposals are satisfactory to you and would request written confirmation within 14 days. Yours faithfully Sign your name, then print your name in capitals underneath. If you have a joint agreement, both partners need to sign. Sign your name, then print your name in capitals underneath. If you have a joint agreement, both partners need to sign.

Sample Letter Pro Rata/ Token offer refused, non priority creditors Name of creditor Address/postcode Date Common Financial Statement Name: Address: Postcode: Partner: Y N Number of Children: Ages: Dear Sir/Madam Re: Name, Address, Account No. I refer to my recent letter and your reply regarding the above account. I am disappointed to learn that you will not accept my offer of payment. The offer has been worked out after careful assessment of my financial situation. As I have no available income I have offered you a token payment as a gesture of goodwill. Making a higher offer to you would be unfair to my other creditors and I cannot afford to pay more due to my current circumstances. (Optional) All of my other creditors have been sent a copy of the Financial Statement and all/most/x number have so far accepted my offer of payment. If you were to sue me in the County Court I would continue to offer this amount and I feel it is likely to be accepted by the Court. Income Wages/Salary Benefit Pensions Other Income Total Income Please confirm you have considered the use of any other lump sum payment Per Month Yes No Expenditure Rent Mortgage Other Secured Loans Other Housing Costs Council tax Utilities Court Fines Maintenance/CSA Pensions/ACV Per Month I would therefore be grateful if you would reconsider your reply to the above offer. Other Life Assurances Yours faithfully Available monthly income after expenditure HP/Conditional Sale TV License Sign your name, then print your name in capitals underneath. If you have a joint agreement, both partners need to sign. Total Priority Debts Telephone Travel Housekeeping Total monthly Priority Payments Children Health Other Expenditure Total available for other creditors Total Expenditure 37

38 Common Financial Statement Priority Debts Debt Arrears Payment/Offer Rent: Mortgage: Other Secured Loan(s): VAT: Inland Revenue: Council Tax: Maintenance/Child Support: Gas: Electricity: Water: Other: Total: Available Income for Other Creditors: Non Priority Debts Debt Total: Outstanding Balance Payment/ Offer County Court Judgement Further help Citizens Advice Bureau gives free, confidential, impartial and independent advice to help you solve your problems. To find your nearest CAB, including those that give advice by Email, look under C in your phonebook or visit www.citizensadvice.org.uk Useful Contacts Age Concern Phone: 0800 00 99 66 Website: www.ageconcern.org.uk AdviceUK (To find a local money advice centre) Phone: 020 7407 4070 Website: www.adviceuk.org.uk Business Debtline (Debt advice for the self employed and small businesses) Phone: 0800 197 6026 Website: www.bdl.org.uk Child Benefit enquiry line Phone: 0845 302 1444 Website: www.hmrc.gov.uk/childbenefit/ Child Support Agency (Child maintenance and enforcement commission) Phone: 0845 7133 133 Website: www.csa.gov.uk Consumer Direct (Helpline for consumer and fuel problems) Phone: 0845 404 0506 Website: www.consumerdirect.gov.uk Cruse (Advice and support for people dealing with death) Phone: 0844 477 9400 Website: www.crusebereavementcare.org.uk Directgov (Government information for citizens) www.direct.gov.uk Disability benefit enquiry line Phone: 0800 88 22 00 Website: www.dwp.gov.uk Energy Ombudsman (If you have a dispute with a fuel supplier) Phone: 0845 055 0760 Website: www.energy-ombudsman.org.uk Financial Ombudsman Service (For complaints about banks, building societies, insurance, pensions etc.) Phone: 0845 080 1800 Website: www.financial-ombudsman.org.uk Financial Services Authority (Information about endowment policies, pensions etc.) Phone: 0845 606 1234 Website: www.fsa.gov.uk Help the Aged Phone: 0808 800 6565 Website: Helptheaged.org.uk Housing Corporation (For a list of housing associations) Phone: 0845 230 7000 Website: www.housingcorp.gov.uk Mind (A charity and helpline which helps with mental health problems) Phone: 0845 7660 163 Website: www.mind.org.uk Office of fair-trading (An independent organisation which protects your rights as a consumer) Phone: 0845 722 4499 Website: www.oft.gov.uk Pension Credit claim line Phone: 0845 99 1234 Website: www.thepensionservie.gov.uk Samaritans (confidential emotional support) Phone: 0845 790 9090 Website: www.samaritans.org Shelter free housing advice helpline Phone: 0808 800 4444 www.shelter.org.uk TaxAid (Advice about tax problems) Phone: 0845 120 3779 Website: www.taxaid.org.uk Tax Credits Helpline Phone: 0845 300 3900 Website: www.hmrc.gov.uk 39

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