Dealing with debt
We've put together some tips on working through your debts and what your rights are when dealing with creditors.
Getting debt advice
If you feel overwhelmed by debt, it is a good idea to get expert advice on sorting it out.
Our freephone helpline can provide details of both national and local debt advice services. Depending on where you live, we may also be able to put you in touch with a specialist debt counselling service for families with disabled children.
Remember you do not need to pay for debt advice. This can help you reduce the amount you are paying out each month.
Sorting out your debts
There is a standard process for starting to sort out your debts. You will be able to get free confidential advice to help you through this process.
It's really important not to ignore your debts. Start by making a list of all your debts and your creditors - the people you owe money to. Check whether you owe the money and have to pay the debt.
You will need to work out your income and expenditure - how much money you have coming in and how much you spend. Check if you can increase your income and cut your spending.
When you've made a list of your income and expenditure, you'll see how much money you have left to offer your creditors. You then need to identify your priority and non-priority debts to make realistic arrangements to pay.
Priority and non-priority debts
Some debts are more serious than others because of the consequences if you don't pay them. Generally priority debts are more serious than non-priority debts. For example, mortgage arrears are a priority debt because you could lose your home.
You should not ignore any of your creditors, but when dealing with your debts make arrangements for your priority debts first. Examples of other priority debts include rent, council tax and TV licence payments. Examples of non-priority debts include credit card debts, bank overdrafts, catalogue debts and store cards.
Think about your personal situation too. For example, payments for a car are not considered priority debts. However, if you rely on it because you have a disabled child then you might want to treat it as a priority.
If you can't receive credit from a bank or credit card company, you may be tempted to try and borrow money by other means. We know that many families borrow money just to get by, sometimes using loan sharks or quick cash schemes. Be aware that loans that are easy to acquire can be expensive to repay.
If you're thinking of borrowing money to clear other debts, take free debt advice beforehand. There are many different types of loan, and it is important to avoid loans you cannot afford to repay. Debt advice can help you make arrangements to avoid getting into more debt.
Debt and borrowing - some frequently asked questions
I applied for a credit card and have been turned down but don't know why.
This may be because you have a low credit rating. To find out if this is the problem, ask the lender if they used a credit reference agency to decide whether to give you credit. You can ask for the credit reference agency's details and write to them to ask for a copy of your file. Alternatively, go to the credit reference agency's website and ask to see the report online. There is usually a charge for this information, but it is normally a small amount.
Look for incorrect information, and ask the agency to correct or remove it if this is the case.
My creditors think I should use my child's Disability Living Allowance (DLA) to pay off my credit card debts. I spend it all on extras for my child.
Remember that benefits such as DLA are intended to cover your child's extra care and mobility needs.
When you work out your income and spending, including an amount for disability-related expenditure that's equivalent to your child's DLA.
Make sure you list all the extra costs you have because of your child's disability. This should help show your creditors that your child's DLA is not spare money to clear debts.
I've had trouble paying my rent and now I've got into arrears. Is it true that money can be deducted from by benefits to pay off my arrears?
Yes, you can have a fixed amount deducted from certain benefits and paid to a landlord to help cover the arrears. You can ask the Department for Work and Pensions (DWP) to see if this can be arranged. This can be done for other arrears too, for example, fuel arrears. Contact our freephone helpline to find out more about this.
If you have rent arrears, check your entitlement to housing benefit. If this doesn't cover your whole rent and you can't afford the difference, you might be able to get discretionary housing payments from your council. These are extra payments to help you pay your rent. (Link to bedroom tax page, section on DHPs).
I feel that I am being harassed by my creditors. They keep calling me very late in the evening. I've asked them to stop phoning me late at night.
If you owe money, then creditors are entitled to make reasonable demands for repayment. However, there are certain things creditors should not do, including phoning you at unreasonable times.
The Office of Fair Trading has produced guidance that describes practices it considers unfair. It also has a leaflet that gives further advice.