Personal debt

Contents
1. Dealing with debts 1.1. List your debts 1.2. Work out your income 1.3. Work out your expenses 1.4. Calculate your available income 2. Where to get advice 2.1. National Debtline 2.2. Debtline NI 2.3. Consumer Credit Counselling Service (CCCS) 2.4. Citizens Advice Bureau (CAB)

Getting into debt is a stressful experience. However the worst thing that you could do is ignore bills as the debts will not go away. Your situation will only get worse if you do not take steps to deal with the problem.

If you think you need help then get some advice. You can get advice over the telephone or in person from your local Citizens Advice Bureau (CAB) or from the National Debtline. There are also a number of different companies or agencies that offer free debt advice which you could use.

The majority of the debt advisers will advise you to firstly create a budget listing all your debts, income and expenditure.

You should separate the debts into ‘priority debts’ and ‘non-priority debts’.

Priority debts include:

• Mortgage arrears or rent arrears. Your home could be re-possessed if these payments are not made.
• Energy or fuel bills. Failure to pay can result in your supply being disconnected.
• Council tax arrears (in England and Wales). If you don't pay these a court can use bailiffs to take your goods. If, after this, you still have arrears unpaid, you can be sent to prison.
• Rates arrears (in Northern Ireland). If you don't pay these, the Enforcement of Judgments Office can enforce a number of court orders against you in order to repay the arrears, for example, a charge can be secured on your property or an order can be obtained to deduct the money from your wages. See our ‘Enforcement of judgment office‘ section for more information.
• Court fines such as for traffic offences and maintenance payable to an ex-partner or children. This includes Child Support (but note that this does not include parking penalties issued by local authorities).
• In England & Wales, if you don't pay these the court can use bailiffs to take your goods. If, after this, you still have arrears unpaid, you can be sent to prison.
• In Northern Ireland, if you don't pay these, enforcement action can be taken by enforcement officers working for the Enforcement of Judgments Office.
• Income tax or VAT arrears. You can be sent to prison for non-payment of income tax or VAT.

You may have other debts which you believe are particularly more important to pay. This could include fuel and other costs associated with the running of a car which, if you're disabled, you may rely on to get around or to and from work. You need to think about why some debts should be treated as being a priority over others as you might have to convince a court or your other creditors why it is reasonable for you to treat these debts as being more important.

Non-priority debts generally include:

• Benefits overpayments
• Credit debts such as overdrafts, loans, hire purchase, credit card accounts and catalogues
• Student loans
• Money borrowed from friends or family
• Parking penalties issued by local authorities.

You cannot be sent to prison for not paying these debts. However, that does not mean that you should ignore them. Your creditors may take you to court if you fail to pay. If you still fail to pay despite there being a court order against you, your creditors may take further steps. For example in England and Wales, by using bailiffs to seize your property to be sold to cover your debts, or in Northern Ireland, seeking enforcement of the court order in the Enforcement of Judgments Office.

Income will include:

• Salaries (after tax) that you and your partner receive. If you do not receive a regular amount (i.e. it varies from month to month) then work out the average over the last six months.
• Any social security benefits you receive, such as tax credits.
• Other regular payments you receive such as for rent from tenants and child maintenance.

You may need to make some temporary changes to your life style in order to reduce your expenses which should generally include:

• Realistic amounts for food, toiletries, meals at school and work, cleaning materials, children's pocket money and pet food
• Rent or a mortgage or any other loan secured against your property, buildings and contents insurance, service charges (for flats) and life or endowment insurance policies that cover your mortgage
• Council tax (England and Wales)
• Rates (Northern Ireland)
• Energy, water and other utility charges
• Travel expenses including both public transport and the cost of running a car such as road tax, insurance, and maintenance
• Insurance
• Childcare costs
• TV licence and any TV rental costs
• Clothes.
• Any other essential expenses, such as for medical or dental health or support for an elderly relative, money you need to set aside for unexpected events and contingencies. This includes saving for things like the replacement of essential household goods when they break down.

You should now have enough information to calculate how much you have available to pay off your debts. You should start by paying off your priority debts. If you cannot afford to pay anything towards these debts then you should obtain some advice.

Once you have paid the priority debts, you should then work out how to pay off the non-priority debts.

Many organisations, such as the ones listed here, are independent and don’t charge for guidance. Always get free, independent advice before using a commercial service.

National Debtline offers free, confidential and independent advice on how to deal with debt problems for people in England, Scotland and Wales. You can call their helpline or download free fact sheets from the National Debtline website .

Debtline NI offers free, confidential and independent advice on how to deal with debt problems for people in Northern Ireland. You can call their helpline or download fact sheets from the Debtline NI website .

The CCCS offers a helpline, providing free, independent and impartial advice to people with debt problems. See the CCCS website for more information.

Your local CAB will provide free information and advice on legal, money and other problems. You can find the address of your local CAB in the phone book or on the CAB website .