Debt & Money
All debt problems can be solved and we have a team of specialist debt advisers on hand to help you.
Many people struggle with money issues because it is often easier to avoid making decisions than taking them. Besides, managing money isn’t very exciting and it’s not easy to understand sometimes, but if you can take control of your finances you will free up time and energy to do the things you really want to do.
This section gives you the information and tools to understand your finances, deal with your debts and get yourself financially fit for a brighter future.
Managing your Money
The trick to managing your money successfully is:
- Know what you have coming in
- Know what you spend your money on
You can draw up your own budget by following the simple steps here.
This easy-to-use tool means you can put in any combination of weekly, monthly or annual amounts and it will calculate your income and expenditure over any time period you choose.
Maximise Income & Minimise Expenditure
- Make ‘maximise income, minimise expenditure’ your catch phrase.
- Check that you are getting all the benefits, tax credits and discounts you are entitled to.
- You can explore ways to save money at these two free, independent money saving websites:
- Money Saving Expert
- Age UK
Be savvy about finance and deal with any debts
Don’t lose out because you don’t understand things like credit, interest rates, and HP agreements, and don’t be fooled by lenders or debt collectors. Use the sections below to find out about your rights and responsibilities and how to get advice.
About Enforcement Agents
Enforcement Agents are people employed to recover the following debts:
- Arrears of council tax, business rates, child support, income tax or rent;
- County Court orders (CCJs); or High Court Orders (Judgements);
- Fines in criminal cases;
- Parking / road traffic penalties; and
- VAT debts.
An enforcement agent can only break in for unpaid fines. They must have the permission of the Court plus evidence that there is something worth taking inside.
Enforcement agents may accept cash or they may seize certain belongings from you. Belongings will usually be sold at auction and the proceeds used to pay the bailiff’s fees and charges, with the remainder going to your creditor.
Bailiffs can be used to evict you from your home if the property has been repossessed for rent or mortgage arrears or a Court has granted a possession order and subsequently a warrant for possession. Find out more information on eviction for mortgage arrears and eviction for rent arrears.
In certain, very limited circumstances, if authorised to do so by the Magistrates Court, enforcement agents can arrest you. For example if you haven’t paid a court fine or council tax debt or if you have failed to turn up in court when you’ve been told to, the Magistrates can issue a warrant of arrest for you to be arrested and brought to court.
What Enforcement Agents can and can’t take
Enforcement Agents can usually only take things that belong to you (or jointly owned by you). They cannot take things that belong to your children or some goods that are protected by the “Taking Control of Goods Regulations – 2013”. The following are protected items:
- Essential household equipment
- Furniture that you need for basic domestic needs
- Tools, books, vehicles and other equipment which you need for your work
- Fixtures and fittings such as a built-in wardrobe
What to do if the Enforcement Agent calls
You will generally get an advance notice that the enforcement agent is going to call. Get advice immediately you receive any such notice. Enforcement agents will charge you a fee if they call so avoiding a visit from the enforcement agent, if possible, will save you money.
Enforcement agent letters will often threaten that they will be accompanied by the police when they call. Enforcement agents aren’t allowed to call the police to assist them in gaining entry to your property, however the police could be called to prevent a breach of the peace.
In most circumstances the Enforcement Agent is not allowed to force their way into your home and you don’t have to let them in.
Tips to avoid letting the Enforcement agent in:
- Don’t open your doors to them;
- Don’t leave your windows open if you know enforcement agents are due;
- Don’t let them in at all, even if they say it is just for a chat or to use the toilet;
- Alert your family and children so that they don’t accidentally open the door to them;
- If you own a car, park it away from your property.
Remember if you let the Enforcement Agent in once, they will have gained peaceable/peaceful entry and they can force entry to collect goods.
What to check if the Enforcement Agent calls
Make sure you see:
- Proof of their identity;
- A copy of the original court order saying you owe the money;
- A copy of their authorisation to take your things away;
- If they’re a certificated enforcement agent proof of their certificate.
Check the dates of the documents to see if they are still valid. For example, a warrant of execution or writ of fi-fa is only valid for one year after it has been issued unless there is proof that a judge has extended it.
Some form of bank account or a post office account is essential whether you are in work, on benefits or a pensioner.
With a current account you can:
- Receive automated (direct) payments (e.g. wages, benefits and pensions);
- Pay in cash;
- Pay in cheques (paying in pound sterling cheques is free however they take four business days to clear before the money is available to spend)
- Have a cheque book to make payments;
- Have a debit card to withdraw money or check your balance at a cash machine or pay for goods and services;
- Set up direct debits or standing orders to pay bills;
- Apply for an overdraft (although you may be charged for this facility);
Most current accounts can be accessed through a high street branch, online, using mobile banking or over the phone.
Basic Bank Accounts
Basic bank accounts are similar to current accounts. Generally you get a cash point card to withdraw money from cash machines but only some banks offer a debit card. Basic bank accounts do not have overdraft facilities so if there isn’t enough money in your account to pay a direct debit when it is due the bank will refuse to pay it and you may be charged up to £25 for each payment that is refused. Basic bank accounts are particularly useful if you have a low credit rating. See here for more information about basic bank accounts.
There is a wide variety of savings accounts including instant access accounts (where you can withdraw cash at anytime), children’s savings accounts, regular savings accounts and ISAs (tax free Individual Savings Accounts). Savings accounts usually pay more interest than current accounts. For more information and to compare different offers visit the Money Advice Service.
Sharia accounts are similar to current accounts. However they operate according to Islamic law and principles. They do not pay interest, however your savings can grow through Sharia compliant profits. They do allow overdrafts.
See here for more information on Sharia Accounts.
Credit Unions can offer an alternative to the high street banks. Credit Unions offer members the opportunity to both save and borrow money. For more information about Credit Unions visit www.moneyadviceservice.org.uk and search for ‘Credit Unions’.
Choosing a Bank Account
When deciding to open a bank account think about whether you’d like to deal with your new bank in person, or would prefer telephone or internet banking or all three options. Remember if you want to be able to visit your bank and speak to someone in person you need to choose a bank that you can get to easily.
Banks charge a range of fees and charges for different services and overdrafts. Think about the services that you are likely to use most often and then compare the costs. Note – one of highest fees is likely to be for going over any agreed overdraft limit.
Banks often offer incentives, including interest on current accounts, to encourage you to choose a account with them rather than another bank. Consider the incentives they offer and whether they are of value to you when set against the costs of fees, charges and overdrafts. Check also whether you already have some of the things the bank is offering, especially if they are part of a package the bank is offering you in return for a monthly fee.
Many banks have specific student accounts often with an interest-free overdraft facility (up to a specified limit). These accounts may also offer incentives to students and graduates, in the hopes that students will become long-term customers.
Compare different accounts – use the easy-to-use comparison tool.
Opening an Account
Money laundering laws mean that banks will ask for proof of your identity and address. The bank will provide you with a list of documents, such as your passport, driving licence, or a letter from a government department as well as recent utility bills showing your address. If you don’t have the documents then talk to someone at the bank because they may be prepared to accept alternatives.
Some banks may also want to run a credit check on you but they will tell you if they need to do this.
Bankruptcy & Debt Relief Orders
Bankruptcy is just one of the options available to you if you are in serious debt. You can apply to the court to be made bankrupt or one of your creditors, the person or organisation or company you owe money to, may apply to make you bankrupt.
When you are made bankrupt the Official Receiver takes control of your assets and deals with all your creditors. You are allowed to keep household goods and a reasonable amount to live off. Your assets, including your home if you own it, your car and any luxury items may be sold to pay off your creditors and the Official Receiver may also use any spare income you have to pay your creditors. The bankruptcy order will last for a specified period of time, often as little as 1 year. After that you are free to make a new start, the money that you owed having been written off.
Bankruptcy costs and fees need to be checked at the time of considering bankruptcy. While you are an undischarged bankrupt you cannot apply for credit; some careers are not available to people who are bankrupt and bankruptcy can affect your immigration status. Bankruptcy is a public matter, lists of everyone who is made bankrupt is published in the press.
See here for more information about bankruptcy. (pdf)
Remember bankruptcy may not be your only or best option. Request our free independent advice here.
Debt Relief Orders
Debt Relief Orders are an alternative to bankruptcy if you can meet certain criteria. These criteria include-
- you have total debts of £20,000 or less;
- your available income, after paying all your household bills, is £50 or less per month; and
- the value of your assets, excluding your car if it is worth less than £1,000.
A Debt Relief Order will cost you £90 and your debts will usually be written off after a year. It usually lasts for a year but during that time none of your creditors can take action against you to recover the money you owe. At the end of the year all the debts listed in the order are written off and you are free to make a fresh start.
You can only apply for a Debt Relief Order through an Approved Intermediary. We have 3 Approved Intermediaries. Our service is free so all you have to pay is the £90 fee.
Please note – Debt Relief Orders are only available in England and Wales.
For comprehensive free, independent advice about Debt Relief Orders and other options for dealing with your debts such as Individual Voluntary Arrangements, please complete our request advice form.
Priority & Non-Priority Debts
There are two different types of debt grouped according to the possible consequences of not paying the debt.
Priority debts, as the name implies are those which, if not paid, can have very serious consequences.
Priority Debts include:
- Mortgage or rent arrears – you could lose your home if you don’t make arrangements to clear these arrears;
- Court fines such as magistrates’ court fines for traffic offences. Non payment can result in your being arrested and even sent to prison;
- Arrears of maintenance payable to an ex-partner or children, including child maintenance you owe to the Child Support Agency or Child Maintenance Service. Non payment could result in imprisonment;
- Council tax arrears – the Council will secure a liability order against you and if you wilfully refuse to pay you could be sent to prison;
- Electricity, gas and water arrears – your supply could be cut off;
- Income tax or VAT arrears – bailiffs may take your belongings and you could made bankrupt or sent to prison;
- No TV licence or TV licence arrears – it is a criminal offence to use a TV without a valid licence and you could be fined up to £1,000
As the name suggests the impact of not paying non-priority debts is less serious. You cannot, for example, be sent to prison. However creditors can take court action against you which could allow them to instruct enforcement agents to call to seize some of your belongings
Non-priority debts include:
- Benefits overpayments;
- Credit debts such as overdrafts, loans including money owed to doorstep lenders, hire purchase, credit cards;
- Store cards and catalogue debts;
- Student loans;
- Money borrowed from friends or family.
For comprehensive free professional advice about dealing with your debts, please complete our request advice form.
Payday loans may be quick and easy but they are very expensive!
Payday loans are short term, often instant loans paid directly into your bank account. Usually less than £500, payday loans are intended to tide you over until your next pay day when the loan is supposed to be repaid in full.
Beware – the interest rates are astronomical! Each day the loan is outstanding the money you owe increases and you pay interest on the interest. If you borrow £350 three weeks before pay day – you will have to pay back at least £450.
Whether you apply for a pay day loan on-line, on the phone or at a high street outlet – the lender will ask for your bank account details so they can access your bank account on the agreed day and debit the loan. What you are doing is giving the lender a ‘continuous payment authority’ which allows the lender to take any amount anytime and to keep asking the bank for all or part of the money – even if you don’t have enough money in your account. The lender does not have to give you any notice that they are going to take money from your account.
You can cancel the Continuous Payment Authority at any time. Contact your bank or card issuer and ask them to make a record of your instruction to cancel the arrangement. You should also advise the lender that you are cancelling the Continuous Payment Authority and obviously you will then need to make alternative arrangements to pay the money you owe.
If the bank refuses to cancel the payment authority or fails to follow your instructions you should complain, in writing, to the bank and if you are not satisfied with the outcome of your complaint you can then complain to the Financial Services Ombudsman.
Don’t be a slave to pay-day lenders. Follow these top tips:
- Don’t take a pay day loan unless you really do not have any other alternative;
- Don’t take a pay day loan to pay off other loans – it will probably cost you much more;
- Be sure before you take the loan that you know exactly how much it will cost you and that you will be able to pay it back on time. Remember interest is added on a daily basis and you will pay interest on the interest;
If you are struggling to make payments to any payday loan company or any other creditor it is not too late to get help and advice!
For comprehensive free professional advice about dealing with your debts, complete our request advice form.
Hire purchase (HP) is a type of borrowing linked to specific goods, for example furniture or cars. Under an HP agreement, you hire the goods and then pay an agreed amount by installments. You do not own the goods until you have paid in full and you cannot sell or dispose of the goods without the lender’s permission. If you do, you’ll be committing a criminal offence.
The lender may be able to repossess (take back) the goods if you fall behind with payments. If you have paid less than a third of the total amount the company does not need a court order to repossess the goods, otherwise they will usually have to get a court order. The lender will sell the goods at auction and use the money towards paying off the debt. Beware – you will remain liable for the balance and any fees and court costs.
You can end (terminate) a hire purchase in writing and return the goods at any time. You will have to pay all the installments due up to the time you end the agreement. The lender is entitled to half the total price of the goods so if you have paid less than this by the time you end the agreement you will have to pay the difference. If you have paid more than half of the price when you end the agreement, you can’t get a refund but you usually won’t have to pay any more.
Payment Protection Insurance
Many HP agreements include Payment Protection Insurance (PPI). Check whether you will be able to make a claim under the insurance, for example to help you make payments if you are off work due to illness.
You will need to cancel the insurance separately if either you or the lender terminates the agreement as the insurance is often covered by a separate agreement.
For more information about PPI, click here
For comprehensive advice and help with dealing with your debts complete our request advice form.