Article: Debt problems
Are you having difficulties paying your creditors including your rent?
Nearly everybody at some time in their life will have a problem with debt often through no fault of their own. It may be due to redundancy, sickness, increased interest rates, Christmas, the birth of another child, marital breakdown. The reason is not important dealing with it is!
The longer you leave it the worse it will become. Ignoring it can lead to homelessness and imprisonment. The stress it causes can affect your health and result in the breakdown of your family. Be POSITIVE, help is out there and it is free. All you need is pointing in the right direction.
At Berneslai Homes we want you to make the right choices, we want to help you maximise your income wherever possible, ensure you receive any benefits you are entitled to, and above all ensure you remain in your home.
Different Types of Debt
It is important to know which debts are the most important and have to be paid first. You need to know the difference between priority and non-priority debts.
Priority debts are the ones which need to be paid first. Failing to do so can lead to loss of your home, loss of goods or services and even imprisonment.
| Priority debts | What can happen if you do not pay |
| Rent and mortgage | You can lose your home |
| Council Tax | Bailiffs could take your belongings. Money could be taken from your benefit or wages. You could be made bankrupt or you could be sent to prison. |
| Service charge arrears | You can be evicted from your home |
| Gas and electricity | Your supply could be cut off |
| Water | Your water supply cannot be cut off. |
| Magistrates Court fines | You could be sent to prison. |
| Hire purchase | You do not own the goods until you have made the final payment. If you miss payments and have paid less than a third of the total price the the company can take the goods back. |
| TV licence | You can be fined up to £1000. The bailiffs can take your belongings. You can be sent to prison. |
| Non priority debts | What can happen if you do not pay |
| Bank Overdrafts Loans Credit cards Store Cards Money borrowed from families/friends Catalogues Door-step lenders. |
You could be taken to Court and receive a County Court judgement which could lead to bailiff action or money taken from your wages.
You cannot be imprisoned and rarely lose your home. |
Ideally every debt needs to be paid because even non payment of non priority debts can lead to a bad credit history. This can stop future borrowing from reputable lenders.
Be aware of doorstep lenders- they are not your friend. The interest charged by doorstep lenders can be very high and can lead you into even further debt. A comparison of a £100 loan from a local doorstep lender and a local credit union example:
| Lender | Loan | Pay back period | Total payable | APR |
| Provident Private Finance | £100 | 31 weeks | £155 | 365.1% |
| South Yorkshire Credit Union | £100 | 24 weeks | £107.38 | 26.3% |
BUT worse are the Loan Sharks
These are illegal money lenders who charge extortionate interest rates often over 1000%.
The tactics they use to collect monies due include acts of violence, harassment, intimidation, keeping hold of payment books, escorting you while you withdraw benefit payments. You will never know if or when your debt has been paid - they do not give receipts. If you have already fallen into their trap help is available- see our section on Loan Sharks.
South Yorkshire Credit Union
If you need to borrow try the South Yorkshire Credit Unionon 01226 734 945 or visit their office at 70 Market Street, Barnsley, S70 1QR. The Credit Union is a safe place to both save and access small amounts of affordable credit. It charges interest at a low rate of up to 2% per month
To learn more about credit unions the Financial Services Authority produce an excellent booklet “Just the Facts about Credit Unions”.
To contact South Yorkshire Credit Union phone 01226 734945 or 01709 897487 if you live in the Dearne area. Go to the link below:
You will need to join to use their services and rules do apply.
If your income will not stretch to meet all your needs make the right choice and pay the priority ones first. If in doubt there is plenty of free advice out there who will not only advise you but they can contact your creditors on your behalf and negotiate acceptable repayment plans.
There are some simple rules for dealing with debt:
- Do not ignore the problem
- Be realistic. Face up to the fact that you have a debt problem but with help it can be resolved
- Contact creditors and explain your problem
- Give priority to the right debts
- Remember all creditors would prefer smaller but regular payments as opposed to offers of payment that you cannot maintain
- Respond to letters within the time period specified in the creditors’ letter
- Keep copies of all receipts of payment and of all letters sent to creditors
- Attend any court hearings and take proof of your income and outgoings
- Never give up trying to reach an agreement
- Never be bullied or threatened into making promises you cannot keep
- Never ever borrow more money from door step lenders / loan sharks
- Never be afraid to ask for help and remember Good Advice is FREE Advice.
- For your rental problems phone us on 01226 774613, 01226 774631 or 01226 774685.
Prioritise and control your spending
- Make sure you can pay your rent or mortgage, council tax, gas, electric and water bills, TV licence and food shopping.
- Do not spend money on non-essential items. This means looking at what items or activities you can do without to reduce the pressure on yourself and on your budget such as cutting back on your spending on entertainment, take-away meals and cancelling subscriptions for TV channels.
- Consider changing suppliers for cheaper services on insurance, phone, gas and electric.
- Check you are not paying any direct debits or subscriptions for services you have cancelled or no longer use.
- Ask yourself and your family are there others living in your household who could and should contribute more?
For free advice on all debt issues contact:
Citizens Advice Bureau - has a close working relationship with Berneslai Homes and will not only offer debt advice but also advice on how to open a basic bank account and or a credit union account. Go to http://www.adviceguide.org.uk/ for details of your nearest local office and contact numbers.
National Debt Line - provides free, independent, confidential and impartial advice by telephone on FREEPHONE 08088084000 or visit the National Debt Line website where you can download a free self help booklet.
The Consumer Credit Counselling Service (CCCS) - is a registered charity that has been providing advice to help people get debt free for over 15 years. For an instant, anonymous assessment of your situation, CCCS offer a free online debt counselling service, CCCS Debt Remedy, which provides tailored advice and a personal budget.
Direct Gov - is the governments’ site offering not just free advice on managing debt and planning your way out of debt but also the ability to take control of your finances by helping you to carryout a financial health check. You can check your entitlement to any state benefit and claim for many benefits online.
There is also a register of Financial Advice agencies which allows you to check their credentials.
Useful information:
