IVA Advice Guide – How to Deal with Debt Problems

IVA.TV - To speak to an IVA Advisor please call UK 0800 048 3651

Advice on Dealing with a Debt Problem

IVA.TV have reproduced the Crown Copyright Guide on Dealing with Debt Problems. Often people are ashamed or embarrassed that they have a debt problem but it is important to realise you are not alone. Most adults have experienced a debt problem at some point in their lives and often the only way you can get help is to speak to someone. IVA.TV have considerable experiencing of speaking to people in your position.

Guide on Debt Problems

How to deal with debt problems by establishing priorities, setting a personal budget, talking to creditors and getting impartial and independent advice.

If you’re in debt and you are finding it hard to cope, it’s important to deal with the debt problem straight away – the longer you ignore your debts, the worse the situation becomes.

Make a list of everything you owe

The first job is to sort out exactly what you owe, and to whom you owe it (your creditors). You then need to put these debts in order of importance. The most important (‘priority’) debts aren’t necessarily the biggest ones. Priority debts are ones where serious action can be taken against you if you don’t pay what you owe.

Priority debts

Priority debts are things such as mortgage repayments, rent, taxes and payments ordered by the courts: if you don’t sort these out, there’s a possibility you could lose your home or go to prison.

Some examples of priority debts, and the consequences of not dealing with them, are listed below.

Mortgages

If you don’t keep up with mortgage payments, the mortgage lender can take legal action to take possession of your house and sell it, for whatever price they want. If the price they get is less than the remaining debt you’ll still be liable for the balance.

Rent

If you fall behind with your rent, your landlord can evict you (and still take you to court for the money you owe).

Tax

Not paying tax can lead to you being made bankrupt or going to prison.

Utility bills

Gas and electricity companies can disconnect their services to your home if you don’t pay their bills. Even a phone bill can be a priority if you need the phone to help you earn your living.

Hire purchase (HP) debt

Any debt should be seen as a priority if what you’re buying on credit (or ‘HP’) is essential such as buying a car you need for getting to work.

Other priority debts

If any of the following debts are unpaid, a court could use bailiffs to come into your home and take your goods away:

• Council Tax or Business Rates
• court fines
• maintenance and child support payments

Your goods would be sold to pay what’s owed. If, after this, you still owe money, there’s a possibility you might be sent to prison.

IVA.TV can advise on how to meet your Priority Debts. We can help make your other non-priority debts more affordable and even negotiate with your unsecured creditors to reduce your payments.

Non-priority debts

Non-priority debts include credit card payments, bank loans, catalogue repayments and money you’ve borrowed from family or friends. You can’t ignore these, but you don’t need to deal with them as a first priority.

Work out a personal budget

To find out what debt repayments you can afford, work out a weekly or monthly budget to see what you need to live on. It’s important to be realistic and honest with yourself.

Your budget will show how much money you can afford to commit to paying off your debts. Your budget may also show you where you can save money.

IVA.TV can help you prepare a budget.

Talking to your creditors

Once you know what you can afford, you can talk to your creditors about your situation and what you’re going to do about it. Offer to pay each debt off in a way you can afford – it’s important not to offer to pay more than you can afford, and not to assume you’ll be able to pay more in the future.

It’s important to follow up a phone call with a letter confirming what you said and agreed.

You may have little or nothing left to offer your non-priority creditors. You should still talk to them, explaining the situation; you may be able to tell them that you will pay them back at some point in the future – but don’t make promises you can’t keep.

For further advice please contact IVA.tv.
Information in the above IVA Advice Guides and Debt Advice Guides includes extracts from Crown Copyright Advice Guides Direct Gov UK

Common Debt Problem Misspellings: Debt Problems, dept problem, dept problems