Debt advice blog

Debt is known to cause problems with relationships, work, eating and sleep. Money problems can make people sad, worried and depressed. However, there are solutions to become debt free again. There is no need to remain in a negative situation when there are routes back out of debt. The first stage is to get information on your situation so you can make a decision which option will be best for you.

The sooner you start the process of dealing with debt the quicker you will be able to regain normality. It’s not uncommon for people to tell us that by simply sharing their financial problems with us makes them feel better. By speaking to a debt advisor you are taking positive steps to rectify money worries.

You can call Debt Support Trust on 0800 085 0226. If it’s out with our opening hours, then why not complete a debt test online. This will give you ideas of appropriate debt solutions which you could be suitable for.

Can’t Sleep At Night Because of Debt

A lack of sleep is a common issue associated with debt, as is problems with relationships. If the debt is the last thing you think about at night and one of the first thoughts you have in the morning, then seek help from a not for profit charity.

You can take steps to improve your financial situation by contacting a debt charity, either via telephone, email or debt analyser.

There isn’t one ideal debt solution, but instead most people are suitable for two or three options. Each debt plan has its positives and negatives and will be administrated slightly differently, but they can all get you back to a debt free life.

Before entering any debt solution, ensure you are making an informed decision by speaking confidentially to a qualified debt advisor. You can speak to Debt Support Trust in confidence on 0800 085 0226. Our friendly advisors are available from Monday to Friday 8am – 7pm. You can also send us an email and ask us to call you back. Our email address is contact@debtsupporttrust.org.uk.

What Can Our Advice Team Do?

Firstly, we know that taking the initial step is difficult. Most people spend a great deal of time thinking about their debt before getting in touch. So, we know you need accurate advice from supportive people.

We will ask about the debt, what income you have every month and what you have to spend out every month. We can then consider what assets you have (house, car etc) so we can best protect these.

There are a number of different debt solutions you could consider including:

Token Payments: An informal agreement to pay a small amount per week to your debt, usually around £1 per week. The debt will not clear the debt but it will buy you time until your situation improves.

Debt Management: If you can afford at least £100 per month you could enter a debt management plan. You repay all of the debt but it will potentially freeze interest and charges.

IVA: If the debt management plan will take too long you could consider an IVA. Your house is secure in an IVA but you may be asked to release equity. If an equity release is not possible your IVA would last 6 years, instead of 5. You pay what you can afford into the IVA and all interest and charges are frozen.

Trust Deed: A similar solution to the IVA but the Trust Deed is only for Scottish people. It lasts for 4 years and all interest and charges are frozen.

Bankruptcy: There are various routes to go bankrupt across the UK. Before proceeding with bankruptcy get advice as you could be asked to repay money into the bankruptcy for 3 years.

Our advice is based on a not for profit basis and we never share your information with anybody, without your permission. We also don’t register your advice on your credit file – it’s an informal chat about your options.

You can start the process of becoming debt free by completing the debt analyser below.

Some credit cards offer excellent 0% interest free periods, where after balance transferring from one credit card to another, there are no fees for a period of time. One of the best balance transfers is almost 3 years at present, however it can lead people into financial trouble in the future. Credit card debts can cause financially difficulty but there are other options to resolve these money worries.

Once the interest free period comes to an end usually you could try and get another deal with another credit card company and pay the balance transfer fee. The transfer fee is a percentage of the total amount being balance transferred.

If you can’t get a balance transfer because you’ve used the introductory offer before or your credit score isn’t high enough, then you would be forced to pay the interest on the existing debt. It’s here that debt problems occur.

Credit Card Debt Problems

The RBS has conducted research which found that 37% of people thought they would be able to balance transfer and clear the debt, but were then unable to do so. This meant they had to repay the outstanding balance with the interest rate included, or find another interest free free card.

The research also uncovered that 57% of people didn’t realise what their interest rate would be once their interest free period was over.

If you have credit card debt then the interest free period could help you clear the debt so you don’t need a debt solution. A debt plan would be helpful if the debts won’t be cleared in time for the interest free period being completed, or if you have multiple debts with different companies and are struggling to manage the repayments.

There are various debt solutions including a token payment plan, debt management, trust deed, IVA or bankruptcy which can help with debt problems. If you would like help with your credit card debts call our charity on 0800 085 0226 or complete the debt test below.

One of the most expensive monthly expenditures is rent or your mortgage, but coupled with this is the council tax, home insurances and energy costs. The energy costs for gas and electricity can be difficult to pay when you live on a low income, but there is help available.

You can call Debt Support Trust for specific help for you, or if you are struggling with debt you can get help on 0800 085 0226.

British Gas Customers

The energy giants want to help people on low incomes with discounts. British Gas has their own deal which started in 1^st May 2014, known as the Warm Home Discount.

This offer helps people get £140 off their electricity bills throughout the winter of 2014/15. You can call British Gas on 0800 294 8604 if you have a prepayment meter or 0800 072 8625 if you have a credit account, to discuss whether you are eligible.

If you are in receipt of pension credit then you automatically get the discount.  However, you could also receive the discount if you have a number of other benefits, including income support, jobseekers allowance, income support or universal credit.

Should your family income be £16,010 gross per annum and you spend 10% of your money on energy bills, or you have somebody living in your house with a mental or physical disability (or an illness) then you would be suitable for the discount too. If you earn £16,010 gross in your household per year and you have a child under 5, a person of pensionable age or somebody with a vulnerability then the discount would be applied.

There are various offers at other energy suppliers too.

The discounts are not automatically applied and you must phone the energy supplier, spend 10 minutes going through your financial situation and then the discount can be applied for. It can help during the difficult winter months.

Available to Everybody

There is help and support available for everybody, not just British Gas customers. You can get free loft and cavity wall insulation to help keep the heat in your property. This is a project to help reduce the carbon footprint and can reduce your energy bills.

You can get free loft and cavity wall insulation from most energy suppliers and British Gas is offering this service to everybody, even if you are not a customer with them.

Finding out that your partner has debt problems can be a difficult situation, but one which can be managed and resolved. Often there are mixed feelings about why the debt occurred and a fear over the future, but Debt Support Trust can help with debt advice.

The initial shock of the debt can be frightening and you may worry about how the money will be repaid. There are ways we can help you at the charity to get debt free again. You can call our advisors on 0800 085 0226 or complete our debt test to get online debt help.

Deal with Unexpected debt

People who contact Debt Support Trust don’t always realise the debt has existed. The shock can be worrying and mean you lose sleep and relationships are affected. There are certain tips we can give you to get the debt under control. These tips include

1. Don’t panic: There are different ways to deal with debt and we help thousands of people every year with their debt problems.
2. Income & Expenditure: Take30 minutes and create an income and expenditure. Sit down and look at your bank statements to understand what you spend every month and what you have coming in. Include all your benefits, income and pensions.
3. Debts: List all of your debts on a piece of paper, with a rough idea of the outstanding balance. Don’t worry if this isn’t 100% accurate, a rough guide is enough.
4. Get help: Speak to Debt Support Trust to understanding which debt solution would be best for you. In many circumstances we can help you come to an arrangement with your creditors.

There are questions you may have about your partners debt, so we’ve created a frequently asked questions section below.

Can my partner’s debt affect me?

Usually your partner’s debt will not affect you because the debt is personal to them. However, if you have assets, such as a house, which is jointly owned then your partner’s creditors could ask for any money in the assets. You will retain your share.

If you don’t have any assets then your partner’s creditors will only be able to ask your partner for the money back.

The debts are joint, what do I owe?

If your debts are joint with your partner then you are both liable for the full amount of the money. Most people think the debt is split 50/50 but in truth each person is liable for the full amount. This means that if one person can’t afford to make repayments then the other party can be responsible to repay the full amount.

Can bailiffs take my possessions?

Bailiffs are not allowed to take your possessions but they can take items belonging to your partner.

Will my credit rating be affected?

Typically your credit rating will not be affected because of your partner’s debt, however, if you are ‘associated’ with your partner on your credit file then it can impact on your credit score. You can speak to the credit referencing agencies (Experian, Equifax and Call Credit) to understand how you improve your credit score.

There are debt solutions which can give you legal protection from your creditors, giving you peace of mind and a legal solution to debt problems. These debt solutions have positives and negatives, but at Debt Support Trust debt charity we’re here to help you.

When debts seem impossible to repay, or the cost of simply maintaining the interest payments is overbearing then it’s best to look at debt solutions. There are formal and informal options available. An informal arrangement offers no guaranteed legal protection from your creditors, but can help get the situation back under control. Formal debt solutions guarantee to protect you from your creditors if they accept the proposal.

If you would like to discuss your debt situation with a qualified advisor then Debt Support Trust can help. You can call on 0800 085 0226 or complete our debt test.

Legal Protection via a Debt Solution

There are debt solutions which can give you legal protection from your creditors, meaning they can’t continue to telephone you or demand payment. All of the debt solutions which enable you to gain protection from your creditors will also write off the debt you can’t afford to repay at the end of the solution, along with interest and charges.

The debt solutions which best help you to become debt free and give you protection from your creditors are an IVA, Trust Deed Scotland and bankruptcy.

The highlights of each solution are:

IVA: Typically a 5 year solution, the IVA allows you to pay one amount to one company and freezes interest and charges. Debt which is not repaid after the 5 years is written off.

Trust Deed: The Trust Deed debt solution lasts 4 years usually. You make an affordable monthly payment and stop all other payments to your creditors. Your interest and charges are cleared at the end of the solution along with any remaining debt you have not repaid.

Bankruptcy: There are various routes to enter bankruptcy throughout the UK but they all mean you gain protection from your creditors and become debt free again.

These debt solutions enable you to put a proposal to your creditors, which is often accepted. The negative is that your credit file will have a default added, lasting for 6 years.

What You Shouldn’t Do

When you’re in debt there are some top tips to deal with the debt. Our top debt advice

You should not:

1. Bury your head in the sand. By avoiding the debt problem you are delaying the process and will be in debt for longer than necessary.
2. Enter a solution without getting advice. You could be suitable for two or three debt solutions so get advice to ensure you’re making the right decision.
3. Enter a solution without being aware what will happen to your assets. If you own your house, or have a mortgage on the property, you may wish to avoid some debt solutions as it could impact on your house.

You can call Debt Support Trust for advice on your debt problem by calling 0800 085 0226 or via our debt test form.

One of the most popular thoughts people have when they are struggling financially is to consolidate debt into one monthly loan repayment. This involves taking a number of loans and credit agreements and merging them into one payment, with one rate of interest.

It makes the debts easier to manage and understand, with one interest payment and one amount leaving your bank every month. These loans still exist and it is possible to still get a consolidation loan, although it was far easier before the credit crunch.

The chances are that consolidation loans will want you to have a good credit rating, so you can get a lower rate of interest.

Debt Support Trust and our friendly advisors can help navigate you through your options. You can speak to us on 0800 085 0226.

Struggling to get a Consolidation Loan

If you are unable to get a consolidation loan then you may have to think about other solutions. Every time you apply for a loan it will leave a mark on your credit file, and the more you apply the less likely you are that a lender will give you the money.

You can get debt help to become debt free from Debt Support Trust. This involves considering your debt level, monthly income, your expenditure and any assets you own.

We can assist you with advice on how to apply for the loan and ensure your credit file is as accurate as possible. If the consolidation loan isn’t applicable for you, because the debt is too large or because your credit file has got too many defaults, then we can look at other debt solutions which work similarly to the debt consolidation loan.

Alternatives to Debt Consolidation

If you can’t receive a debt consolidation loan then then next step is to consider debt solutions. There are similar benefits to the consolidation loan and some debt solutions. For instance, a debt management plan will allow you to pay one affordable payment each month to one company.

A Trust Deed or IVA would help you to repay what you could afford over a fixed period of time and write off the debt you can’t afford to repay. You could also consider bankruptcy too.

There are pros and cons to the debt solutions and one of the negatives is that each debt solution will leave a default on your credit file, whereas a loan would not.

If you want to discuss your debt options then Debt Support Trust can talk through all of your options, providing the positives and negatives, for you to consider. You can call 0800 085 0226 to get information about consolidation loans or debt advice.

Tax credits are given to families to top up their income in the form of child and working tax credits. However, many families find that because of a change in their circumstances, they have tax credit debts. This can cause stress and distress but Debt Support Trust can help.

If you would like help with your tax credit debts, please call our helpline on 0800 085 0226 for debt help.

Tax Credit Debts from Overpayment

The debts to the HMRC tax credit department can vary from hundreds to thousands of pounds. When HM Revenue and Customs re-evaluate your account they may inform you that you’ve been overpaid. Last year over 1.5 million people fell into this problem. The Government overpaid £1.5 billion in the year 2012-2013 to people claiming tax credits.

New powers which will be introduced in 2015 will mean HMRC can take the money from a person’s bank account. In the meantime, HMRC can refer the debt to debt collectors who are taking action to recover the money.

The first stage from HMRC is to ask for the money back. They will write and call to make an arrangement to get the money back. You won’t be asked to repay the money in one payment if you can’t afford it, but usually will be asked to create a payment plan.

When you create the payment plan you won’t usually face the threat of debt collectors, but if you fail to make contact with HMRC they could take further action.

HMRC Debt to Tax Credits

If you are struggling to repay tax credit debts along with credit cards, overdrafts and loans then you’re not alone. Thousands of people contact Debt Support Trust with debt problems and we’re able to assist them back to a debt free life.

If you need help with any element of tax credit advice call our helpful money advice team on 0800 085 0226.  We’ll be glad to help you with your query.

When debt problems occur you may need help and advice from your local debt advice bureau. If you need advice from a registered charity specialising in debt you can speak to Debt Support Trust on 0800 085 0226.

If you would like free face to face advice we always recommend speaking to the Citizens Advice Bureau. Your local debt advice bureau can provide excellent support and assistance if you would prefer to meet somebody face to face.

My Local Debt Advice Bureau

At Debt Support Trust, we provide expert online and telephone debt advice. Many people like speaking to our friendly advice team about their debt problems because it ensures they get immediate debt help.

If you would like help to find your local face to face debt advice bureau you can always call Debt Support Trust and we will help you arrange an appointment and signpost you to your local debt advice bureau.

Help from a Registered Charity

If you need help with debts from a registered charity you can call Debt Support Trust on 0800 085 0226. You can also complete the debt test to check confidentially which debt solution would be best for you.

Your mortgage is a priority which must be paid on a regular basis, otherwise your mortgage company is entitled to repossess your home and sell it to recover their money. If you have debt to your mortgage company and need help then speak to Debt Support Trust today.

The charity advisors at Debt Support Trust provide holistic debt advice on a wide range of issues. You can get debt advice by telephoning 0800 085 0226.

Help with Mortgage Debt Problems

We’re focussing on priority debts this week and one vital expenditure which must be made on time is rent or a mortgage. This ensures you retain your property.

If you have arrears on your property loan then your lender will work with you initially to resolve the problem. Usually when your mortgage is 3 months in arrears your lender will commence court action.

It’s always best to liaise with your mortgage company before the debt grows too large. By speaking to the lender you can reduce the chance they will proceed with repossession or court action.

Assistance with Mortgage Debt

There are a number of financial solutions which can help you deal with your mortgage debt problems. If you are failing to pay your mortgage because of other unsecured debts, like your credit cards and overdrafts, then there are debt solutions which can resolve this. By resolving your unsecured debts you would then be able to afford your mortgage.

If you have recently become unemployed then you could be struggling to pay your mortgage. There are solutions which can help pay your mortgage interest for up to two years.

What happens after my home is sold?

If you fail to come to an acceptable agreement with your lender to repay the arrears on your property then your home could be repossessed and sold.

The property can be sold under value in order to recoup as much money as possible. If the outstanding mortgage was £150,000 but the property was sold for £130,000 then there would be a £20,000 shortfall. The property owners would be liable to repay this £20,000, plus any fees for selling the property.

If the property is jointly owned by two parties and their is a shortfall then both parties are liable to repay the full amount of the debt.

Mortgage Debt Support

You can receive help with your mortgage debts from Debt Support Trust. We will review your financial position and discuss the options available to you. As well as considering your secured debts we will also review unsecured debts to help resolve your complete debt problem.

For help with your mortgage debts please call 0800 085 0226 or complete the debt test below.