What are priority debts?

If you find yourself in a spiral of debt, you must identify which debts are the most important to pay back first.  These are known as your ‘priority debts’.  They aren’t necessarily your biggest debts but they are the debts where the consequences for not paying are the most serious.

According to Directgov, the UK government’s digital service for people in England & Wales, these are the debts that you should consider priority debts and non-priority debts:

Priority debts

  • Your rent, mortgage or loans secured against your home – if you fall behind with repayments on these, you could lose your home.
  • Council tax – tell your council if you’re having trouble paying, in the most very serious cases they may send bailiffs to your home.
  • Income tax, national insurance and VAT – underpaying could result in you being made bankrupt.
  • Utility bills – not paying these could mean your services are disconnected.
  • TV licence – non payment can result in a hefty fine or even prison.
  • Other priority debts include anything bought on hire purchase, tax credits overpayments, maintenance and child support payments, court fines and even parking fines.

Non-priority debts

You still need to deal with these debts but they should be addressed after your priority debts.  You may not lose your home or go to prison for not paying these debts but you can still be taken to a county court and ordered to pay what you owe, often with additional court costs.

If you still don’t pay after you’ve been ordered to do so by the court, there are a range of actions your creditors can try to take against you so it is just as important to seek help if you’re struggling with your non-priority debts.

Non-priority debts include:

  • Credit card or store card arrears
  • Catalogue debts
  • Overdrafts and personal loans
  • Loan shark loans
  • Money borrowed from friends and family
  • Gym and health club memberships

If you are struggling with debts, whether they are priority or non-priority debts, contact us.  We can help you get back on the road to financial freedom.

 

Source:  direct.gov.uk

Dealing with….rent arrears

According to Credit Action, research published by the National Landlords Association (NLA) has uncovered that a fifth of private residential landlords have had tenants in rent arrears over the last three months.

We’ve pulled together some tips should you find yourself in arrears with your rent.

  • Double check the payments you have made and your rent receipts to ensure that your landlord hasn’t missed any payments you’ve definitely made.
  • Check your tenancy agreement that you signed when you agreed to rent the property.  What does it say about rent arrears?  Know exactly what you have agreed to in the contract and if necessary, seek advice from your local advice centre.
  • Discuss the issue with your landlord, don’t avoid the situation and let it get worse.  You may be able to come to some kind of agreement about making partial rent payments until your situation improves.
  • In a worse case scenario you may receive a court summons – this may sound frightening but it will give you an opportunity to try to reach an agreement with your landlord through the court to clear the arrears.  You must adhere to this agreement as well as paying your regular rent payments to avoid being evicted.

If you are having trouble paying your rent and other bills due to financial worries, contact us today.  We may be able to help.

Avoid starting married life with financial worries

With the average wedding, according to Weddingplan, costing around £21,089* it is little wonder that many newly wed couples find themselves in a mountain of debt after celebrating their big day.

Here are a few ways which may help you avoid starting married life with major financial worries:

  1. Set up a team and use your friends and family as wedding organisers, it’s cheaper than hiring a wedding planner and they’ll have your best interests at heart.
  2. Budget – look realistically at the money you have and stay within that amount.
  3. Go minimalist – instead of large flower arrangements which can be very costly, go for the minimal look with single flowers or small arrangements.
  4. Look at hiring your dress as opposed to buying it – after all, you’ll only wear it once.
  5. Ask the venue if you can supply your own alcohol – paying for corkage could be far less expensive than paying bar prices.
  6. Consider getting married on a Friday or a Sunday which can lower the cost dramatically; and try to avoid May, June and July which are deemed peak wedding months and therefore more expensive.
  7. Negotiate – don’t be afraid to ask for a discount whether it be for rings, flowers or the venue.
  8. Prioritise – decide what part of your day means the most to you both and set your budget accordingly e.g. would you rather splash out on your photographer and be more frugal with your dress?  Would you prefer your honeymoon to be the holiday of a lifetime instead of hiring the more expensive band?

It is the most important day of your life and we realise you want the best of everything but all things considered, is it worth getting yourself into a spiral of debt to say ‘I do’?

 

*Source: Credit Action – September edition

Social media and debt….a warning

A recent report from the comparison site, confused.com has warned that using social media websites e.g. Facebook and Twitter could see people driven into debt due to burglary or increased home insurance premiums.

This report comes on the back of news that in the US state of New Hampshire, 50 homes were burgled after home owners made it public they were not at home through location services on the social media sites.  The burglary ring responsible stole $100,000 worth of goods from the properties.

If this trend continues in the UK, confused.com go on to say that insurance premiums could be hiked up.  This could lead to many people not bothering with home insurance which may save them money in the short term but could leave homeowners needing debt solutions should something happen to their home.

In addition, with the increased number of employers using social networks to ‘suss out’ prospective employees, social network users should be aware that what they post on their profiles could come back to haunt them in the future and could prevent them from being hired from some companies.

 

UK tops the G7 nations with highest level of personal debt

Reported in The Telegraph, British households are now more indebted than any other major country in reported history.

Families in the UK now owe a record 173% of their incomes in debts, official figures from the Office of National Statistics have shown.  The ratio of debt to income is higher than any other country in the G7, the group of seven leading industrialised economies, and is sharply higher than the 129% of incomes it was five years ago.

Read the full article here.

Top tips for a debt free Christmas

With less than 100 days until Christmas and department stores beginning to make space for festive lights and decorations, it is now a good time to plan ahead to ensure you start next year without a mountain of Christmas debt.

We’ve compiled a few tips to ensure you stay debt free this Christmas:

  1. Work out what you can afford – it sounds simple but look at your finances and determine how much you can afford BEFORE you start spending.
  2. Start saving early – if you can start saving a little each month, you’ll avoid having to rely on your December salary to pay for everything.
  3. Plan ahead – write down a list of the gifts you have to buy and work out how much you can afford to spend on each.  Perhaps agree a fixed budget with some of your friends or family.
  4. Avoid panic buying – if you have a large number of gifts to buy, why not start buying early so you don’t leave everything to the last minute and be panicked into buying things you can’t afford.
  5. Leave the credit card at home – try shopping with cash so you’re not tempted to buy more expensive gifts that you’ll have to pay for later when the credit card bill comes in.

Christmas can put a strain on the family budget so make sure you stick to what you can afford.  However, if you do find yourself in debt, talk to us, we may be able to help.

The price of being single

A study commissioned by price comparison site uSwitch has claimed that living alone costs singletons an extra £250,000 over a lifetime compared to couples.

This is due primarily to housing, with people who live alone having to pay an average of £7,080 annually on their rent or mortgage compared with £3,804 for someone living with a partner.  Then there are household bills and council tax.

Other ‘additional’ expenses for singletons include supplements in hotel rooms and missing out on bulk buying discounts at supermarkets.

Read the full article.