This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.bbc.co.uk/news/business-64291327

The article has changed 18 times. There is an RSS feed of changes available.

Version 4 Version 5
Cost of living: What do I do if I can't afford to pay my debts? Debt: What do I do if I can't afford to pay?
(3 months later)
The rising level of bills and prices are leading some people to borrow more, or leaving them struggling to make debt repayments.The rising level of bills and prices are leading some people to borrow more, or leaving them struggling to make debt repayments.
A poll for the BBC indicated that half of those asked had used credit in some way to pay for Christmas and the holiday season. A third of those were not confident in their ability to repay. The Financial Conduct Authority, which regulates financial services, says that 11 million adults in the UK struggle to pay their bills - a rise of 3.1 million compared with last year.
So what can you do if you find yourself in difficulty?So what can you do if you find yourself in difficulty?
Who can I talk to?Who can I talk to?
It is important that you do talk about financial difficulties before finding yourself in a spiral of debt. The earlier, the better.It is important that you do talk about financial difficulties before finding yourself in a spiral of debt. The earlier, the better.
If you think you cannot pay your debts or are finding dealing with them overwhelming, seek support straightaway. You are not alone and there is help available. A trained debt adviser can talk you through the options available. If you think you cannot pay your debts or are finding dealing with them overwhelming, seek support straight away. You are not alone and there is help available. A trained debt adviser can talk you through the options available.
Information and support is available which is free of charge - click here to find out about organisations who may be able to help Information and support is available and free of charge - click here to find out about organisations who may be able to help
What practical steps should I take?What practical steps should I take?
Consumer advice charity Citizens Advice says that you should work out how much you owe, who to, and how much you need to pay each month.Consumer advice charity Citizens Advice says that you should work out how much you owe, who to, and how much you need to pay each month.
Identify your most urgent debts. Rent or mortgage, energy and council tax are called priority debts as there can be serious consequences if you do not pay them, and so they should be paid first.Identify your most urgent debts. Rent or mortgage, energy and council tax are called priority debts as there can be serious consequences if you do not pay them, and so they should be paid first.
Calculate how much you can cover in debt repayments. Create a budget by adding up your essential living costs like food and housing, and take these away from any income such as your wage or benefits you receive.Calculate how much you can cover in debt repayments. Create a budget by adding up your essential living costs like food and housing, and take these away from any income such as your wage or benefits you receive.
Always see how you could boost your income, primarily by checking what benefits you are entitled to, and whether you are eligible for a council tax reduction or a lower tariff on your broadband or TV package.Always see how you could boost your income, primarily by checking what benefits you are entitled to, and whether you are eligible for a council tax reduction or a lower tariff on your broadband or TV package.
How to check if you can claim a benefitHow to check if you can claim a benefit
Guide to benefits. when you qualify and what to do if something goes wrong, from the independent MoneyHelper website, backed by governmentGuide to benefits. when you qualify and what to do if something goes wrong, from the independent MoneyHelper website, backed by government
Check benefits calculators run by Policy in Practice and charities Entitledto and Turn2usCheck benefits calculators run by Policy in Practice and charities Entitledto and Turn2us
My energy bills are the biggest problem. Will my supplier help?My energy bills are the biggest problem. Will my supplier help?
Your supplier must give you a chance to clear your debt through a payment plan first.Your supplier must give you a chance to clear your debt through a payment plan first.
If you don't agree a plan with your supplier, it has been the case that they might try to force you to have a prepayment meter installed, or they may switch your existing smart meter to prepayment mode.If you don't agree a plan with your supplier, it has been the case that they might try to force you to have a prepayment meter installed, or they may switch your existing smart meter to prepayment mode.
But since it emerged that meters were being forcibly fitted into the homes of vulnerable people, this option has been temporarily stopped. But since it emerged that meters were being forcibly fitted into the homes of vulnerable people, compared are now required to pass certain tests before they can switch customers.
I need some time to get myself sorted. What do I do?I need some time to get myself sorted. What do I do?
A "breathing space" scheme in England and Wales shields people in problem debt from further interest and charges.A "breathing space" scheme in England and Wales shields people in problem debt from further interest and charges.
People receiving debt advice can apply for the break, which lasts for up to 60 days, to prevent them falling into a spiral of debt.People receiving debt advice can apply for the break, which lasts for up to 60 days, to prevent them falling into a spiral of debt.
People receiving mental health crisis treatment can apply for a scheme which lasts for the length of that treatment, plus another 30 days.People receiving mental health crisis treatment can apply for a scheme which lasts for the length of that treatment, plus another 30 days.
Consultation is underway for a similar scheme in Northern Ireland. In Scotland, an alternative short-term debt relief system is known as a Statutory Moratorium.Consultation is underway for a similar scheme in Northern Ireland. In Scotland, an alternative short-term debt relief system is known as a Statutory Moratorium.
What happens if there is no prospect of paying off debts?What happens if there is no prospect of paying off debts?
For some people, there is little or no chance of paying off debts, and so they may have to consider some form of personal insolvency.For some people, there is little or no chance of paying off debts, and so they may have to consider some form of personal insolvency.
This should only be done after seeking advice. There are different forms of insolvency which may be considered depending on your circumstances and where you live.This should only be done after seeking advice. There are different forms of insolvency which may be considered depending on your circumstances and where you live.
Bankruptcy: This is the most serious option, which involves an official receiver being appointed to sell off your assets to pay your debts. If you own a house or a car you may lose them.Bankruptcy: This is the most serious option, which involves an official receiver being appointed to sell off your assets to pay your debts. If you own a house or a car you may lose them.
The bankruptcy will affect your credit record for at least six years. But after one year all your debts will be written off. The procedure currently costs £680, but you can pay in instalments.The bankruptcy will affect your credit record for at least six years. But after one year all your debts will be written off. The procedure currently costs £680, but you can pay in instalments.
Individual Voluntary Arrangement: Under an IVA, an insolvency practitioner will help you strike a deal with your creditors, which allows you to pay off your debts over a fixed period - say five years. Once approved, all interest on unsecured debt is frozen.Individual Voluntary Arrangement: Under an IVA, an insolvency practitioner will help you strike a deal with your creditors, which allows you to pay off your debts over a fixed period - say five years. Once approved, all interest on unsecured debt is frozen.
There is less stigma with an IVA, and a greater chance of you keeping your home if you own one.There is less stigma with an IVA, and a greater chance of you keeping your home if you own one.
Debt Relief Order: This form of insolvency, introduced in 2009, is the easiest of all. Your debts must not exceed £30,000. If your application is accepted, some debts will be frozen for one year, then written off. A DRO costs £90.Debt Relief Order: This form of insolvency, introduced in 2009, is the easiest of all. Your debts must not exceed £30,000. If your application is accepted, some debts will be frozen for one year, then written off. A DRO costs £90.
Insolvency in Scotland: If you live in Scotland, bankruptcy is known legally as sequestration. However there are three alternatives: A Debt Arrangement Scheme, A Debt Management Plan, or a Trust Deed.Insolvency in Scotland: If you live in Scotland, bankruptcy is known legally as sequestration. However there are three alternatives: A Debt Arrangement Scheme, A Debt Management Plan, or a Trust Deed.
Related TopicsRelated Topics
MoneyMoney
Personal financePersonal finance
Personal debtPersonal debt
Cost of livingCost of living