In the small hours of the morning, worries about bills and debts can go round and round in your head:
- complicated ideas about how to juggle all the payments when there isn’t enough money;
- worries about your partner who doesn’t know how bad it is and how to stop your children being affected by your money shortage;
- panics about what “they” (debt collectors, a judge in court, bailiffs etc) can do to you, etc.
Not being able to sleep properly is a warning signal that problem debts are starting to take over your life and impact your health.
Here are some practical pointers for some common problems.
“I’m not sure how bad my debts are”
Living busy lives it’s easy to let your finances drift. But if bills and credit card statements arriving give you a sick feeling, then the sooner you act, the more options you will have.
Action plan:
- make a complete list of your debts, how much you owe and what the monthly payments are.
- if you think the monthly payments are affordable, read up about snowballing – that’s the fastest way to clear your debts and end up with a great credit score;
- if you could manage if only interest was frozen, look at whether a payment arrangement is right for you;
- if you can’t face talking to your creditors, call StepChange. They can arrange a debt management plan for you where interest is frozen, or discuss any better options.
If you aren’t sure if you can manage the payments, the best way to find out is to try not using your credit cards at all for a month. If you can, great! If you can’t, it’s a sign that every month your problems are getting larger.
“Another month, another budget crisis”
Is your current budget realistic? There is no point trying to live off so little that you keep failing. That’s like going on a crash diet – you can’t keep it up for months.
How have you been trying to budget so far? The two main approaches are:
- Piggy Banking – where you separate the money you need for your most important bills into “pots” so you can’t spend it on something else
- Tracking everything – this is a lot easier and less hard work with the new apps that can help you budget better.
If you have failed a lot with one of those approaches – try the other one!
You do have to accept that not every month will go smoothly. That doesn’t mean you are bad at budgeting and may as well give up.
“If I can’t get things sorted we will be homeless”
If you have rent arrears or mortgage arrears then you need debt advice as soon as possible. Call Shelter or go to your local Citizens Advice.
Don’t delay. Even if you think there is nothing you can do or a court case is coming up, there may be something that can help.
“I’ve had letters threatening bailiffs”
These may be bluffing, but if you have court papers or have got a CCJ don’t ignore them. It is almost always possible to avoid bailiffs coming even if you don’t have enough money to pay off a debt in full.
National Debtline is a good source of advice for everything to do with CCJs and court action.
“I just need a consolidation loan”
Making one payment a month sounds so much easier, but it can be hard to get a big enough loan if you have a lot of debt or a bad credit score.
If you haven’t already done this, find out your credit score. Then read up about consolidation loans and think if one will work in practice, or lead to bigger problems later. Expensive loans like guarantor loans are a trap, not a solution at all.
And look at the option of a debt management plan – it’s like a consolidation loan in that you only make one payment a month. But in ,amy ways it’s better as there is no interest and the payments can be changed, up or down, if your situation changes.
“The bills are just too high”
In recent years Citizens Advice has been helping twice as many people with household bill problems than consumer debts such as credit cards and loans. Everyone has to pay those everyday bills and they keep getting higher.
In 2021 and 2022, energy bills in particular look set to rocket.
Do you know which debts and bills are legally top priority?. Your council won’t phone you up and hassle you, but they are much faster to go to court and then send in bailiffs than loans, catalogues and credit cards.
If you are on benefits or a low income, talk to Citizens Advice about whether you can get help with the rent, council tax or pay less for water. And what your options are for rising gas and electric bills,
It’s not too early (or too late!) for debt advice
Sometimes people think for years that their problems aren’t serious enough to talk to a debt adviser about. Then they switch to thinking there is no point in debt advice because their situation is so bad…
They are wrong on both points! Debt advisers rather like seeing people with “early stage” debt problems – we can help you develop a plan that starts to cut your debts and improves your credit record. And even if there is no chance of ever repaying your debts, it matters that you get unbiased advice to choose between the different sorts of insolvency.
Read Where to get good debt advice to find out who to talk to – there are different recommendations depending on where you live, what sorts of debts you have and if you prefer phone or seeing someone.
None of the ones I suggest are aiming to make big fees by selling you a particular debt “solution”, they will give good, unbiased advice on your options and the pros and cons so you can choose. They are also friendly, non-judgemental and talk to you in confidence.
Options when you cant pay bills & debts
Plan v reality – budgeting problems
Worries about debt and credit ratings
David Lane says
I received confirmation on the 16th that my DMP is finally set up, think the Christmas period got in the way a bit. I’ve decided to try the pot approach of budgeting, having set up an account with Monzo. I’ll have to see how I get on, having been diagnosed with depression finally seem to be sleeping again.
Anony Mouse says
One thing I have noticed and I do not know if it is common or not and mainly effects credit cards.
As they all have a detailed budget sheet showing what is due do they are then aware what other non priority cards are worth etc, the ones who are “due” the least are in my case at least by far the most vocal in both frequency of letters and the general tone of them. The companies with higher dues seem quieter.
The sums in these “vocal” cases are very low three figures. What I cannot fathom is if:
This is just “the luck of the draw” and those companies policies mean they would do this anyway OR if they are concerned that some “external arrangement” (not a DRO but something to provide relief) were to be made they would forcwant if a better term suffer more as in receive a tiny sum if anything.
I could not really see anything relevant to work this one out. I suspect the former but there could be something to the latter too I guess.
Sara (Debt Camel) says
I am not sure wondering about why some creditors do somethings and others don’t is helpful You have to manage with what each one does. You can waster a lot of headspace going round in circles about things that don’t actually matter.
Lisa says
I was in a good job £30k salary – in 2016 I had a nervous breakdown and had to take voluntary redundancy
I was in therapy from 2016 until lockdown , still on medication today for a mental health condition . Have been in receipt of ESA and PIP since 2016 and my circumstances are not going to change in the near future.
I had debts totalling £45k to 7 creditors , bank loans , credit cards and catalogues . I have been paying the minimum £1 a month since 2016 and never missed a payment to date . I am very anxious that I will never be able to repay these debts after nearly 5 years and wondered if there is a way I can ask for these debts to be written off ?? How would I go about it ?? And would I be considered . It is not helping my mental health as I am constantly worrying I will never be able to pay. I am receiving offers from creditors that if I pay a % they will write the rest off but I cannot afford that . I just make the monthly payments as it is . Thank you 🙏
Sara (Debt Camel) says
Hi Lisa,
Making these token payments is, as you say, never going to repay the debts. So it’s good to see if you have other options now.
Are you buying or renting?
Lisa Nickson says
Renting from housing association , only asset is a car , no savings but really wanted to avoid bankruptcy was hoping a write off would be possible at this stage