Finding it hard to keep control of your money is scary, especially if it has not happened to you before. As the financial landscape changes, belts tighten and there are fewer deals available, what can you do if you are struggling to make ends meet?
What to do if you cannot pay...
Your mortgage...
City watchdog the Financial Services Authority says it fears more than a million families are in danger of losing their homes in the next 18 months as big mortgages and other debts become unmanageable, particularly as fixed-rate mortgage deals end. Keeping up regular mortgage payments should be your priority before other debts.
If you do find it hard to make the payments, it is never too early or too late to contact your mortgage lender. If the local office is unhelpful, contact their head office and try to reach an agreement with them. If you have not paid the mortgage for a number of months, it's still not too late to talk to your lender. It's crucial to start paying what you can, even if you can't afford the full monthly payment.
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Mortgage lenders must deal fairly with borrowers and help customers in arrears by setting up a payment plan which is practical in terms of your circumstances and which covers the rest of the term of your mortgage, where appropriate. They are not allowed to put pressure on you with too many telephone calls and letters but you can make the situation work as smoothly as possible by keeping in touch with them and responding to any questions they have promptly.
If you think you are being treated unfairly by a lender, you can complain to The Financial Ombudsman Service.
Remember, you cannot be evicted from your home without a court order. If your situation has become so overwhelming that you want to just hand the keys of your house back to the mortgage lender then seek professional advice before you do anything. The National Debtline can help: call 0808 808 4000.
Your rent...
If you are a tenant and have fallen behind on your rent then start by checking what sort of tenancy agreement you have. If you have an "assured shorthold tenancy" then it much easier for your landlord to evict you from your home. If you are not sure what sort of tenancy agreement you have, ask experts at the National Debtline to help you.
Contact your landlord immediately. He or she is far more likely to want to help if you get in touch promptly rather than wait until things get worse. Get a breakdown of your rent account and make sure that all the payments you have made have been recorded and the amount of any arrears is accurate. Work out how much of the arrears you can afford to repay each month. Be realistic and pay only what you can really afford. You cannot be evicted without a court order. If your landlord tries to evict you without going to court, harasses you or threatens you with bailiffs, they may be acting illegally.
Your council tax...
Most councils usually expect payment in 10 monthly instalments but if you find that you are struggling, don't just stop paying but pay what you can afford. Contact the council and explain your situation and ask them to accept lower payments from you for a period of time. Bear in mind that if you don't stick the new payment arrangement, the council may go to court to recover what you owe. You may qualify for a discount or Council Tax benefit - ask your council for details.
Your gas and electricity bills...
The companies providing your gas and electricity can simply cut off your supplies within a few weeks of non-payment. They don't need to go to court to do it. This means it is crucial to contact them as soon as you think you will have trouble paying their bill. Work out what you can afford to pay - this should cover the cost of the fuel you are using and part of any arrears you owe.
All fuel companies should agree, under their code of practice, to accept manageable repayments if you are struggling financially. Advisers at National Debtline recommend that you keep paying what you can afford towards the fuel you are using, even if you the company has not yet agreed to a payment arrangement. If you do not get an agreement from the first person you speak to at the supplier, ask to speak to someone more senior until you do get help.
It is important to check that your bills are based on meter readings and not estimates, which may make them higher than they need to be. If in doubt, ask the company to visit to take a meter reading. The fuel company may ask you to have a pre-payment meter installed as a way forward.
Make sure you don't pay too much for gas and electricity
Your water bill...
Since the law changed in 1999, water companies can no longer disconnect your supply if you are in arrears. If your water company is threatening to disconnect you, complain to Ofwat. Contact your water company and ask for a repayment arrangement. If you do not get an agreement from the first person you speak to at the supplier, you should ask to speak to someone more senior until you do get help.
Your credit debts including cards, loans and catalogues...
If your creditor refuses smaller payments don't panic and don't give up. National Debtline recommends that you start paying the amount you have offered anyway as a gesture of goodwill and then write to the creditor again to ask them to reconsider. Explain that your offer is reasonable and all you can afford to pay. If some creditors have accepted your payment arrangement then tell other creditors about this.
National Debtline can provide further advice if these steps do not work. Ask the creditor to stop charging you any more interest. They may agree to this for a limited period then start charging interest again. Ask them to waive any late payment charges, too. Once they agree, double-check your statements when they arrive to make sure that interest is not being charged again.
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