Once you realise you're in debt you will probably feel as though you have lost control of your finances. However, there are some steps you can take to improve the situation.
1. Check your direct debits
Work out which are the most essential (your priority payments). The following are usually treated as priority payments:
- Rent
- Mortgage
- Council Tax
- Utility bills
- Magistrates' Court Fines
- Child Support
- Income Tax
- VAT
- Some Hire Purchase Agreements
Cancel any direct debits you can do without - remember to do this in writing and to keep a copy of the letter.
2. Change your bank account
If your wages, for example, are paid into a bank account and the account is overdrawn, you will probably find that the bank is using your money, as it comes in, to pay off the overdraft. The bank also has the right to transfer your money to pay off loans and credit cards etc held with that bank. The only certain way to stop this is to open a new current account with a bank you don't owe money to.
Sometimes it can be difficult to open a new account, particularly if you have a history of credit problems, however, most banks now offer a basic account without many credit checks.
A list of these accounts is available from the Financial Services Authority in their leaflet 'Basic bank accounts - your questions answered' (external website / pdf document).
You can also request a copy by phoning: 0845 606 1234.
If your bank says you cannot change your bank account you should get help from a Debt Adviser.
3. Entitled to benefits?
If you get low wages, are on a low income or are sick or disabled etc you might be entitled to welfare benefits such as:
- Working Tax Credit
- Child Tax Credit
- Housing Benefit
- Council Tax Benefit
- Disability Living Allowance
4. On the right tax code?
Ask your employer to check your tax code. You may be entitled to a refund.
5. Being paid below the minimum wage?
Your employer is not allowed to pay you less than the minimum wage. You can find out more about the National Minimum Wage (external website / pdf document) by reading the information on the website of Greater Manchester Pay and Employment Rights Advice Service.
6. Entitled to help from insurance?
Check to see whether you can claim on any Payment Protection Plans. These are a type of insurance policy that you may have taken out, usually against loans or mortgages. They may cover the cost of your payments if, for instance, your income has dropped because you can no longer work due to ill health or you have been made redundant.
Information on other websites
Adviceguide from Citizens Advice
Help with debt
National Debtline
Library of information about dealing with debt
Need more help? Live in Manchester? Send us an email
Information Provider:
Manchester Advice
Date Written:
4 April 2005
Date Reviewed:
10 November 2008
This information is for guidance only and is not an authoritative statement on the law. Please read our Terms and Conditions.
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