Task 2: List your non-priority debts
Now let's look at how to deal with lower priority debts.
These are your unsecured, personal debts. An 'unsecured debt' is one you didn't 'secure' against an asset like your house or car.
They could be:
- Personal loans
- Credit cards
- Overdrafts
- Store cards
- Catalogue debts
- Payday loans
- Cancelled contracts. For example, old mobile phone debts
It is not quite as bad if you miss a payment to one of these.
To deal with them:
- Work out what is left in your budget after paying your priority debts
- Take out what you need for every day living
- Use what is left over to pay lower priority debts
Task 3: Deal with creditors getting in touch with you
When you miss payments, the people you owe start to get in touch more.
This is normal. It is just part of the debt collection process.
You may think the person who contacts you most is the most important. Do not be fooled. They are not.
Being contacted by letter or email
Ways creditors can write to you with demands to pay what you owe.
- Annual statement: They send these to all their customers at least once a year
- Reminder letters: They may ask you to make a payment or set up a payment plan
- Default notices: This lets you know you broke the credit agreement by not paying. A note gets added to your credit file
- Letters from debt collectors: They buy debts and chase payments. They may use words that sound scary. But, remember, they do not have any legal rights to collect the debt
- N1 County Court judgment (CCJ) claim forms: You get one of these if a creditor raises a CCJ against you.
A CCJ is a court order to make you pay what you owe.
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- They are light blue in colour and have a court crest in the top left corner
- There is a deadline to respond. Do not ignore this deadline
- If you cannot pay, you may be able to get the court to agree to a payment plan
- Find out more about CCJs
Always open and read letters from creditors as soon as you get them
You might not have to respond. But there could be important information on what happens next.
You cannot stop creditors writing to you. But, you can make a complaint if they do not treat you fairly.
Find out more about your rights.
Being contacted by phone and text
There are rules about this and things you can do:
- They cannot call you at ‘unreasonable’ times: That means calling you too late or too early
- There is no limit to the number of times they can call you: But complain if they call you too much, or at times you have said you cannot take a call
You can keep it brief and ask them to write to you: Say you would prefer a letter or email. Or have a short chat to say you are paying what you can afford. Tell them we are helping you. You can hang up if they upset you: You have the right to end call if they do not treat you well
You will not get into trouble for this
You can get them to remove your number: We have template letter to stop a creditor from calling (PDF) you can use
Remember to:
- Focus on paying priority debts
- Pay non-priority debts with what is left over
That is all for today. Now go and have a cup of tea. You have earned it.