Debt is when you owe someone money. The money factor isn’t the issue; everyone has debts such as a loan, mortgage, student loans, finances and credit cards. However, they can begin to be a problem if payments are missed and you don’t have enough money to make the minimum repayments as well as being able to afford to live. According to rcpsych health advice, one in two adults with debts has a mental health problem.
If your mental health is constantly fluctuating, then being in debt can cause a bad episode. You may feel tempted to ignore the situation and begin to feel afraid to open letters and answer the phone. You might also feel ashamed or scared to talk about it, however, there are things you can do.
What are priority debts?
Your priority debts are things that, if missed, can get you into legal trouble or result in you losing your home. These debts should be your main priority when considering which ones to repay first:
- Rent or mortgage
- Business rent
- Business rates
- Secured loans
- Council tax
- Electricity and gas
- Magistrates’ court fines
- Child support
- Hire purchase
- Income tax
- TV licence
What are non-priority debts?
Non-priority debts are payments that don’t directly affect your home and can be left until after your priority debts. Sometimes non-priority debts are the ones you can be more persistently chased for; however make sure you’re covering your priority debts first but be careful not to ignore non-priority debts altogether as they can result in higher fines or legal procedures if not paid. Non-priority debts include:
- Credit cards and store cards
- Student loans
- Default loans not secured against your home
- Money borrowed from friends and family
What can you do about it?
If you’ve accepted that you have a problem with debt there is lots you can do to help resolve the issue. Free, independent services such as the Citizen’s Advice and the National Debtline are available to give you advice on what you can do next.
The National Debtline has a self-help pack that includes information on:
- How to work out your budget
- How to decide which debts are the most important (deal with those first)
- How to work out offers of a payment
- How to manage court procedures
Top tips to get out of debt:
- Don’t ignore the debts
- Get independent advice from either the Citizen’s Advice or the National Debtline before you borrow any more money
- Sort out the most important debts first
- Keep the names of everyone you speak to from each company as well as your reference number
- Keep copies of all the letters you send and receive
- Be honest, don’t try and hide your debts from those trying to help you
- Let everyone you owe money to know you’re struggling – you might be able to come to some agreement
- Make sure any instalments you agree to are realistic