Debt & Depression

When you have problems with debt and arrears it can be incredibly easy to feel overwhelmed. Over time the weight of your debt can become too much for you to handle. Times like this can be especially trying for your mental health. Especially when you continually can’t keep making repayments and you begin to receive warning from civil enforcement agents.

On the other hand your mental health may be the reason you are struggling with debt. When you’re struggling in your day to day life it can be difficult to prioritise your finances. Dealing with money day to day becomes a challenge when your motivation, judgement and income are effected.

Debt alone can be incredibly destructive. It can ruin relationships, cause people to lose their homes and mean that families break down. Depression can have a similar effect. When the two are combined they are an incredibly damaging force.

At times like this it is imperative to remember that no debt problems are unsolvable. You have to remind yourself that however severe your debt there is always a path to a solution. When depression is holding you down it can be difficult to even think about tomorrow. One of the most crucial steps you can take is asking for help.

Trying to handle both your debt and depression by yourself inevitably makes both worse. It is very easy to get caught in to a debt-depression cycle. When debt mounts up, so does your stress and anxiety. Once you have established this it is vital that your reach out for the help and advice of others. Nobody expects you to deal with debt and depression alone, so you shouldn’t feel like you have to.

If you are feeling incredibly low then it’s important to deal with this first. Get in contact with your GP, consultant, psychiatrist, friend or family member. It can take a while before you feel prepared to tackle your debt. You shouldn’t make financial decisions when you are low or unwell. Always wait until you are feeling more able.

When you’re feeling a bit more prepared you should tackle your debt in stages. You should always stop borrowing first. You cannot solve existing debts it you keep adding to them. Secondly you should cut interest rates. Less interest means more money going towards your repayments. Thirdly you should pay off the highest debt rates first. Don’t split the amount your repaying on various debts, focus any extra cash on paying off the highest one first.

As you begin to work through your debt step by step you will begin to feel a weight is being lifted. It may not make your depression disappear, but it certainly will alleviate a large amount of the strain. As your finances become clearer and easier to deal with you can begin to focus your energy on getting on with life.

If you’re in debt then there is a real threat of becoming depressed and vice versa. You should not have to deal with your problems alone. If you are in council tax debt then get in touch with CTA. We can give you free, independent advice to help you work through your council tax debts. We will provide you with all the information you need to understand bailiff enforcement. CTA want to take the weight of anxiety off your shoulders. Get in contact with us today.

Payday Loans – Are there alternatives?

In terms of borrowing money in 2014, there is one phrase that crops up a lot more than most. You see them advertised on the TV, with fluffy elderly puppets or people who look like they could live down the road. The companies that offer them sponsor everything from football teams to double-decker buses. In this day and age, the payday loan is very much a sign of the times.

Borrowing money quickly may seem like the perfect solution to your existing financial problems, or even a way of sidestepping them before they even reach your door. With more and more people finding themselves in difficulty, the question that needs to be asked is whether there is an alternative.

The most high profile option available comes from an unlikely source. In a kneejerk reaction to the damage he saw payday loans causing across the country, Justin Welby – the Archbishop of Canterbury, no less – announced recently he intends to tackle them head on. Instead of lobbying against them, he recognised why they were being used. His proposal to drive community-run credit unions is one that has received a lot of plaudits from the national press.

Credit unions usually specialise in providing loans to people with low incomes that find themselves in financial difficulties. They are seen as an alternative to banks, loans and payday lenders and they cap the borrowing at 3 per cent a month. This low cap on borrowing means that they are usually quite selective as to who they lend to. Payday lenders, on the other hand, benefit from their huge interest rates and have very little need to give people’s credit history stringent checks.

Another alternative would be to choose a community development finance institution (CDFI). They are more commonly used by people or businesses that have difficulty attaining loans from the high street due to previous credit problems. Generally speaking, CDFIs offer much cheaper interest rates that payday lenders but have more leeway than credit unions. They do not have to abide by the same strict rules as unions and as a result will be prepared to take greater risks with who they lend money to. To ensure a more structured payment plan, 26 weeks is the shortest amount of time they will loan money for, but will offer anything as little as £100 for their customers.

The key to their success is raising awareness. Credit Unions and CDFIs struggle to compete with companies like Wonga, who boast marketing budgets in excess of £10m. It is this reason that payday lenders receive so much business. They are presented as the easy option and sometimes as the only option. This is not the case.

As with any loan, it is vital you are informed before you make a decision. With so many options, it is often difficult to know option suits you the best. If you feel in doubt about which route to take, contact CTA today for expert advice that is tailored to your needs.

Overpaid tax credits adding to UK debt problem

The scale of the debt problem in the UK has been brought into sharp focus recently. The number of people seeking help with the payment of their priority bills, such as council tax, has rocketed in recent months, despite claims that the nation is emerging from the recession that followed the global financial crisis in 2008.

Although we have been bombarded with news of the most common types of debt and the impact they are having, it is important that we do not overlook other sources of debt. One such source that is gaining prominence is overpaid tax credits. According to new figures from the Citizens Advice Bureau, Wales has been particularly affected by this in the last three years with a sharp increase in the number of people experiencing debt problems as a result of overpaid tax credits.

Working tax credits are payments made to supplement the earnings of lower paid workers, however this can result in overpayments if a recipient’s income rises unexpectedly or there is an error from HM Revenue and Customs (HMRC).

Research from the charity has revealed that more than 1,300 people in Wales contacted them over the issue in 2013/14, amid claims from HMRC that overpayments had reduced since 2012. The extent of the problem has left some unexpectedly owing thousands to the Inland Revenue. Not only can the amount owed be huge, but the fact that debtors often are given little, if any, notice that they are in arrears can be incredibly stressful.

One nurse from Pembrokeshire told BBC Wales of her horror at learning that she owed £10,000 dating back to 2009; having had no idea whatsoever that she was in any kind of debt.

“We received 10 letters in one day which indicated we had an overpayment for each year dating back five years for amounts between £2,000, £3,000 and £400 – totalling £10,000,” she said.

“They asked us to pay them back within a month. It was shocking, absolutely shocking. I didn’t know what to do.”

Data from Citizens Advice revealed that 918 people visited a bureau with an issue about debt relating to overpayment of tax credits in 2010/11, a figure which has increased by 45% to 1,329 in 2013/14. In England, there has been a 52% increase from 12,024 in 2010/11 to 18,273 in 2013/14.

Despite the disclosure of such alarming figures, people owing money because of overpaid tax credits should not automatically assume they have done something wrong and it is always worth getting advice because, in some cases, the debt can be successfully challenged.

HMRC has also sought to reassure those who have received tax credits, saying: “If an overpayment occurs as a result of HMRC’s error, claimants do not need to repay the overpaid money. An overpayment only needs to be repaid if a claimant has failed to meet their responsibilities in telling HMRC of any changes in circumstance.”

CTA is an independent provider of free advice for all kinds of debt problem. If you have received a letter indicating that you owe money relating to overpaid tax credits and would like help regarding what to do next, or you would like to speak to someone about another type of debt issue, contact CTA today.

Their Job, Your Rights – Lifting the lid on bailiffs

There are few positions in British society more controversial than the bailiff. Few are subject to as much scrutiny from the general public as those employed by the government to recoup debts.

For your situation to reach its desired outcome it is important that you are well aware of your rights. The bailiff should also be well aware of their responsibility. Without one side being aware of the other’s predicament the chances of resolution remain slim. And that is not ideal for anyone.

First of all, remember that they cannot force their way into your home. Pushing past you at the front door. Asking a child for entry. Climbing over a fence or a wall or in through a window. None are acceptable methods of entry. Such actions would be breaking the law. Before you grant them entry to your home, we recommend seeking advice first. Without knowing bailiff’s rights you will not being giving yourself a fair chance.

Their identification is also a crucial part of the process. Especially as some creditors will send people round to act on their behalf. Check their credentials when they arrive as you can use it to report any behaviour you think is aggressive or offensive. Especially if people who are in your care (children, the elderly or the disabled) are present.

A single father stated his disbelief when a bailiff entered his home and ‘started pricing up items in front of [his] son – including the computer console [his son] was playing on at the time’ and ‘wouldn’t budge, claiming [his son] had let him in’. This is an example of a bailiff exploiting his role, and is something you can act upon if you feel you have been mistreated.

It is also key to remember that, in most cases, the bailiffs themselves are just doing their job. While it is difficult to stomach, they are required to value and confiscate your possessions. They are not necessarily out to make life difficult for you. It is also important to remember what counts as an exempt item. Tools, books and computer systems that are integral to your work or education are off limits. Items that belong to your child (or another household member) are also exempt. Bailiffs will be aware of this, and will do their best to accommodate both parties.

Gareth, a former bailiff, is aware of the poor standards some bailiff companies have but claims your experience needn’t be a traumatic one. ‘[The company I worked for] were fair to debtors and always gave them time to pay, working as more of a negotiator between the client and the debtor’. These are tactics he believes that ‘work much better’. Just remember two things when faced with a visit – seek bailiff advice, and know your rights.

Low income debts – a new solution

There is little that is more ominous than bankruptcy. With the threat of it looming over your head, there seems little else to focus on. It clouds your thoughts, affecting your life at home and at work. It is a subject with a stigma attached to it, with people embarrassed about confronting the issue and avoiding seeking help.

It may seem like an obvious observation, but you would be surprised how much it costs to declare yourself bankrupt. It must be stressed that all other paths must be considered before you take the route of bankruptcy, as it is not a quick fix to your problems. While all is not lost should you do so, it will still take years of careful financial management to recover. This is where the new solution comes in.

Debt Recovery Orders, or DROs, are becoming increasingly popular across the country as many people find themselves struggling with various debts. A newspaper in Lincolnshire has highlighted the growing number of cases that are being reported in their community. The report can be seen as a microcosm of the entire country.

For just £90 many people have been able to sidestep their looming bankruptcy by purchasing a DRO. Seen very much as the last chance saloon for debtors, a DRO is a very quick solution to serious financial problems. As long as the debt does not exceed £15,000 and providing other stipulations are met – these will depend on the specific of your case – your creditors have to receive permission from the court if they want to contact you. Within a year, you could see your debt written off.

Authorities in Lincolnshire recorded ten DROs that were issued in just a month. The reason for this, they believe, is that bankruptcy is too expensive. A DRO can be attained for a much smaller fee and there are a lot fewer legal hoops you have to jump through in order for it to be actioned.

Introduced in 2009, it is surprising that they have not received much attention in the press. For people on low incomes who find themselves in difficult financial situations they are an ideal way to get back to a more secure position. Without any expendable income or any assets to gain funds from, the courts are able to issue a DRO which effectively exempts you from further action from the creditors.

With all forms of debt relief, however, there are other implications. A DRO will still have a detrimental effect on your credit rating. They must still be treated with caution and cannot be seen as an easy get out clause for smaller debts. However, if you are on a low income and feel threatened by bankruptcy then they are definitely worth considering. Our detailed guide on DROs will help you decide whether they are the right course of action to take. If you still have further questions, do not hesitate to contact CTA today for expert advice on all forms of financial difficulty.

Belongings and bailiffs

If you worried about bailiffs at your door it may be because you know that they can take your belongings. Obviously there are some rules and regulations about what bailiffs can and cannot take. Although it’s also important to know where they can take the belongings from and how you can get them back. It can be incredibly worrying thinking of people removing your items but it’s important you know the following facts to make sure you understand what is happening.

What can the bailiff take?

Bailiffs are entitled to take a number of things from your property as a form of debt repayment.

  • Any items which belong to you – This is anything can has been fully purchased and is solely owned by you. This will mainly be personal items of value.
  • Jointly owned items – These are usually items such as your car, television or computer
  • Items bought with personal loans – This includes any items that were bought for with credit cards, store card, bank loan or finance company loan
  • Any cash, cheques, bonds, stocks and shares – If you have any of these on your premises then the bailiff is entitled to take them.
  • Items that you are wearing or carrying – These are usually items such jewellery, items of clothing, gadgets such as your phone or watch.

What can’t the bailiff take?

  • Items which are necessary for you work, study, or education – Unless your debt is for unpaid business rates, in which case these items are not protected
  • Household equipment – This is anything that you need to serve your basic domestic needs
  • Anything belonging to a child – This includes mainly any toys your children may own
  • Anything you are paying for on hire – These usually include kitchen or technological equipment that are not rightfully yours
  • Any domestic pets or service animals – Any pets or animals you own are rightfully yours and cannot be taken by the bailiff
  • Food – This also comes under your basic domestic needs.
  • Any goods that are also your home – This is relevant if your home is a tent or a caravan.

How much should the bailiff take?

Once the bailiffs have arrived they will go through all of your belongings. They will then establish which things they will take to sell. They are entitles to either take them away, secure them, or ask you to sign a controlled goods agreement. This is where you promise not give away or dispose of the good they have repossessed.

The bailiffs will provide you with a list or inventory. This is so you are entirely aware everything that has been taken from you. A formal notice should also be given to you entitled ‘notice after entry’. This will explain in detail what the bailiff has done, what will happen next, and how you can stop the bailiff action from continuing.

The bailiffs should only take control of enough goods to cover the amount of money that you owe. This includes your debt plus the bailiffs fee and charges. If the bailiffs take something of a higher value than they need, then after the belonging is sold the remaining money will be returned to you.

How do I get my belongings back?

You do have some options when it comes getting your items back.

  • Pay off your debt – This is the quickest and simplest way of reclaiming your belongings. You usually will have seven days until the sale takes place. Remember you still have to pay the bailiff fees.
  • Come to an agreement with your creditors – You creditors might still agree to a payment plan or another way of paying back what you owe. They don’t have to co-operate, but it is worth having a conversation with them about your options.
  • Buy back the goods – You do have the right to buy the goods back yourself if you want. You must offer highest bid in auction.
  • If the bailiffs did not comply to regulation – Bailiffs do have a number of rules and regulations to uphold. If you feel these rules and regulations were not met when they took your belongings then you can make a complaint to the bailiff firm. If they are not co-operative you may take your argument to court and reclaim your items before they are sold.

Get out and stay out! Five easy tips for managing your money and staying out debt

These tips can help you whether you are in, or out of debt. Keeping on top of your money is relatively easy, once you know how. If you’ve been in sticky financial situations in the past then hopefully you would have learnt from your mistakes. Letting your finances get so bad that they rule your life is and incredibly stressful way to live. Follow these tips to eliminate financial stress in your life:

* Budget – Creating a budget should always be step one. You need to ask yourself the following questions: How much money do I earn? How much money do I owe? What money do I have set aside? Once you’ve established what money you have and how much is going out you can begin to create a picture of your finances. You can now decide how much you can afford to spend, and how much you need to repay one week at a time. Don’t panic yet if it looks like your outgoings are bigger than your incomings. There are steps you can take to tackle this problem in stages.

* Use cash – Once you’ve established your weekly budget then you should withdraw that amount in cash. It’s important to not keep it on you all at once, but from the cash you have you should be able to the budget for each day. You are less likely to overspend during the week if you can physically see your money in your wallet. The danger with cards is that you can very quickly lost track of how much you’ve spent.

* Cut bad habits – Bad habits are expensive. There’s no denying it. We can appreciate that cutting out bad habits is a challenge. We won’t sugar coat it, what is best for your money is to completely cut out smoking and drinking. You will all save money on health care if you do.

If you need to cut out habits slowly then set yourself targets each week. Start with ten cigarettes instead of twenty, one pint instead of two. We promise that you really will see the benefits from cutting out bad habits even on a weekly basis.

* Keep your receipts – Throughout the day collect all your receipts. Even if it’s just something small like food or drink. Don’t let them all pile up in your wallet either. Remember to take collect them at the end of the day and use a quick system to organise them. You don’t have to spend hours on this, just paper-clipping with a post-it note saying the day of the week will do.

* Analyse your spending – This is the part where you really have to commit a bit of time. Naturally, life is sometimes impossibly busy and you don’t even have time to sit down. Analysing your spending really is crucial to managing your money efficiently. If you don’t sit down and review everything you’ve spent, your bills and your repayments then they quickly get on top of you.

There are now so many tools you can use to help you analyse your money. You can download apps such as Pocket Money, HomeBudget and Account Tracker. This will give you an opportunity to start analysing your spending while you’re on the go.

As time goes by you will have a complete picture of your spending. You will think about financial decisions for longer and you won’t indulge in guilty spending as often.

When it comes to money, don’t sell yourself short. With a bit of practice you can be in command of your bank accounts, bills and repayments. If you let your finances be in command of you then you are on a single track to being stuck in debt.

Band Valuations – Is yours right?

If there’s one thing you need to be sure of when it comes to council tax, it’s that you’re in the right band. It’s not something that immediately springs to mind to verify, but it can make all the difference when it comes to saving yourself money.

So how common is it that houses find themselves being charged the incorrect amount? Almost half a million homes in the UK are believed to be wrongly categorised. If you have been affected, you can claim a backdated rebate as far back as 1993, as well as reducing your current outgoings. Many people have claimed to enjoy repayments worth thousands of pounds.

Due to changes made by Thatcher’s Conservatives in the early ‘90s, every home had to be reassessed by councils. Many slipped under the radar due to the size of the task. The help of estate agents and other housing authorities aided the process but it also meant that corners were cut. Detailed information was discarded in a rush to complete the process and as a result houses across the Britain were placed in the wrong band. After the overhaul, the majority of the public did not question the decision and some were left paying over the odds on their residence.

The process of checking if your band valuations are correct is simple. The easiest port of call is on your doorstep. Well, almost – your neighbour’s doorstep. In all likelihood your house will be in an identical band to your neighbours, so will give you a clear indication if you are paying over the odds. If you don’t get on with your neighbours or you feel it is too intrusive to ask, don’t worry. There are websites provided to check this depending on your location. England and Wales use the Valuation Office Agency (VOA) and Scotland uses the Scottish Assessors Association (SAA).

The size of the database may mean that – perhaps inevitably – some properties are missed off the list. Again, if this be the case you are still able to find out you band valuation relatively easily. As the new valuations came into place in 1991, by finding what the value of your home was then you are able to see if you are in the correct band. You can do this by visiting sites such as Rightmove and Zoopla as they offer free sales price information that should sufficiently backdate.

It’s crucial that both of the checks are carried out if you feel you are able to make a challenge. The last thing you want is the council to move your, and possibly your neighbour’s, band up rather than down. That wouldn’t make you the most popular person in the street.

Once you are confident you are eligible, contact the VOA or the SAA and they will direct you to the next stage of your claim. If you have collated all of your data but are

unsure whether you have a case to proceed, contact Council Tax Advisors for informed guidance regarding the appropriate course of action.

Court Summons – The best course of action

Moving into a property also means you have to pay council tax. If your outgoings start to outweigh your incomings, it is often the bill that gets swept under the rug. After your final warnings are sent through your letter box, the next course of action for the council to take is to summon you to court. It is this step that precedes the involvement of bailiff enforcement agencies, so it is extremely important you act accordingly to avoid things taking a turn for the worse.

These letters will firstly ask you to speak with an officer at the council. What this means is it gives you an opportunity to try and arrange a resolution. If you feel aggrieved in some way, the best way to enquire about this is to request a discussion with the Magistrates. This is perfectly within your rights, and generally speaking both the council offer and the Magistrates will be happy to oblige.

Improving your dialogue with the council is the best way of increasing the chances of an amicable resolution. For instance, a court summons adds a further £90 onto your pre-existing bill and if you believe that you should be entitled to exemption from this charge the council will always investigate your claim.

Another request you are allowed to make is to apply for an official review of your bill under the council tax reduction scheme. This is slightly more long winded. You will be required to write a letter to the council explaining why you believe you qualify for exemption. You will also have to detail your financial difficulties and explain why your circumstance warrants a review. Action is the most important thing when you receive these warnings rather than ignoring them. While it is not advisable to start making demands to the council you should always ask for a breakdown of your charges and ways that your case can be given further consideration.

Do not think that just because you have been issued a court summons you are a criminal. More often than not the council will try and work out the best way for both parties to resolve the dispute. This is especially the case when you request the involvement of Magistrates.

At Council Tax Advisors we have a team of consultants with a wealth of experience in this field. A court summons is not as serious as it seems, although if ignored it will develop into a much greater problem. The threat of bailiff involvement is a very serious one. Without giving the matter any attention you run the risk of your debt being passed on to bailiff enforcement agencies. With the right guidance, you will feel much more prepared when faced with these warnings. Contact Council Tax Advisors today for free advice on what will work best for you.

Council Tax – Removing the Stigma

Council Tax arrears are now the main reason that people are seeking debt advice. With rising living costs and no sign of an adequate pay increase to match them, council tax is the main cause for concern amongst the British public.

There have recently been reports of a 17 per cent increase of people who are experiencing difficulty meeting the payments for their council tax, and one in five of that number reported to be in arrears. This increase, since April 2013, has occurred as a result of an inadequate support system being put into place following the removal of the council tax benefit by the coalition last year. Over 75% of English local councils demand contributions from all working-age households. This is regardless of income or circumstance.

What this highlights more than anything is that the stigma attached to council tax debts is no longer what it was. With the number of people seeking advice increasing by the day, and with everyone in the country being hit by greater charges, people should no longer feel embarrassed if they need help.

A lot of politicians from all sides would have you believe that the majority of people that struggle to meet council tax payments are unemployed. Unfortunately for them, that is not the case. In the recent report, only 28% of those seeking advice were listed as unemployed. More than anything it shows the problem is now not exclusive to those on income support. It now stretches to a large section of Britain’s workforce, too. Council Tax Advisors offer help and advice to all those affected, whatever their situation.

Where council tax arrears differs from other types of common debt issues, such as unsecured or credit card loans, is that it stems from a payment compulsory to the whole population. While many people suffer from other financial issues – something to be expected in these difficult times – council tax bills are often the ones that edge people into debt. The threat of local councils may not seem as severe as private credit companies but the unfortunate truth is that their repercussions are just as damaging.

This new shift in debt support has seen traditional advice outlets become increasingly overworked. Here at Council Tax Advisors we specialise in exactly that. Our group of consultants are experts in all issues that can arise from council tax issues. Even if you aren’t in arrears or haven’t missed a payment, but want to know the best ways to equip yourself to avoid trouble in the future make sure you contact us today. If you have missed payments and feel like you could be losing control of your finances, please remember we are here to help.

As the new leading cause for financial difficulty, here at Council Tax Advisors we offer the best in experience, advice and action.

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