If in debt, follow these 5 steps
The feeling of owing money is never a pleasant one. Whether it’s cash lent from a friend, a bank loan or an overdue bill, it is easy for these outstanding payments to mount and take on a snowball effect. When this happens it can seem easier to bury your head in the sand than to tackle your debt head on, however the latter is always by far the better option. No debt problems are unsolvable, although it may sometimes feel this way. We’ve put together five key steps to follow if you find yourself in this unfortunate situation.
- Assess how bad your debts are. Size isn’t everything. It’s an age old saying for a reason and what really matters is your debt in proportion to your inability to repay. Debt crisis is defined as having non-mortgage debts bigger than a year’s salary after tax. This would be dealt with differently to non-debt crisis.
- Act quickly. There is always a solution. It may not be quick or easy but it will be a lot less painful if you act immediately. Ignoring your debts in the hope they will eventually disappear will firstly be ineffectual, secondly will see you accumulate more debt, and thirdly will do very little to endear you to your debtor, should there be any possibility of negotiation.
- Prioritise your debts. Whilst you should never simply ignore any debt, it can feel overwhelming if you have several different outstanding payments. In this situation it makes sense to prioritise your debts. Council tax is one you should prioritise, especially considering your local council or government may sometimes be able to help you with other debts.
- Check the validity of your debt. Make sure that the payments you are being asked to make are fair and legitimate. It may be that you have been miss-sold insurance for example. When it comes to Council Tax it’s also worth checking to see if you are eligible for a discount, for example a disability reduction. It is also estimated that up to 400,000 homes in England and Scotland are in the wrong council tax band, so it’s worth checking this too to see if you can reduce your bill.
- Ask for help. At Council Tax Advisors we are here to help people in council tax arrears, whether you need advice, information or simply just reassurance from someone experienced in the industry. Not only can we help you work out what to do next, we can also negotiate with your local council on your behalf. It may be that we can improve the terms of your payments.