SELF-HELP DEBT PACK
All the advisers at Citizens Advice Jersey are able to help you with debt and this will include things like:
- checking you are getting all the benefits and allowances you are entitled to;
getting a clear picture of your income and expenditure;
advising on priorities and negotiating payments;
advising on procedures and options available to you.
Some advisers specialise in debt work, but, in all cases, dealing with debts successfully, depends on:
- complete information about how many debts there are and who the money is owed to;
realistic assessments of your income and expenditure;
communication with creditors at each stage.
Trying to pretend some debts don't count or can be dealt with differently (or thinking they might 'go away' if you ignore them!) will only add to the problem in the long term, and makes things more complicated.
The links in the text below take you to "Internet" versions of the documents that you can print out and fill in. However, if you have Microsoft Word, Microsoft Excel or Open Office installed on your computer, each document contains links to Word and / or Excel versions, as appropriate, which can be down loaded and filled in, before printing. If you have a different word processor e.g Word Perfect, WordPro etc. versions in rich text format are also available to download.
Don't panic and don't be pressured to give one creditor priority over another.
Try to take things step by step.
So, dealing with debts can be divided into 4 main stages:-
Working out your income and expenditure
Working out exactly how much you owe, and to whom - and identifying priorities
Working out how much to offer to creditors
Obviously, this can involve a lot of calculations and writing letters, and if you cannot manage it yourself, we are here to help you.
However, it is important that you realise that by offering reduced payments to creditors, your credit rating my be adversely affected.
The starting point for dealing with all debts is to prepare a Financial Statement (see links to the sheets at the end of this page). Although it can be difficult to complete fully at first, it is very important to get it right. This means contacting all the creditors for full details of what is owing. You may want to use the Holding Letter to do this (see end of page).
Use the Financial Statement to work out your total weekly or monthly income and expenditure (different versions of the financial statement can be down loaded see bottom of the financial statement page).
Don't be tempted to cut back on basic things like food, clothes and heating
Do allow something for emergencies
Do make sure all the figures are either weekly or monthly (don't get them mixed up together!)
You can use it:
to see how much money is coming into your household
to see how much money is going out
to work out offers to creditors which you can afford
to plan your future spending.
We are here to help if you are having any problems with completing
the forms. The office is open Monday to Friday 10 am to 3 pm
FREEPHONE 0800 735 0249
The next stage depends on the amount left over when you have subtracted your expenditure from your income (ie " Money for Creditors"). (If there is nothing left, you may want to come back to us for advice).
Some debts are more important than others because the law gives different creditors different ways of getting their money back, so these should be dealt with first.
Your mortgage or rent must be your main priority - you don't want to lose the roof over your head
If you don't pay your rates bill, or Income Tax bill, you could end up in the Petty Debts Court or Royal Court
It is very important to make arrangements to settle these debts first
But don't panic with any of these debts, you will be given warning and providing you act quickly enough it is nearly always possible to stop these things happening. Start by contacting these creditors to tell them you have money problems, and if you can, pay something now even if it's only a few pounds.
If you feel you cannot manage alone, call in to see us for further help.
(NB - this section should NOT be used for your priority creditors)
After paying your expenses and making arrangements to pay priority creditors, there may be nothing left to pay other creditors.
If you have nothing left, say so.
Show your creditors by sending them your Financial Statement (different versions of the financial statement can be down loaded see bottom of the financial statement page)and an Offer letter to back this up.
If you have something left, the best way to divide it amongst your creditors is called 'pro-rata distribution'. This is how the court would do it and means all your creditors get a fair share.
If some creditors don't agree to your offer at first, don't give up. Write back to them and if one or more creditors have agreed to your offer tell them this.
If a creditor has already taken you to the Petty Debts Court you should include the weekly payment (wage arrest) under Priority Creditors.
If the creditor refuses to stop interest charges you can try to persuade him by saying the payments are conditional on this.
If any of this is confusing, or you would like some more guidance, call back to see us.
We can help you compose the letters, negotiate with creditors, do the calculations, etc.
FREEPHONE 0800 735 0249
This has explained the main procedures used to manage debts. If you feel you can manage with this information, you may not need further help. We do know it can be difficult though, so don't hesitate to ask us if you need more help, and we will do whatever we can.
The help we give also depends a lot on you doing what you can.
Once the full situation is explained to your creditors, with all debts and information relating to your circumstances being clear, you are half way there.
Creditors do not have to accept your offers of repayment or freeze interest but may still seek full repayment by issuing default notices, sending the account to a debt collection agency or in the last resort, taking legal action.
However, many creditors will accept reasonable offers of repayment and agree to lower if not always freeze interest charges when they are made aware of your full situation.
HOW TO DO A PRO-RATA DISTRIBUTION TO OTHER CREDITORS
Make sure you have all the information on exactly how much you owe each creditor.
Add up all the individual debts, to find out how much you owe in total.
Multiply each individual debt by your MONEY AVAILABLE FOR OTHER CREDITORS figure.
Divide that by the total amount owed to find to how much you should pay each creditor.
FOR EXAMPLE, IF YOU OWED:-
ABC Catalogue Co Ltd 268
Bank Trust & Savings Co 1,960
Flexible Bank Card Plc 825
Easicheck Financial Services 265
And you could afford to pay £20 per month in total, you would multiply each individual debt by your MONEY AVAILABLE FOR OTHER CREDITORS (£20), then divide that amount by the total amount you owe (£3,318).
ABC Catalogue Co Ltd
(£268 x 20 = 5,360) then (5,360 ÷ 3,318 = £1.50)
Bank Trust & Savings Co
(£1,960 x 20 = 39,200) then (39,200 ÷ 3,318 = £12)
Flexible Bank Card Plc
(£825 x 20 = 16,500) then (16,500 ÷ 3,318 = £5)
Easicheck Financial Services Ltd
(£265 x 20 = 5,300) then ( 5,300 ÷ 3,318 = £1.50)
If you haven't got one, borrow a calculator, and round the figures to the nearest 50p.
If you have problems with this or things are not working out, come back to us for further advice.
SAMPLE LETTERS AND FORMS TO ASSIST YOU
The two letters can be used as a guide for contacting your creditors. Use the appropriate letter and make any other changes you need to explain your situation to your creditors. Any unusually high expenditure figures in your Financial Statement should be explained in your letter to creditors.
These forms are to assist you, only the Financial Statement is sent to your creditors