Debt pay delay
Question
I have a £3,000 debt; I'm signed off work sick and will be for some time. My sole income is £57.76 per week. Can this debt be deferred to pay later? I have no assets and live in a family-owned, furnished house. Can the bailiffs come in and take goods that are not mine?
Answer
When it comes to debts you have an obligation to pay the monies owed, and if you default your payments your creditor has the right to try and get their money back. They can use a range of legal means, including using bailiffs to remove your personal belongings. However, it is possible to find a strategy for dealing with this debt in a way that can satisfy both you and your creditors.
Firstly, did you take out payment protection insurance? If so, does it cover illness and have you made a claim? If not, do so straight away - there is no guarantee that they will pay, but it's definitely worth a try. If not, do you have any other sickness insurance that will pay you a cash sum while you are ill? Again, if the answer is yes, make a claim as soon as possible.
If you have no insurance on your debt, the next step is to talk to the loan company and explain your problem. Ask for a payment holiday and a suspension of interest and charges until you return to work. This can sometimes work if you will return to full-time work in a couple of months.
If the loan is with your own bank, it's worth considering switching banks immediately. This is because if you have an overdraft or a loan with the bank they can take cash from your account to pay the overdraft and loan off before allowing you access to the money for living. They should leave an amount to live on, but this does not always happen.
If you decide to switch banks, you would probably be best to go for a basic bank account where you cannot run up an overdraft. When you switch banks the only things you should take with you are Direct Debits to utility companies, rent and so on. Make sure you tell the Job Centre and your Council of your new banking details.
Your bank may offer you a consolidation loan that will reduce you outgoings. In most cases this is very unwise as it can put you into greater debt in the long-term.
If you're still worried about dealing with this debt, there are several organisations you can talk to for further advice. Try your local Citizens Advice Bureau (CAB), National debtline or Consumer Credit Counselling Service (CCCS). It's also possible that your local council will have a debt advisor who can help.
Updated: 05/10/2007
Question answered by CAB
