Deal with your debts
By getting your finances in some sort of order you’re likely to feel a great weight lifted off your chest. This doesn’t mean miraculously clearing all debts within the month; it means setting goals and putting together a plan of how to tackle your money woes over a longer period.
Some good places to start
- Phone home. Much as you may want to cope by yourself, the first port of call should probably be your relations. If you ask for a loan rather than a handout and show willing to get your finances in order after this, they may help you out.
- If you can’t pay your rent, discuss the problems with your landlord/housing agency. Don’t ever just stop paying your landlord. If you are upfront about your cash flow problems – especially if they are short-term – they may be more understanding about extra time to pay.
- Prioritise all your outgoings. Make sure you have a roof over your head and food to eat, and then work out what else you can afford. For example, nights out or clothes. A debt charity, such as National Debtline, will help you prioritise your expenditure and get you back on track.
- Contact your creditors in writing. This may involve sending your creditors a proposed repayment scheme – one you feel you can afford. If they’re not happy with it and take you to court, don’t worry; the court will only order you to make repayments that you will be able to afford, anyway.
- If you are a student, apply for an Access payment. While this can take a while to come through, once they have accepted your claim you can tell your landlord, which will hopefully get them off your case for a while. Most universities also have an accommodation fund for those of you whose rent is higher than average. Ask your academic registry for more information.
- Find out if you are entitled to some form of housing benefit or Local Housing Allowance if you rent from a private landlord. However, this is not available if you live with a close relative or you are a full-time student (unless you are disabled or have children).
- Speak to your bank. If you are entitled to some of the above funds you could go to your bank with written confirmation and they may give you a temporary overdraft extension to cover you until they arrive. They’re more likely to be flexible if you’re upfront and honest.
Your credit file
While you should always pay your way with bills in a house-share situation, it’s important to realise that failure to pay will only affect you personally if the bill/bills are in your name.
If they are in your name, defaults and delays in payments with everything from council tax to credit cards will be noted on something known as your credit file. This is a report held, but not determined, by a number of credit reference agencies. When you apply for new credit lenders use the information held to assess how reliable you are as a payer.
That’s why it’s important to protect your credit file by making bill payments in full and on time. Failure to pay could affect further borrowing, which could be very frustrating at a later date if you are refused a mortgage to buy your first home, for example.
What you shouldn’t do
- Panic: Getting flustered and upset isn’t going to get the cash together, nor is pretending everything is OK. You need to stay calm and work out a plan of action. Remember, you can’t be evicted without a court order and that could take weeks to arrive.
- Expect friends or flatmates to bail you out: If you’re only a little behind, your mates may offer to help you out, but making a habit of this won’t go down well.
- StepChange offers free advice on your debt problems, basing it round what's right for you. 0800 138 1111
- The National Debt Helpline offers you free, confidential and independent advice on debt issues. 0808 808 4000
- Chat about this subject on our Discussion Boards.
- Need help but confused where to go locally? Download our StepFinder iPhone app to find local support services quickly.
Updated on 29-Sep-2015