Self help debt pack

Visit Amazon's Haytham Al Fiqi Page http://amzn.to/1Uaf9Mr

1

Self Help

Debt Pack

http://amzn.to/1Uaf9Mr


2

According to The National Union of Students “Money worries are the

greatest cause of angst for students during their time at University.” It is easy to spend money quickly, but if you get into debt it’s usually

much harder to pay it off. This self help debt pack will help you deal with your debt and remove the pressures of being in debt by providing

you with basic advice and simple guidelines on how to deal with money problems.

As a student on a limited income you have to be very careful with your

money. The last thing you want is to find yourself with unmanageable

debts and carry over a bad credit rating into your future working life. But if you do get into debt, it is very important that you do not panic

and that you do something about it. Ignoring debt will not make it go away.

With careful budgeting, you can avoid getting into debt or limit your

debt by planning your spending so that you know your incomings, outgoings and how much you have left to play with. It is better to do

this at the beginning of each academic year or each term before you get your funding. The pattern of student financial support payments,

termly rather than monthly, presents its own challenges but with careful planning it is manageable. To help you budget a personal

budget sheet is available with this pack. If you want help with budgeting please get in contact with the Student Money Adviser in

Student Services on 01248 383637 or e-mail [email protected]

Before you start tackling your debt problem here are some guidelines

you should follow:

Don’t ignore the problem. It won’t go away and the longer you leave it the worse it will get.

Don’t borrow more money to repay your debt. Think of ways you can earn more money or increase your income instead.

Check that you are claiming all the financial support you are entitled to, whether Student Financial Support, Benefits or Tax

Credits. For further information contact the Student Money Adviser. Get in contact with your creditors straight away and explain your

difficulties. Go and see them or phone or write to them.


mailto:[email protected]


3

Use this pack to work out a Personal Budget. Make sure you show it

or send it to all of your creditors when you tell them about your difficulties.

Make sure you tackle your priority debts first. Use this pack to help work out a reasonable offer to repay the

money owed. Don’t worry if it appears small, if that is all you can afford. Creditors prefer you to pay a small amount regularly than

make an offer you can’t afford. Contact everyone you owe money to. If you make arrangements to

pay some creditors but not others, you could run into difficulties again.

If the first person you speak to is unhelpful, ask to speak to somebody more senior who may be able to agree to what you want.

Don’t give up trying to reach an agreement even if creditors are difficult.

Step 1 Working out your income The first step is to list your income. Fill out the first box on the

Personal Budget Sheet. Remember to fill in your income in either weekly or monthly figures – do not mix the two. Although your student

financial support arrangements are paid termly, you can work out a monthly or weekly figure by dividing the amount of loan and grants

you get for the term with the number of weeks/months in the term. You will need to include the income of your partner if you live

together.

To find out if you’re claiming all the financial support you are entitled to contact the Student Money Adviser in Student Services on 01248

383637 [email protected]

If you think that you could increase your income by gaining part-time

employment, visit the University JobMart for information about employments in the local area. Further information can be found at the

end of this pack.

Step 2 Working out your outgoings Work out how much money you have to spend each week/month on

basic expenditure – at this stage do not include any debts or arrears or any credit payments. Remember to only include your basic

expenditure. At this stage you might see that there are areas or




4

expenses you can cut down on. Again remember to fill this in either

monthly or weekly figures, not both.

Remember to be realistic. Remember to plan ahead for example if you live in a shared student house and you haven’t received a fuel bill yet,

get in contact with your landlord or your fuel supplier to get an estimate of how much your fuel will be. By doing things like this you

won’t get caught out with an unexpected bill.

If you pay things monthly and want to get a weekly figure multiply your figure by 12 and divide by 52. Or if you pay weekly and want a

monthly figure multiply your figure by 52 and divide by 12.

Special note about housekeeping: this should include food, toiletries, cleaning materials, newspapers etc and a small amount for

entertainment and miscellaneous expenditure. The National Debt Line

gives a rough guide: Single person £35 - £45 per week

Couple £60 - £75 per week Each Child £20 - £35 per week

Step 3 Money left over for creditors This is calculated by subtracting your total outgoings from your total income. If your income is more than your outgoings, you have an

amount of money to pay creditors on the personal budget. If you have worked out your personal budget weekly you will need to convert it to

monthly by multiplying your “money for creditors” by 52 and divide by 12.

Are your outgoings more than your income? If this is the case you should:

Check with the Student Money Adviser to see if you are entitled to any extra financial support for example any benefits or the

Hardship Fund. See if you can cut down on any of your outgoings, but try not to

cut down on basics like food, gas, electricity and course related costs

Are there any possibilities to increase your income such as gaining part-time employment?

If your outgoings are still more than your income after doing these

things you will need to seek professional advice from a professional agency. A list of contact details are included in the back of this pack.



5

Step 4 Dealing with your Priority Debts

You will need to make a list of all your debts. Collect all the paper work

you have for all your debts and divide them into two categories, priority

and non priority debts. Your priority debts will need to be tackled before the non priority debts.

What are Priority Debts?

It is difficult to give a comprehensive list of these debts because

circumstances will vary from one person to the next. However, the law gives different creditors different ways of getting their money. Priority

debts are debts owed to creditors who can take the strongest legal actions against you if you do not pay. It’s not the size of the debt that

makes it a priority but what the creditors can do to recover the money. Child Poverty Action Group defines priority debts as: “where non

payment would give the creditor the right to deprive the debtor of his/her home, liberty or essential goods and services.” Using this

definition these are some examples of priority debts:

Rent arrears: Rent arrears can lead to possession action by the

landlord and homelessness. Mortgage arrears: Mortgage arrears can lead to the lender

recovering the money borrowed by repossessing the property and selling it.

Gas and electricity charges: Being in arrears of Gas and Electricity charges could lead to disconnection.

Council Tax arrears: non payment of council tax could ultimately lead to imprisonment

As a student in Higher Education, your tuition fees and other

debts to the Institution should also be treated as a priority debt. If you do not pay your University debts you may be excluded

from your course, refused progression onto subsequent years of your

course or your final degree may be withheld.

Other examples of priority debts: Fines, maintenance and compensation orders

Tax and VAT



6

Hire Purchase/ Conditional Sale

National Insurance contributions

If you have any of these debts, you must deal with them before you offer to repay any of your non-priority debts.

Using the Personal Budget Sheet list the balance owed to each of your

priority debts and offer a monthly repayment you can afford. There are no hard and fast rules about calculating payments to priority creditors.

The usual opinion is to pay the normal payments plus something for the arrears. This will depend on your circumstances and how close the

creditor is to taking the ultimate sanction available.

Step 5 What’s left after paying your priority debts? Once you have calculated an offer of repayment to your priority

creditors you will be able to calculate how much money you have left for your non priority debts.

Step 6 Non priority debts Non priority creditors can not take the harsh legal action against you

as priority creditors can. You cannot be imprisoned for not paying non-priority debt. You are unlikely to lose your home or your essential

goods. However, if you make no offers to pay, without explaining why, the creditors will take you to court. If you still fail to pay when the

court has ordered it, the creditors can take further action – for example, they can get another court order allowing them to send

bailiffs in.

Examples of non-priority debts:

Credit Cards and Store Cards Bank overdrafts

Unsecured loans Money borrowed from friends and family

Benefit overpayment Catalogue arrears

Although these are non priority debts they should not be ignored. The

most common form of student debt is the overdraft. Don’t be fooled in thinking that as a student you have a “right” to an interest free

overdraft. If the bank is unhappy with the way you conduct your account, for example if you regularly go over your agreed overdraft



7

limit, they can call the debt in at any time. They could close your

account just after you receive your student loan instalment which means you would be without money until your next instalment. That’s

why it’s very important that you inform your creditors as early as possible if you get into financial difficulties.

If you have any money left after Step 4 the best way to calculate

repayments to non priority creditors is through pro rata distribution. This is how the court does it and it means that all your creditors get a

fair share of the money available.

You will most probably need a calculator to work your repayments offer in this way.

The first thing you will need to do is get in contact with all of your non

priority creditors to find out exactly how much you owe them. List

these in Step 6 on your Personal Budget Sheet. Make sure you write down all of your non priority debts. You will need to add up each

individual debt to find out how much you owe in total. Put this figure down in the box in Step 6.

The formula for working a pro rata distribution is:

Money available to non priority debts x Individual debt

Total non priority debt

For example Susan is £2000 overdrawn and the bank is asking for the money back, she has a Credit Card with a balance of £550 and a Store

Card with a balance of £435. Her total non priority debt comes to £2985. Her total money available for non priority debt is £35.

Overdraft = £35 x £2000 = £23.45 £2985

Credit Card = £35 x £550 = £6.45

£2985

Store Card = £35 x £435 = £5.10 £2985

Total repayments offered = £35



8

Don’t worry if your offers look very small. Your creditors would rather

you pay a small amount regularly than make promises you can’t keep to.

Sample letters in the back of this pack can help you negotiate with

your creditors. Make sure you get in contact will all your creditors and sent your Personal Budget Sheet to all of them. It can be a long

process, waiting for response from creditors. While you are waiting for a response from them DO NOT stop repaying them. Pay the amount

you are offering regularly to show that you are trying.

Not all debt problems are straight forward to deal with. Possibly you won’t have any money left over to offer to repay regularly. You might

have to offer token payments i.e. one off payments until your situation improves or offer no payments for a specific time. You can use the

sample letters to help.

If your circumstances change let the creditors know as soon as

possible. This could mean going through the whole process again, but it’s very important you keep them informed of your situation.

Dealing with Callers

If your creditors do not accept your proposal for a reduced payment,

they have other courses of action open to them. Do not be intimidated or bullied into agreeing to pay more than you can reasonably afford.

Some companies will make phone calls, which can be quite distressing. Stick to your guns and inform them that you will only deal with them

in writing. If they send representatives to your home, you do not have to speak to them nor do they have a right of entry into your

home. If they persist, you can pursue an action against them for

Harassment under the Administration of Justice Act. If you have asked them to leave and they refuse, they are trespassing and you can

call the police.

Dealing with a Summons

If you have offered a reasonable repayment plan it is unlikely that your creditor will resort to issuing a summons but if you are served

with one – don’t panic. You must not ignore it and you may be asked to go to a hearing. You should take this opportunity to put your side

across to the Judge and present to the court, your offer letter and a copy of your personal budget sheet. If your offer was reasonable and

all you could afford, it is likely that the Judge will make an order for



9

payment in line with your offer. The Judge could also order a payment

lower than your offer.

Dealing with Bailiffs

A visit from the Bailiff can be quite alarming. These enforcement officers do not have a right to force entry into your home (unless you

owe money for a fine or community charge). Do not invite them into your property and do not sign anything. They may ask you

to sign a ‘walking possession order’ which gives them the right to return at a later date when they can force entry. The best way to deal

with the situation is to be polite but firm. Tell them that you will make an offer of payment to them and, if they won’t accept, that they will

have to leave. Generally, they will be happy to come to an arrangement with you but if you can’t make an offer, they will have to

report this back to the creditor, who will consider further enforcement

action. In this situation, always try to make an offer of payment even if it is only a few pounds a month but do not be tempted to make

promises that you can’t keep, as you will find yourself in exactly the same situation in a few months time.

Credit Rating

Financial bodies share information about their customers with credit reference agencies. When you apply for credit, for example a bank

account, credit card or loan, the lender will check your record with these agencies. Your credit history is not just your financial history; it

also includes public records such as electoral roll information, County Court Judgements (CCJ’s) in your name plus files for bankruptcy. Your

credit record will also show whether or not you are keeping up with repayments and if you fall into debt. This information is kept on your

file for six years. Bad credit rating could prevent you from getting credit, such as a car loan or a mortgage.

The information kept on file will usually relate to you and members of

your immediate family who live at the same address. This means that people who lived there previous or who are not related to you should

not affect your credit rating. You can ask the credit reference agency

for a “disassociation” to be put on your file so that other people’s details do not show up.

You can find out what information an agency holds about you by

requesting a copy of your file and enclosing £2. If the information is incorrect, you have the right to request that it’s changed. The three



10

main Credit Reference agencies are Experian Limited, Equifax plc and

Callcredit plc. The information held by these agencies can differ so it may be worth checking with them all. The addresses are shown below:

Experian Limited Equifax plc

Consumer Help Service Credit File Advice Centre PO Box 9000 PO Box 1140

Nottingham Bradford NG80 7WF BD1 5US

0870 241 6212 0870 010 0583

www.experian.co.uk www.equifax.co.uk

Callcredit plc PO Box 491

Leeds LS3 1WZ

0870 060 1414

www.callcredit.co.uk

Further information Student Money Adviser

Money Support Unit Student Services

3rd Floor Students’ Union Building UWB

01248 383637 / 383566 [email protected]

http://www.bangor.ac.uk/ar/main/ssc/money.htm

Students’ Union Advice Centre 2nd floor Students’ Union Building

UWB

01248 388015 [email protected]

www.undeb.bangor.ac.uk


http://www.experian.co.uk/

http://www.equifax.co.uk/

http://www.callcredit.co.uk/


http://www.bangor.ac.uk/ar/main/ssc/money.htm


http://www.undeb.bangor.ac.uk/


11

JobMart 1st floor Students’ Union Building

UWB 01248 388200

[email protected]

Gwynedd and South Anglesey Citizens Advice Bureaux

0870 750 2350 www.citizensadvice.org.uk

National Debt Line (free phone)

0808 808 4000 www.nationaldebtline.co.uk

This pack was created using information from the following sources:

www.nationaldebtline.co.uk www.citizensadvice.org.uk

www.nusonline.co.uk www.adviceguide.org.uk

Child Poverty Action Group,(2004) Debt Advice Handbook 6th ed



http://www.citizensadvice.org.uk/

http://www.nationaldebtline.co.uk/

http://www.nationaldebtline.co.uk/

http://www.citizensadvice.org.uk/

http://www.nusonline.co.uk/

http://www.adviceguide.org.uk/


12



13

PERSONAL BUDGET SHEET Name:

Address:

STEP 1 INCOME Student Loan £

Student Grants £

Parental Contribution £

Wages £

Partner’s wages £

Benefits £

Tax Credits £

Other £

Total Income £ Monthly/Weekly

STEP 2 OUTGOINGS Mortgage £

Rent £

Water rates £

Gas £

Electricity £

Council Tax £

Content/Buildings Insurance £

Other fuel £

Housekeeping £

TV Licence £

Travelling expenses £

Clothing £

Laundry £

Telephone/mobile phone £

Childcare Costs £

Tuition Fees £

Course related costs £

Other 1 £

2 £

3 £

Total Outgoings £ Monthly/Weekly

STEP 3 Total Income £

Take away

Total Outgoings £

Money for creditors £

Monthly conversion £

(Multiply by 52 divide by 12)

STEP 4 PRIORITY DEBTS Monthly Balance Owed Offer of repayments

Mortgage arrears £ £

Rent arrears £ £

Council Tax £ £

Gas £ £

Electricity £ £

Other Fuel £ £

Tuition Fees £ £

Mag Court Fines £ £

Maintenance £ £

HP arrears £ £

Other £ £

Total Priority Debts Repayments

£

STEP 5 Money for Creditors £ Take away

Total Priority Debts

repayments £

Money for non priority Debts

£

STEP 6 NON PRIORITY DEBTS Monthly Creditor Balance Owed Offer of repayment 1 £ £

2 £ £

3 £ £

4 £ £

5 £ £

6 £ £

7 £ £

8 £ £

Total Owed £

Total monthly repayment £

This is an accurate record of my financial position

Date:

Signed:



14

Use this example letter if you are making pro rata offers to your creditors

Creditors name and address Your address Date

Dear Sir/Madam,

Account NO ______________________________________________

Since making the above agreement with you, my circumstances have

changed. I cannot now afford the agreed monthly payments because (e.g. I am a full-time student and I have been unable to secure

employment). I enclose a Personal Budget sheet that shows my total income from all sources, and my total outgoings. As you can see I

have only £________ per month left for my creditors.

The offers I have made to my creditors have been worked out on a pro

rata basis, and I have written to all my creditors asking them to accept reduced payments.

In view of my circumstances, please accept a reduced offer of

£_____per month. If interest or other charges are being added to the account I would be grateful if you would freeze these so that all

payments made will reduce what I owe you.

Should my circumstances improve I will contact you again.

I would be grateful if you would send a (paying in book) (standing order form) to make it easier to pay you. (choose)

Thank you for your assistance. I look forward to hearing from you as soon as possible.

Yours faithfully,

Under signature – your name in printed capitals.



15

Use this example letter if you are making no offer of payment

or token payments

Creditor’s name and address Your address Date

Dear Sir/Madam,

Account No. _______________________________________

Since making the above agreement with you, my circumstances have changed.

I cannot now afford the agreed monthly payments because (e.g. I am

a full-time student and I have been unable to secure part-time employment).

I enclose a Personal Budget sheet that shows my total income from all sources, and the total expenditure of my household. As you can see I

have no money left to make offers of payment to my creditors.

In view of my circumstances, would you please accept (no payments at present) (a token offer of £1.00 per month) to be reviewed in six

months. If interest or other charges are being added to the account I would be grateful if you would freeze these so my debt does not

increase.

Should my circumstances improve I will contact you again.

I would be grateful if you would send a (paying-in book) (standing order form) to make it easier to pay you. (only include this if offering

a token payment and you choose which one)

Thank you for your assistance. I look forward to hearing from you as

soon as possible.

Yours faithfully,

Under signature – your name in printed capitals
