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Debt difficulties can arise for a range of different reasons, and older people can get into debt due to factors beyond their control.
These factors include bereavement, relationship breakdown, ill health and retirement.
Many of these changes are likely to affect us in later years, and dealing with debt will therefore be an issue of great importance to many older people.
If you are struggling with debt, it can drastically impact on your ability to manage your money effectively, as well as negatively affecting your health and wellbeing.
Deal With Debt Immediately
It is essential that debt problems are dealt with quickly, because the longer they are left, the worse they will get.
It is important therefore to be aware that free, independent and non-judgemental advice is available if you have a debt problem. Contact Advice NI for your local debt advice provider.
Even if your debts have spiralled and you feel unable to address them, it is never too late to seek help.
"But I feel ashamed and embarrassed"
Don't. Many older people feel that there is a stigma attached to being in debt and are reluctant to get advice for this reason. However, people of all ages experience financial difficulties, often for reasons beyond their control. Although making the decision to get help can seem daunting, it is the first step to being in control of your finances.
As you begin to start to deal with your debts, you should visit our pages to do with budgeting and maximising your income, as setting a realistic income and expenditure budget is essential to enable you to see how much you have available to pay your creditors.
A debt adviser will be able to assist you with drawing up your budget and can also advise on ways you may be able to maximise your income. Once you have a clear income and expenditure recorded, the next steps can follow.
These pages will provide you with a simple approach to start dealing with your debts, and these are broadly the steps that a debt adviser will go through with you.
Dealing With Priority Debts
Priority debts are those where the consequences of non-payment are potentially more serious. They may involve the risk of losing your home, goods or services, or could result in enforcement action being taken against you via the courts.
Priority debts include the following:
- Rent and Mortgage arrears
- Arrears of rates payments
- Gas or electricity arrears
- Unpaid magistrates court fines
- Unpaid TV License fees
- Arrears on secured loans
- Arrears on a hire purchase agreement for essential goods
If you are in debt with any of the above, you should get advice without delay to avoid more serious consequences.
Most priority creditors will accept offers to repay your arrears at a rate you can afford, as long as the ongoing priority payments due to them (rent or mortgage instalments, for example) are maintained as well. However, your debt adviser can provide detailed advice and assistance negotiating with priority creditors as required.
Dealing With Other Debts
Money and debt advisers often refer to other debts as ‘non-priority’ debts.
This does not mean that they are unimportant or that they should be ignored. The phrase ‘non-priority’ simply refers to the fact that the most severe sanction available to a creditor pursuing the debt is to secure a county court judgement against you.
Information about court judgements can be found at NI Direct.
These debts are clearly still important and should also be given attention once arrangements are in place with any priority creditors.
Please note that if you are a homeowner, a court judgement can put your home at risk. It is therefore essential that homeowners deal with all of their debts as soon as possible.
Whatever your circumstances, if you have court judgements and are not currently paying them, you should seek advice from your local advice agency.
Non-priority debts can include any of the following, although it is not an exhaustive list:
- Credit cards
- Arrears on mobile phone, TV and internet contracts
- Payday lending
- Arrears on catalogue accounts
- Rent or mortgage arrears on a property you no longer reside in or have no further financial interest in
Once you have identified how much surplus income you have, and are repaying your priority creditors, it may be appropriate for offers of repayment to be made to these other creditors. A specialist debt adviser will be able to help you with this process, either by advising on making payments directly, or about entering into a Debt Management Plan.
Failure to address non-priority debts can negatively impact on your credit rating, or result in accounts being passed to debt collectors. These debt collectors may then send many threatening letters and disturb your privacy with repeated phone calls.
Ultimately it can result in County Court Judgements being registered against you. Again, a debt adviser can help you deal with concerns about your credit rating or with debt recovery action which debt collectors may be threatening you with.
Other Options Open to You
In many cases, making affordable repayments to creditors will be the right option to deal with a debt problem.
Even if you have very limited surplus income, with the help of debt advice and intelligent budgeting, you will find a manageable solution to your debts.
However, if your debts are significant, or you have little or no surplus income, more formal options for dealing with debts may be appropriate.
These options could involve declaring yourself insolvent, which is a legal process whereby you declare yourself unable to pay your debts out of your available income and assets.
The two available insolvency options, which could result in having your debts written off, are:
If you are considering either of these options, it is essential that you get expert, independent debt advice as the consequences of declaring yourself insolvent can be very serious, and in the case of bankruptcy, incur costly court fees.
If you have surplus income
For those who have significant surplus income, a different option may be appropriate. One of these is entering into what is known as an Individual Voluntary Arrangement (IVA).
An IVA is a legal agreement between you and your creditors to pay a certain amount to them each month. It can be an option for dealing with debt, particularly if you have significant surplus income, you have significant debt levels, and you wish to avoid insolvency to protect an asset you may have.
If you are considering an IVA, independent debt advice should always be obtained.
A less formal approach for those who have capital sums available, is to make offers of full and final settlement to your creditors. A debt adviser can advise in more detail on this approach.
Get the Right Advice
Even a brief online search will show very quickly that there is a wide range of agencies and companies offering debt advice and debt solutions.
Making sure that you get the best advice for your circumstances is crucial, and you should always make sure that the advice you get is free, independent and professional:
Many firms charge a fee for their services, but it is important to remember that free and independent advice is readily available to you.
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