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How am I going to pay all my debts and ongoing bills with no income?
Question
I have recently been made redundant and have no idea how I am going to pay my mortgage. I also have a £10,000 bank loan and a three-piece suite on hire purchase. How am I going to pay all these debts and ongoing bills with no income?
Answer
First check to see if your mortgage, hire purchase debt or loan are covered by payment protection insurance. If you think you are covered you should make a claim. If your claim is rejected ask for a full copy of the policy and seek advice.
An adviser can also help you identify which benefits you may be eligible for and help you make a claim.
Secondly, you will need to prepare to balance a reduced income. Some debts are more important to pay than others - these are known as priority debts. These are things like your mortgage, fuel, water, council tax and fines. If these are NOT paid, results can be eviction, imprisonment, bailiff action or disconnection.
The rule is to keep in contact with creditors and keep any income for these commitments rather than for any non-priority unsecured debts such as credit cards.
If your bank loan is secured, this means that your home could be repossessed if you fail to make payments. Help may be available through Income-based Jobseeker's Allowance or Income Support. Payment of these benefits is subject to a means test and other income affects any amount payable. In the long term you may be able to make interest only payments, or get a temporary suspension or reduction in payments - you should seek advice from your lender.
Finally, contact your Council to get help with paying your council tax; you should be eligible for council tax benefit.
To find more information and or advice on budgeting, dealing with debt and welfare benefits look in the Legal Facts and Information section and or the hereforadvice Directory or use the site search.
