What rights do I have when I owe debt?

It’s important to remember that no matter your situation you always have rights when it comes to repaying debt.

The people and companies you owe money to, also known as creditors, have the right to chase to recover the debt owed.

Action can range from sending reminder letters and calling to sending bailiffs to your home or even take you to court.

However, while they are entitled to take action against you they must follow specific rules set out by the law.

Most creditors are bound by the Consumer Credit Act. This states what creditors can and can’t do when it comes to chasing payments.

If the debt you owe is covered by the Act, you’ll have more rights than you would if you owed an unsecured debt.

Your rights include:

• If you fall into arrears a regulated creditor must issue a default notice detailing the debt and give you time to repay the money you owe.
• Regulated creditors must also hold a licence and it’s a criminal offence for them to trade without one.
• You must receive regular statements and letters about outstanding debt
• Regulated debts can be investigated by the Financial Ombudsman Service if you complain to the company and are unhappy with the outcome.

If you owe money to unregulated debts you may not have all the same rights as covered in the Consumer Credit Act.

Your rights will be determined by the terms and conditions you agreed to when singing up to your agreement with the creditor.

Unregulated lenders still have legal requirements to meet and most are overseen by trade bodies or other ombudsman services which ensure customers are treated fairly.

If you’re worried about unregulated debt you should speak with a debt adviser as soon as possible.

How do I deal with debt on a low income?

Managing debt on a low income isn’t easy so it’s important to be aware of what support is available if you find yourself falling behind on your payment plan.

The first thing you should do is either review your budget or set one up if you don’t already have one in place.

It’s easy to think of a budget as a way of limiting your spending and finances but the reality is it often gives you more freedom than before.

You may choose to decide to set a weekly or monthly budget. No matter how you decide to manage the budget, your starting point should always be to take note of your income after tax.

From there you should list all of your outgoings – starting with priority debts first. Your priority debts are the most important debts that you owe as failure to stay on top of payments could put your home at risk. Examples of priority debts are mortgage or rent payments or council tax payments.

You divide your income between all the repayments, ensuring that you have money left to pay for essentials such as food, electricity and heating.

If you’re unable to manage essential payments after your budget, you should seek debt advice.

You can find free debt advice from a number of different organisations, including the Citizens Advice Bureaux and companies like Your Debt Expert.

A debt adviser will review your personal or financial information and help you find the best solution to deal with your debt problems.

Solutions can range from Debt Management Plans to Individual Voluntary Arrangements (IVAs) to help you with a personal action plan.

How do I find out who I owe money to?

If you’re juggling debt owed to a number of different companies, sometimes it can be tricky to stay on top of who you owe money to.

It’s vital to know not only know what bills you owe but also when each needs paid to avoid further debt problems.

One way to confirm what debt you owe is to search your credit file. Your credit file holds all the information about the debt you owe as well as any county court judgments held against you.

You can access your credit file online for free where you’ll find a company list as well as a note of any outstanding balances you have.

You can apply for a hard copy of your credit file but this can take longer and may cost you money.

You should also check any contact you’ve had from creditors, such as letters and emails, to ensure you have a record of any debts potentially missed from your credit file.

If you owe money to HMRC, the local authority or have received an overpayment in your benefits you’ll need to check with them directly.

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How do I check if I need to pay a debt?

In England, Wales and Northern Ireland if a creditor takes too long to take court action to recover certain debts, it will become enforceable.

The legal term for this is statute barred. Put simply it means the debt still exists but the law (statute) can be used to stop the creditor (bar) from obtaining a court order to recover it.

The limitation period for this is typically six years and applies to debts such as council tax arrears, credit card debt, personal loans, utility bills arrears and payday loans to name a few.

In Scotland the debt will become prescribed if a creditor takes too long to recoup it. Once a debt is prescribed, it no longer exists in the eyes of the law and there’s nothing the creditor can do to change it.

In Scotland the prescription payment is five years and applies to the same debts as above.

Can I write off debt I can't afford?

If you’re struggling to repay problem debt there are options available that allow you to write off a percentage of what you owe.

There are debt solutions in the UK that use government legislation to reduce monthly payments to an amount you can afford, freeze the interest rate and stop pressure to pay what you can’t.

To write off debt in England, Wales and Northern Ireland you may consider an Individual Voluntary Arrangement (IVA), while in Scotland you may consider a Protected Trust Deed.

You should be aware that while there are clear benefits to these debt solutions, they are also a form of insolvency. You should speak with a qualified debt adviser to find out if you meet eligibility criteria as well as how it could affect your finances overall.

It’s also important to be aware that these solutions only help if you’re unable to pay unsecure debts such as credit card debt. Debts such as mortgage debt or any other unsecured debts can’t be included.

Where can I find debt advice?

If you’re worried about managing your debt repayments and how your financial situation could impact your family it’s important to act quickly.

Your Debt Expert specialises in providing tailored debt help to people in need to help them find a solution best suited to their situation.

For more call us on 0800 082 8086.