Debt

Seek Advice

There are many organisations who can provide free, confidential help and advice for people struggling with debt including:

• Step Change
• National Debtline
• The Citizens Advice Bureau

Money Force

MoneyForce is the home of money guidance for UK Service personnel and their families. Make sure your money stays as MoneyFit as you by taking control of it in every aspect of your career.

Priority Debts

It can be difficult to know which debts to pay back first. Choosing the right debts to pay back first, can help you keep your home and keep the heating on.

They might not be the biggest, or even the ones with the highest interest rates. However if you don't pay them you could:

• Lose your home
• Become bankrupt
• Have your gas or electricity cut off
• Receive a Court Summons

If you cannot pay all your debts seek advice. The following are priority debts:

• Rent, mortgage or loans secured against your home
• Income Tax, National Insurance and VAT
• Council Tax
• Gas and electricity bills
• Child maintenance
• TV licence
• Hire/purchase agreements, if what you are buying with them is essential
• Court Fines

Once you've worked out your priority debts, write them all down so you know how much you owe to each organisation.

Non Priority Debts

Non priority debts also need paying. You should try to set up minimum payments on all of them, followed by paying off the one with the highest rate of interest.

If you're paying high interest rates, you may want to shop around to see if you can move the debt to a lower interest rate. For more information visit The Money and Pensions Service.

Borrowing Money

Before taking out a loan, make sure that you actually need it. Every lender will charge interest and if you can avoid borrowing, or can borrow a smaller amount, you will have to pay less back.

Consider how much you can afford to pay back each month. This will tell you whether you can afford to borrow the money and also how long it will take to pay back.

When you are looking for a loan shop around and compare deals. Make sure that you know:

• The interest rate (APR)
• The cost per week or month
• The total amount you'll have to repay and
• Any penalties for late or missed payments

Loan Sharks

One person lending to another is civil. Businesses with 4 or more employees, lending money without a licence is criminal. Loan sharks are criminals.

You may have borrowed money from an associate or someone you thought of as a friend.

If they haven’t given you proper paperwork they might not have the appropriate licence to lend. Licences are issued by the Financial Conduct Authority (FCA). If it’s not a legal debt, you’re not in trouble, you may not have to pay back the loan and the lender can be prosecuted by the England Illegal Money Lending Team.

They can be contacted by emailing reportaloanshark@stoploansharks.gov.uk or calling 0300 555 2222.

Payday Lending

From January 2015 the FCA put a cap on payday lending of 0.8% of the total amount borrowed per day. This applies to new and existing loans, any interest and fees. Fixed default fees cannot be more than £15 and the overall cost will never be more than 100% of the amount borrowed. For more information visit the FCA's website.