Dealing with your business debts

Transcription

Dealing
with your
business
debts
1
Increase your income
2
Working out your business and household budget
3
Deal with your priority debts
Deal with your non-priority debts
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@Biz_Debtline
For free, confidential, independent advice, call Freephone:
0800 197 6026
For more information, visit www.businessdebtline.org
Contents
Getting started
03
What this pack contains
04
Four simple steps to dealing
with your debts
05
Phone advice from Business Debtline
05
Online advice from Business
Debtline’s website
05
Extra help if you have mental-health
difficulties
05 Companies that charge for advice
06 Golden rules
07 Business status
07 Sole trader
07 Partnerships
08 Limited companies
Increasing your income
11
Ways of increasing your
business income
12
Benefits, tax credits and
Universal Credit
14 Minimum wage
14 Tax
15
household income
15 Help from grants, advances
and loans
Working out your business
and household budget
19 Doing a monthly budget
19 Working out your business budget
19 Working out your business income
19 Security over business assets
20
Working out your business outgoings
20
Will my creditors think my business
outgoings are reasonable?
20 Types of business outgoings
21 Drawings
22
Are your business outgoings more
than your business income?
22
Help with managing your money
and budgeting for your business
23 Reducing your business outgoings
25 Working out your household budget
25 Working out your household income
25
Working out your household outgoings
25
Will my creditors think my household
outgoings are reasonable?
26 Household outgoings
28
Other household outgoings
2
¦
28
How much do I have left to pay
my creditors?
29
Decide on the best way to deal
with your non-priority debts
29
Working out offers of payment
to non-priority creditors
30
What if I already have a county court
judgment?
30
Are your household outgoings more
than your household income?
30
Help with managing your money
and budgeting for your household
31
Find the easiest way to pay your
TV licence
31 Help with gas and electricity bills
31 Are you paying too much for phone
calls?
32 Help with your water bills
Dealing with your
priority debts
35 What are priority debts?
36 Business and household priority debts
37 Priority business debts
37 Business mortgage
37 Business rent
37 Business rates
38 Business gas and electricity
39 Business water rates
39
Income tax, VAT and National
Insurance
41
Business hire purchase or
conditional sale
41 Business equipment leases
42 Major supplies
42 Business overdrafts and loans
43 Negotiating with your bank
43 Accountants
44 Priority household debts
44 Household mortgage
44 Household rent
45 Council tax
46 Household gas and electricity
47 TV licence
47 Magistrates’ court fines
48 Parking penalty charges
48 Child maintenance
48 Benefit overpayments
49 Tax-credit overpayments
49
Household hire purchase or
conditional sale
Freephone 0800 197 6026
www.businessdebtline.org
Dealing with your
non-priority debts
52
What are the options for dealing
with my non-priority debts?
52
What if I have some money left
to pay my creditors?
53
What if I have no money left to
pay my creditors?
53 Dealing with your creditors
54
Interest
54
Copies of credit agreements
and account statements
55
Making payments – ways to pay
55
Reviewing your offers of payment
55
What if a creditor refuses my offer?
55
What can I do if creditors harass me?
56
Collection agencies
56
What if I have a complaint about
my credit agreement?
56
What if I already have a county court
judgment?
56
Debts with your bank – overdrafts,
loans and credit cards
57
Opening a bank account
58
Extra help
58
Charge cards
58
Payday loans
58
Catalogue debts
59
Personal debts to friends and family
59 Household water rates debt
59
Non-priority business debts
59
What if my creditors take court action?
61
Can I get credit again?
62Useful contacts
63About Business Debtline
63 Business Debtline and
the Money Advice Trust
63
Our partners
63 Business Debtline – our aims
and services
63 Funding
Getting started
What this pack contains
Lots of people are in debt these days for all sorts of reasons.
This pack gives you good advice on tackling your debts. Included
with this pack are a business and household budget sheet, a tax
information sheet and some sample letters you can use.
¦ Freephone 0800 197 6026
Your business and
household budget sheet
Page 2
Before you start to deal with your debts, it is important to look at your
business and household finances separately. To help you do this we
have split the business and household budget sheet into two parts.
This pack will help you work out your business budget and then your
household budget.
Working out your breakdowns
Before you start to work out your business and household budget sheet, you will
need to complete your breakdowns.
If you trade from home, this will help you work out if you need to split any costs between
your business and your household, for example, phone costs.
If you use a vehicle for business and for personal or social journeys, you will need to split
your travel costs between your business and your household. For example, if you use your
vehicle 80% of the time for your business, 80% of your travel costs should be shown on
your business outgoings. The remaining 20% of your travel costs should be shown in your
househould outgoings.
Your business and
Page 1
The breakdowns will also help you work out how much your household spends on
housekeeping.
Telephone costs
Mobile 1
Business telephone £
Household telephone £
Information:
your partner’s
household costs
Mobile 2
Mobile 3
Landline
Internet
TV
Totals
Box (1)
Box (3)
• The business and household budget sheet and the tax information
sheet will help you work out your business income and outgoings,
and what you can draw (take) from your business as an income.
The options you have will depend on how much money you have left
over after taking account of your business and household outgoings.
There is lots of guidance in Dealing with your business debts to
help you. This includes help on what is reasonable to spend on things
like housekeeping and clothing.
Important:
numbered boxes
Insurance
MOT or
maintenance
Other
Totals
Before you start to work out your budget, check your business
Use this budget sheet if you are a sole trader.
Household travel £
Fuel
Road tax
Your business and
If you are working out this
status. This will help you to decide which budget sheet you
budget for your household,
remember to include your should be using and what debts you are responsible for.
partner’s telephone and
‘Business status’ on page 07.
travel costs.
Travel costs
Business travel £
¦ Freephone 0800 197 6026
Box (2)
Box (4)
Keep your business and household budget sheet safe
and up-to-date.
If you have entered an amount
Keep a copy of your business and household budget sheet to
into one of the numbered
help keep track of how you spend your money. Make sure you keep
boxes on this page, you will
it up-to-date and do a new budget sheet if your circumstances change.
need to use this figure later
on. Make sure you copy Contact us if you need another copy of our budget sheet.
these figures into the same
numbered boxes on pagesBDL reference number (if known):
3 or 5 of your budget.
Housekeeping
Your business name:
Food, toiletries and cleaning products
Clothing and footwear
Your business address:
Cigarettes, alcohol, newspapers and magazines
Laundry and dry cleaning
Information: you might prefer
to prepare your budget online
If you think you will find it easier to fill
in your budget online, visit our website:
www.businessdebtline.org.
Baby food and nappies
Pet food
Total housekeeping costs
Box (5)
Your name:
Freephone 0800 197
6026
Your
home address:
Freephone 0800 197 6026
• You can use your business and household budget sheet to work
out how much money you have to pay towards your debts. This will
help you assess how well your business is doing and decide the best
way to deal with your debts.
• If you decide that your best option is to negotiate reduced
payments to your creditors (the people you owe money to), you
will need to send them a copy of your business and household
budget sheet.
Getting started
Freephone 0800 197 6026
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3
Getting started
Four simple steps to
dealing with your debts
Using this pack will help you
take four important steps to
deal with your debts.
Step 1
Increase your income
SEE
page 9
We explain each step in a
different section of this pack.
Step 2
Work out your business
SEE
page 17
Step 3
Deal with your priority debts
SEE
page 33
Step 4
Deal with your non-priority debts
SEE
page 50
Following all four steps will
take some time. But it will
help you deal with your
debts. So don’t give up, and
contact us for help as often
as you need to.
How Business Debtline
can help you
Business Debtline is the expert UK charity helping
small businesses in need of debt advice.
By phone: 0800 197 6026 Monday to Friday 9am – 5.30pm
Online: www.businessdebtline.org
Use the website to follow the four simple steps to deal with your debts. There
is library of downloadable fact sheets and sample letters to help you get started.
You can also fill in your business and household budget sheet online.
Remember: how Business Debtline can help
Business Debtline is a national advice service for self-employed
people with business and personal debt problems. The service
is free, confidential and independent.
Business Debtline offers expert, professional advice online and
over the phone. This allows you to actively deal with your debts
in an informed way and decide the best option for you to take.
Call 0800 197 6026 or see www.businessdebtline.org.
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Freephone 0800 197 6026
Extra help: we have included some extra
information in this pack to help you deal
with your debts.
Green boxes help you
move ahead and deal with
your debts.
Amber boxes tell you
important things to think about
before taking your next steps.
Red boxes warn you about
situations where you need to
be particularly careful.
Getting started
Phone advice from Business Debtline
Calls to Business Debtline are free from landlines. If you
are calling Business Debtline on a mobile phone, most
networks will not charge you for the call because you are
ringing a Freephone number helpline.
You can call us using the Text Relay service. Business
Debtline also uses a telephone-interpreting service. This
means our advisers always have access to professional
interpreters over the phone in 100 languages. If you do
not speak English, it takes just a couple of minutes to get
an interpreter on the phone who will translate accurately
what you and the adviser are saying to each other.
Online advice from Business Debtline’s website
You may want to visit the Business Debtline website at
www.businessdebtline.org where you can view this
information pack and the fact sheets that deal with some
debt problems in more detail. You can also fill in sample
letters to send to your creditors and fill in a business
and household budget sheet online.
Extra help if you have mental-health difficulties
If you have mental-health difficulties, extra help is
available to support you.
• There are a number of organisations that may be
able to provide you with different types of support.
See ‘Useful contacts’ on page 62.
•E
xtra guidelines apply to many organisations that
you are in contact with. We can explain these
guidelines to you and how you can use them to
help deal with your debts.
Information: confidentiality
To protect your confidentiality, Business Debtline does not use
‘caller display’ equipment. This means advisers cannot see
your number displayed on a screen when you ring. We also
have a permanent block on the ‘caller return’ service. This
means that if we ring you back, the Business Debtline number
will not be announced as the last number to ring you to anyone
dialling ‘1471’. This is in case you don’t want anyone to know
that Business Debtline has contacted you.
Companies that charge for advice
You may come across companies that offer to sort
out your debts if you pay a fee. Be very careful to look
at what the company is promising to do for you before
sending them any money. Some of these companies
say they will get your creditors to write off part, or all,
of your debts. Unless you have special circumstances,
this is unlikely to happen.
• Ask the company if they are authorised by the Financial
Conduct Authority.
• The Financial Conduct Authority has issued its
Consumer Credit sourcebook (CONC) setting out rules
and guidance for debt management companies. See
www.fca.org.uk. You can use the rules and guidance to
make a complaint if the company does not follow them.
Warning: itemised phone bills
Your phone calls to Business Debtline
may be listed on an itemised phone bill.
You need to remember this if your call is
confidential and someone else may see
your phone bill.
• You can make a complaint to the Financial Ombudsman
Service if you are not happy with the outcome of your
complaint to the company.
• Professional advice on dealing with your debts is
always available free from agencies such as Citizens
Advice, money advice centres, or by ringing Business
Debtline. Remember, instead of paying fees to a
debt-management company, you could be better
off using the money to pay off your debts instead.
Freephone 0800 197 6026
¦
5
Getting started
Golden rules...
If you follow these golden rules, you won’t go far wrong.
• It is never too late to get advice. Remember,
we are here to help and you are not alone.
•D
on’t borrow money to pay off your debts without
thinking carefully. Get advice first. If you own your
home, this kind of borrowing could lead to you
losing your home.
• If you have lost your job, closed your business or
are off work because of illness, check whether
the payments you need to make are covered by
payment protection insurance. Check your credit
agreement. Contact the insurance company or your
lender to find out more details about how to claim.
•C
heck you are claiming all the benefits and tax
credits you can.
‘Benefits, tax credits and Universal Credit’
on page 12.
• Check your business status. This will help you
decide which budget sheet you should be using
and what debts you are responsible for.
• If you are a sole trader, use the business and
household budget sheet in this pack. If you
are a partnership or a limited company, use our
website to work out the right budget sheet for
your business status, or contact us for advice.
• A business and household budget sheet is an
essential tool when dealing with your debts. It will
help explain your financial situation to your creditors.
•O
nce you have finished your business and
household budget sheet, use this pack to work
out the best way to deal with your business and
personal debts. It can also help you work out the
best way to manage your business. If you are
unsure, contact us for advice.
•M
ake sure that any money you receive (for
example, business income, wages or benefits)
goes into an account at a bank or building society
that you don’t owe any money to. This means the
bank or building society will not be able to take
any of your income to repay your debt to them.
‘Opening a bank account’ on page 57.
•M
ake sure you tackle your priority debts first – for
example, debts which could mean closing your
business, losing your home or having your gas
or electricity cut off.
6
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Freephone 0800 197 6026
‘Dealing with your priority debts’ on page 33.
• If you decide that the best option is for you to
try to come to a payment arrangement with your
creditors yourself, use this pack to work out a
reasonable offer to repay the money you owe.
‘Working out offers of payment to
non-priority creditors’ on page 29.
• If you are going to make offers to your creditors,
you will need to send them a copy of your
business and household budget sheet
when you tell them about your difficulties.
• Use this pack to work out your business and
household budget sheet.
• Use the sample letters included with this pack to
write to your creditors.
• 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.
• If a creditor takes court action, don’t panic. When
you receive the court papers, fill in the reply form
and let the court have all the facts. The court will
use this information to decide if you owe the
money and what instalments you should pay.
• Always go to court hearings. Take a copy of your
business and household budget sheet with
you. Don’t think that going to the County Court
makes you a criminal. It’s not that kind of court.
They will not send you to prison and there is no
jury. There are money advisers who may be able
to represent you in court. Check the Law Society’s
website at www.lawsociety.org.uk for details of
agencies providing advice in your area.
• Always keep copies of any letters or court forms
you send or receive.
Important: don’t ignore the problem
It won’t go away and the longer you leave it,
the worse it gets.
Getting started
Business status
There is a lot of confusion about what it means
to be a sole trader, partnership or limited
company. These terms are used to describe
the status of a business. Before starting to
deal with your debts, it is important that you
understand which term describes your business
and which budget you should use.
Sole trader
This is where you are an individual and work for
yourself. You may also have people working for
you. All bills, bank statements, invoices, letterheads
and other business correspondence have just your
name on them. Even if you trade using a business
name, you cannot separate yourself from your
business debts.
You are personally liable for all of your business
debts. This means you have to pay these debts
out of your own income, even if you have stopped
trading. If you do not pay, the creditors you owe
money to could take further action against you
personally. If this happens, both your business
and personal assets could be at risk.
Which budget?
If you are a sole trader you can fill in the business
and household budget sheet included in this pack.
See our fact sheet: Sole traders.
Partnerships
A partnership is two or more people carrying on
a business, with the aim of making a profit. A
partnership must have at least two partners. Most
partnerships can have no more than 20 partners,
except for firms of solicitors and accountants.
By law, you do not have to have a written
partnership agreement, though you may decide it is
a good idea to have one. Otherwise, all you need to
do to show you are a partner of the business is put
your name on the business notepaper as a partner.
In a partnership, all partners (separately and
together) are liable for all business debts. This is
known as ‘joint and several liability’ and means that
all partners have to pay these debts out of their own
income, even if the partnership has stopped trading.
If any of the partners do not pay, the creditors can
take all the partners to court for the total debt. Your
business and personal assets could be at risk. It is
not possible to divide up responsibility for the debts.
If the creditors cannot get one partner to pay the
debt, they will claim payment in full from the others.
Information: income tax
Partners are taxed only on their share of the business profits.
If one partner owes income tax, Her Majesty’s Revenue &
Customs (HMRC) cannot claim it from the other partners.
If you leave the partnership, write to all the
business’s creditors to make sure they know that
you will not be responsible for any new debts after
the date that you left. Keep a copy of all the letters
you send. Make sure that your name no longer
appears on the business’s notepaper and ask the
bank to take your name off any business accounts.
If you have given a personal guarantee or a legal
charge to a bank as security for the business’s
debts, make sure the bank accepts that you are
only responsible for any debts that built up before
the partnership ended. A personal guarantee means
you have signed an agreement to say you will pay
the money back yourself even if the business
closes. You need to do the same thing for any
business overdrafts.
If one partner goes bankrupt, although creditors will
cancel the debt for that partner, they can still try to
get the whole debt back from the other partners.
This means that partners with the most assets have
the most to lose.
If you have had to pay a partnership debt, you have
the right to take the other partners to court to get
back their share of the debts. If one of your partners
has paid a partnership debt, they can take you (and
any other partners) to court to get back your share
of the debt.
Which budget?
The business and household budget sheet in this
pack is for sole traders. You can find a partnership
budget on our website at www.businessdebtline.org
or you can contact us for advice.
See our fact sheet: Partnerships.
Freephone 0800 197 6026
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7
Getting started
Limited companies
A limited company is legally separate from its directors
and shareholders. In a small limited company,
the directors are often the shareholders.
A company must have at least one director and, in
some cases, will also have a secretary. It needs to
be registered at Companies House and must send
audited accounts to Companies House each year.
By becoming a director, you agree to act in the best
interests of the company, its shareholders, its
employees and its creditors. This is called a ‘duty of
care’ or ‘fiduciary duty’. Usually, if you are a director
(or acting as a director), you are not personally liable
for paying the company’s debts. This means that if the
limited company does not pay its debts and a creditor
takes court action, only the company assets are at risk.
However, you can be made personally liable for
the following.
• Your own PAYE and National Insurance payments.
• Any income tax you have not paid on cash you have
taken from the company.
• Any personal guarantees you have given for the
company (usually to banks, finance companies,
landlords and major creditors). This is when you sign
an agreement to say that if your business cannot
pay the money back, you will pay it back yourself.
• Any liabilities that have come out of your company
after it has been investigated in relation to liquidation
(a formal option to deal with the company debts
and bring it to a close) and found guilty of wrongful
trading. This is when you carry on trading when
the company was insolvent and there was no
reasonable chance of avoiding liquidation.
• Any liability where you have benefited from a
transaction at the expense of your creditors. For
example, if you have bought a company asset for less
than it was worth, or you have paid your own wages
or directors’ loans from the company assets but
cannot afford to pay your creditors. This is called
‘misfeasance’.
• Any liability that comes from committing fraud
while you were running the company. For example,
fraudulently taking credit in the company name.
This is called fraudulent trading.
Important: insolvent limited companies
A limited company is ‘insolvent’ if:
• the company cannot meet its debts as
they fall due;
• the value of its assets is lower than the
total debt that it owes; or
• it cannot meet its debts as they fall due
and has assets worth less than the total
amount it owes.
If you are not sure whether your company
is insolvent, contact us for advice.
Warning: trading when insolvent
If you are not sure whether your company
is insolvent, you will need to be very careful
when you are trading. Contact us for advice.
Which budget?
If you are a director of a limited company, we advise
you to ask your accountant to help you to work out
a company budget. This is because the company is
a separate legal entity to you and its finances should
be separate from yours. You should then be able to
work out how much the business can pay you. This
will help you fill in a household budget based on
your household income and outgoings.
The business and household budget sheet
in this pack is for sole traders. You can find
a household budget on our website at
www.businessdebtline.org or you can
contact us for advice.
If you need more advice about your business status,
Information: liability
Being liable for a debt means that you are
legally responsible for paying it back. If you
do not pay, and the creditor takes court
action, your personal assets could be at risk.
Information: personal guarantees
If you have given a personal guarantee, it means you have
guaranteed to pay part or all of the debt back yourself, even
if the business closes. Contact us for advice.
8
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Freephone 0800 197 6026
See our fact sheet: Limited companies.
Increasing
your income
Lots of people are in debt because they don’t receive all the money
they are entitled to.
Before you work out your business and household budget
sheet, use this section to see if you can increase your business
income and household income.
You may be able to claim benefits, tax credits or Universal Credit,
help from grants, help with energy costs or other ways of boosting
your business and household income. We have divided this section
up so you can see the different sorts of help available.
Step 1
Increasing
your income
Freephone 0800 197 6026
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9
Increasing
your income
Checklist
Use this simple checklist to make sure you have done all you can to increase your income.
ook at ways to increase your business income.
L
Make sure you have looked at ways you can
increase the amount of money coming into your
business. There may also be loans, grants and
funding you can apply for.
‘Ways of increasing your business
income’ on page 11.
re your business customers paying
A
you on time?
It is important that your customers pay you on
time to make sure you can pay your own bills
and debts for your business and your home.
‘Late payments and bad debts’ on page 11.
et benefits and tax credits or Universal Credit.
G
Make sure you are getting all the benefits, tax
credits or Universal Credit that you should. Can you
get help with your rent or mortgage payments, or
a reduction on your council tax? Do you need extra
help because of illness or disability?
‘Benefits, tax credits and Universal Credit’
on page 12.
If you are also employed, is your employer
paying you at least the minimum wage?
Not all employers pay what they should by law.
Check you are being paid the right amount.
‘Minimum wage’ on page 14.
Are you paying too much tax?
Are you getting all the tax reliefs and tax allowances
that you can? Check this with your tax office.
‘Tax’ on page 14.
Are others paying you enough?
Should a former partner be paying child
maintenance but they are not? If people are staying
with you, are they paying enough to cover their
keep? Check how much they are really costing
you and ask them to pay more if necessary.
‘Money from other people’ on page 15.
10
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Freephone 0800 197 6026
o you have payment protection insurance?
D
Have you taken out payment protection
insurance to make payments to your creditors if
you are unemployed or in financial difficulties?
‘Money from insurance’ on page 15.
Can you rent a room out?
Do you have a spare room you could rent
to a lodger to make some extra income?
‘Renting out a room’ on page 15.
an you get an advance, a budgeting loan
C
or help from your local council?
Could you get a short-term advance, a
budgeting loan or a budgeting advance from
the Department for Work and Pensions (DWP)
to help you pay for an essential item? Could
you get help from your local council?
‘Help from grants, advances and loans’
on page 15.
taying on at school?
S
You may be able to get help with the costs of
your children staying on at school or college.
on page 15.
Can you cut your energy or water bills?
Can you save money by using less energy or by
switching to a different energy supplier? Can a trust
fund help you with your energy or water bill or other
costs? Can you cut your energy bills by adding
insulation and heating improvements to your home
through the Green Deal scheme, or through the
Energy Company Obligation (ECO) programme?
on page 15.
Remember: contact us
You can always contact us for help,
information and advice on
0800 197 6026 or see
Increasing
your income
Ways of increasing
your business income
Enterprise agencies
• Your local enterprise agency may be able to provide help
with preparing a business plan or ways of improving your
business. Search online for details of agencies in your
area. You can also get advice online. See www.gov.uk
for information about finding business finance and
preparing a business plan. If you are a member of your
local Chamber of Commerce, you can contact them for
business advice.
• Think about discontinuing certain lines or services which do
not bring in much profit. This will help you concentrate on
the things which have a higher profit margin. This could be
existing goods or services, but you could also think about
offering new ones.
•T
hink about your trading hours. There may be certain times
when you are usually busy and certain times when you are
quiet. It may not be helpful to trade during quiet periods, but
you could extend your trading hours when you are busier.
•T
here may be whole parts of your business which are not
as successful as other parts. Think about concentrating
on the more profitable parts of the business. This may
include stopping doing things that are not successful.
Funding and grants
• You can search for business finance, support, grants
and loans for your business at www.gov.uk using the
‘Business funding and support finder’. This will search for
the help you need based on what your business does, the
size of your business and where your business is located.
Enterprise Finance Guarantee
• The Enterprise Finance Guarantee (EFG) can help your
business get funding, for example when you can’t get
a business loan because you have no business assets
for it to be secured on.
• You can use this money to invest in your business so it
can grow and expand, helping to increase your business
income. The lender you apply to will assess whether to
give you a loan based on their own lending criteria. See
www.gov.uk for more information.
Improving turnover and sales
• You could call existing customers or target new ones to
increase the amount of money coming into your business.
Check to see whether it is worth paying for advertising to
help do this.
• A sale or a reduced rate may bring in new customers.
A ‘loss leader’ can help to do this. A loss leader is when
you offer goods or services without making a profit (or
even making a loss) to help bring in more customers.
The idea is that they will take other goods and services
in the future, so you can make a profit.
• If you have other businesses close by, you could consider
working together to provide a ‘deal’ for customers. For
example, if your business is a restaurant, you could offer a
discount on meals if someone sees a film at the local cinema.
Review your prices
• Regularly check that you are making enough profit on
the goods and services you provide. You need to make
sure that you are making enough money to pay your
business outgoings and have enough left over to live
on. Your prices should be set at a reasonable rate.
They should be able to compete with any services and
businesses in your area, but still make you enough profit.
Important: professional advice
Always get professional help from your
accountant or business adviser before making
any drastic changes to your business.
Late payments and bad debts
It is important to make sure all the money that is owed
to you is paid on time. When customers buy goods or
services from you but pay for them at a later date, this is
known as getting ‘credit’ from you. ‘Credit control’ is a term
used to describe how your business:
• provides credit; and
• collects money from your customers.
Good credit control procedures will make sure your
business income is more stable, can help you plan better
for the future and can help the business make a profit.
If someone owes you money and they are not paying you,
you should speak to them to try to work out a solution. This
may include:
• arranging for them to pay in instalments; or
• coming to an agreement if they are not paying the debt
because they have a dispute with you about the invoice
or the goods or services they bought.
If the person is only disputing part of an invoice, you should
ask them to pay the part they are not disputing immediately.
The rest of the money can be sorted out separately. Be
careful not to harass the person who owes you money.
See our fact sheet: Harassment by
creditors and debt collectors.
If you want more advice about recovering debts from other
people or businesses, contact us for advice.
See our fact sheet: Credit control.
Freephone 0800 197 6026
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11
Increasing
your income
If you have not been paid money you are owed, and you are
registered for value added tax (VAT), you may be able to claim
back the VAT on the debt. You can do this when the debt is
more than six months old and you have written it off in your
accounts (decided you won’t ever get the money back).
Benefits, tax credits
and Universal Credit
There is a range of different types of benefits and tax
credits which you might be entitled to. During 2013 the
Government started to introduce a new benefit called
Universal Credit. Whether you can claim any of these
benefits will depend on your circumstances.
You can see more information about many of these
benefits at www.gov.uk. Type the name of the benefit into
the search box.
Some benefits are based on the National Insurance
contributions you have paid. These include contributionbased Jobseeker’s Allowance, income-related
Employment and Support Allowance, pensions and
maternity benefits.
Important: contribution-based benefits
As a self-employed person, you may not have
paid the correct type of National Insurance
contributions to qualify for contribution-based
benefits. Contact us for advice.
Other benefits and the new Universal Credit are meanstested. This means the amount of help you get depends
on how much money you already have coming into your
home. There are also limits on how much you are allowed to
have in savings and still claim. These benefits are designed
to ‘top up’ any income you already have. You do not need to
have paid National Insurance contributions to claim them.
Universal Credit
You can use an online benefits checker such as the
benefits calculator at www.turn2us.org.uk.
Income-based Jobseeker’s Allowance
This is for people working less than 16 hours a week who
are looking for work. You may also be able to get help towards
your mortgage. There may be a time limit of 104 weeks on
the help with your mortgage.
Income Support
This is for people who are not looking for work (for example,
because they are caring for someone). You may also be able
to get help towards your mortgage.
Income-related Employment and Support
Allowance
This has replaced Incapacity Benefit and Income Support for
people who may be unable to work due to illness or disability.
You may also be able to get help towards your mortgage.
Pension Credit
You can claim this once you have reached the qualifying age.
The amount you are entitled to depends on your income.
There is an extra payment called Savings Credit if you or
your partner are 65 or over. This rewards you for having
modest savings. The amount you get will depend on how
much money you have saved. You may also be able to get
help towards your mortgage. To check your entitlement to
Pension Credit, see www.gov.uk. Type Pension Credit
into the search box.
Support for Mortgage Interest
If you claim Income Support, Pension Credit, incomerelated Employment and Support Allowance or incomebased Jobseeker’s Allowance, the DWP will normally pay
at least some of the interest on the mortgage if you took
the mortgage out to buy your home. This is called ‘Support
for Mortgage Interest’. The rules about how much help you
can get are complicated. Different rules apply depending on
when you took out your mortgage and when you made
your claim for benefit. If you are not sure about whether you
are eligible, contact us for advice.
In 2013, Universal Credit began to replace the following
benefits and tax credits.
• Income-based Jobseeker’s Allowance
• Income Support
• Income-related Employment and Support Allowance
• Child Tax Credit
• Housing Benefit
• Working Tax Credit
Some people who make a new claim for these benefits
will get Universal Credit. Between 2013 and 2017, most
people claiming the old benefits and tax credits should
be transferred onto Universal Credit. However, if you are
getting Employment and Support Allowance, you will
not be transferred onto Universal Credit until after 2017.
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Extra advice: housing
costs and Universal Credit
If you claim Universal Credit, the DWP will
normally pay at least some of the interest on
your mortgage if you took the mortgage out
to buy your home. The rules about how much
help you can get from Universal Credit are
complicated. If you are not sure about whether
you can claim, contact us for advice.
See our fact sheet:
Mortgages – help with payments.
Increasing
your income
Child Tax Credit
This is paid to people with responsibility for children (under 16
or under 20 if the children are in full-time education or certain
kinds of approved training). It can be paid whether you are
in or out of work, unless you are being paid Universal Credit
instead. The amount you will get depends on your income. For
information, ring the Tax Credit Helpline on 0345 300 3900. In
time, this will be replaced by Universal Credit.
Housing Benefit
You may be able to get help with your rent by claiming
Housing Benefit from your local council if you are on benefits
or a low income. In certain situations, your Housing Benefit
can be paid directly to your landlord. Contact us for advice.
Working Tax Credit
This is paid to people who in work but are on a low
income, unless they are being paid Universal Credit
instead. It is paid on top of your wages or drawings from
your business, and is dealt with by Her Majesty’s Revenue
& Customs (HMRC). You can claim whether you have
children or not, but the hours you must work to be eligible
will depend on your circumstances and age. For information,
ring the Tax Credit Helpline on 0345 300 3900 or see
www.gov.uk. Type tax credits into the search box.
Extra advice: Universal Credit
and being self-employed
The Government has put a cap on how much you can receive
in benefits if you and your partner are of working age but not
working. This is known as the ‘benefit cap’. This applies
if your combined income from certain benefits is over a set
amount and means that the amount of Housing Benefit you
receive may be reduced.
If you are self-employed and claim Universal
Credit (when you previously would have claimed
Working Tax Credit), the DWP will assume you
earn a minimum amount from your business.
This amount depends on your circumstances
and will affect the amount of benefit you can
claim. You will also be expected to give the
DWP details of your business income and
outgoings each month. If you are not sure how
this will affect you, contact us for advice.
This cap will not apply if anyone in your household receives
particular disability-related benefits and some other pensions.
Extra advice: when the
benefit cap does not apply
If you are paid Housing Benefit, the benefit
cap will not apply for nine months if you (or
your partner) have lost a job which you have
held for a year or more and you have not
been on certain benefits during that time.
The cap will also not apply for nine months
to people getting Universal Credit whose
earnings have been over a set amount during
the previous year. Contact us for advice.
Support for council tax
Your local council runs a Council Tax Reduction scheme.
Contact them for details of how to apply.
‘Council tax’ on page 45.
If you live on your own you may qualify for a single
person discount.
‘Can I reduce my bill?’ on page 45.
Important: Universal Credit
If you are of working age and you rent your home from
a council or housing association, your local council may
reduce the amount of Housing Benefit they will pay you
if they decide that you have more bedrooms than you
need. This is commonly known as the ‘bedroom tax’.
This does not affect some properties and people in certain
situations. Contact us for advice.
Universal Credit will replace the following benefits and tax credits:
• income-based Jobseeker’s Allowance
• Income Support
• income-related Employment and Support Allowance
• Working Tax Credit
• Child Tax Credit
• Housing Benefit.
You may need to apply for Universal Credit if you make a new
claim, depending on where you live. Most people who claim
benefits should be moved on to Universal Credit by the end of 2017.
Until you receive Universal Credit you can still claim tax credits.
Once you get Universal Credit, tax credits will stop and you will
be given an extra amount for a child that you look after.
Freephone 0800 197 6026
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Increasing
your income
Help with health costs
Extra advice: questions about benefits
Working out which benefits to claim can be complicated.
There are different ways of getting answers to your
questions about benefits.
If you would like to speak to someone, contact your
local DWP office or the Jobcentre Plus helpline on
0800 055 6688.
You can ask a local advice centre for help or you can
You can use an online benefits checker such as the
benefits calculator at www.turn2us.org.uk.
Other benefits
Some benefits are not means-tested and you don’t need to
have paid any National Insurance contributions to claim them.
These include Child Benefit if you have dependent
children. The amount of Child Benefit you receive may be
affected by the High Income Child Benefit charge if you or
your partner earns more than £50,000 a year. If either you
or your partner earns over £60,000, you will not receive
any Child Benefit. Contact us for advice.
People with disabilities can claim benefits such as Disability
Living Allowance, Personal Independence Payment and
Attendance Allowance, and their carers may be able to
claim Carer’s Allowance.
You may be able to get help with the cost of prescriptions,
dental treatment, sight tests, glasses and contact lenses,
travel to hospital, wigs and fabric supports. The rules are
different depending on whether you live in England or Wales.
Prescriptions are free for everyone in Wales. If you live in
England, you may have to pay. Contact your local advice
agency, the DWP or the Low Income Scheme helpline on
0300 330 1343 to see if you qualify for free prescriptions
and help with health costs. If you cannot claim free
prescriptions, you may be able to reduce the cost by
buying a prepayment certificate.
Minimum wage
If you are also employed, check that you are being paid
at least the national minimum wage. This usually goes up
every year in October. The minimum wage you are entitled
to depends on your age. You can find more information at
www.gov.uk. To complain if you think you are being paid
too little, ring the Government’s Pay and Work Rights
Helpline on 0800 917 2368.
Tax
Everyone is entitled to a personal tax allowance (or
tax-free amount), but there are all sorts of tax allowances
and tax reliefs available. These depend on your age and
personal circumstances. You can check your entitlement
to tax allowances and reliefs at www.gov.uk and
www.litrg.org.uk. If you are still in doubt, contact your
tax office on 0300 200 3300. Contact us if you have
any questions.
• If you are under 16, you can apply for Disability
Living Allowance.
• If you are between 16 and 64, you can apply for
Personal Independence Payment.
• If you are 65 or more, you can apply for Attendance
Allowance.
If you currently get Disability Living Allowance, this will be
replaced by Personal Independence Payment by 2017. The
DWP will let you know when you need to make a new claim.
If you are under 16, you can continue to claim Disability
Living Allowance until you reach your 16th birthday.
You will be invited to apply for Personal Independence
Payment before your 16th birthday if you are living in an
area where Personal Independence Payment is being
rolled out. If you are not, you will be checked to see if
you are still eligible to receive Disability Living Allowance.
Whether you can claim any of these benefits will depend on the
nature of your illness or disability and the effect it has on you.
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Important: backdated tax
allowances
You can still ask for tax allowances to be
given to you for earlier years, even if you do
not qualify now. Make these claims as soon
as possible as there are time limits. If you
think this might apply to you, check with
your tax office or contact us for advice.
Increasing
your income
household income
Money from other people
• If you have grown-up children or other relatives living in
your home, make sure they are paying enough towards
the household expenses. Contact us for advice.
• If you have children from a former relationship, you may
want to claim child maintenance or see whether the
maintenance you are getting can be increased. You will
be able to keep all the child maintenance you receive, even
if you are on benefits. You can find independent advice
about child maintenance options at www.cmoptions.org
or contact 0800 083 4375.
Money from insurance
• Check whether your mortgage or any other loans are
covered by payment protection insurance. If so, this may
cover your payments if you have been made redundant
or you are off work due to illness. If you are turned down
by the company when you claim on your policy, you may
be able to complain to the Financial Ombudsman Service.
Contact us for advice.
Renting out a room
• Do you have a spare room in your home that you could
rent out? You will need to check to see how this would
affect any benefits you are claiming. Also check your tax
position. Ask your tax office about the ‘rent-a-room’
scheme. This allows you to receive rental income, up to
a certain limit, tax-free. You will usually also need your
landlord’s or mortgage lender’s permission to do this, as
your tenancy or mortgage agreement may not allow you
to rent rooms out. To find out more, see www.gov.uk.
guidelines on the type of items you are allowed to buy
and who will qualify for help. See www.gov.uk or
• The Social Fund provides maternity grants or funeral
expenses payments for people on qualifying benefits.
See www.gov.uk or contact us for advice.
• If you are pregnant or have a child under four and you
are on certain benefits, or you are pregnant and under
18, you may qualify for help with the cost of milk,
fruit, vegetables and vitamins under the Healthy Start
scheme. Contact the Healthy Start Issuing Unit on
0845 607 6823 or see www.healthystart.nhs.uk
to find out if you qualify for this scheme.
• If you have no income or there is an emergency or
disaster, you can apply for help from your local council’s
welfare assistance scheme. See www.gov.uk to find
your local council. In Wales, this is called the Discretionary
Assistance Fund. See www.wales.gov.uk and type
welfare assistance in the search box or call 0800 859
5924. You do not have to be on benefits to apply but
you can only get help with certain items. Contact us
for advice.
The 16-19 Bursary Fund (if you live in England)
If you have children who are aged between 16 and 19 and are
staying on at school or college, they may qualify for a bursary
of up to £1,200 a year. This is only in limited circumstances,
for example, if they are claiming Income Support or Universal
Credit in their own name, or are disabled and on certain
benefits. The school or college can also help with a bursary
if the child is in financial hardship. For more information,
contact the school or college.
Education Maintenance Allowance and the
Assembly Learning (if you live in Wales)
Working as a childminder
If you have children who are aged between 16 and 18 who
are staying on at school or college, they may qualify for an
Education Maintenance Allowance (EMA) of £30 a week,
depending on your household income. If your child is 19
or over, they may qualify for an Assembly Learning Grant
if they stay on at college. For more information, contact
Student Finance Wales on 0300 200 4050 or see
www.studentfinancewales.co.uk.
Help from grants, advances
and loans
Help with gas, electricity and water costs
• You may be able to work as a childminder in your home
and still claim Income Support or Employment and
Support Allowance. Some of your earnings are ignored
and you are not treated as working full-time. The rules
are different if you are on Jobseeker’s Allowance. Check
with the DWP or contact us for advice.
• Check with your local council to see if you can get help
with home improvements or a disabled facilities grant.
This will depend on your income, whether you have a
disability and what repairs need doing in your home.
• If you are on Income Support, income-based
Jobseeker’s Allowance, income-related Employment
and Support Allowance or Pension Credit, you may
qualify for a short-term advance or a budgeting loan
from the DWP. If you are on Universal Credit, you may
qualify for a short-term advance or a budgeting advance.
Payments depend on your circumstances and there are
• Can you cut down on the amount of energy you use?
GOV.UK has a calculator on its website www.gov.uk
which tells you what help you can get with energy grants
and heating costs. Contact your supplier to find out what
help they can provide, or ring the Energy Saving Advice
Service on 0300 123 1234. You can also ring the Home
Heat Helpline on 0800 336 699 to find out what help you
can get from your supplier.
• You may be able to apply for other grants, depending
on the benefits you receive and your age.
• In Wales, you can also apply for free home improvements
through the Nest scheme. For more information, call
0808 808 2244 or visit www.nestwales.org.uk.
Freephone 0800 197 6026
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15
Increasing
your income
• You may be able to get a grant through the Energy
Company Obligation (ECO) programme for insulation
and heating improvements, plus they can give you
advice about saving energy. You may also be able to
get a loan through the Green Deal scheme. Ring the
Energy Saving Advice Service on 0300 123 1234 or
see www.energysavingtrust.org.uk.
• Some fuel and water companies have trust funds and
support schemes that may be able to give you help to
pay your bills if you are in financial difficulties.
‘Help with your water bills’ on page 32 and ‘Help
from gas and electricity companies’ on page 31.
Information: Turn2us
Turn2us is a charity that helps people in
financial need get access to benefits,
charitable grants and other financial help.
See www.turn2us.org.uk, which has a
benefits calculator and other advice about
benefits, as well as a grants search tool,
or ring the helpline on 0808 802 2000.
• You may be able to save some money by switching to
a different energy supplier.
‘Getting the best energy deal’ on page 31.
• If you are a single person, it could be cheaper to go on
a water meter. If your water bills are already high on a
water meter and you are on certain benefits, you may
be able to get help.
‘Help with your water bills’ on page 32.
• If you have reached pensionable age, you may be entitled
to a lump sum each year called the Winter Fuel Payment.
Ring the Winter Fuel Payments helpline on 0845 915 1515
or see www.gov.uk.
Next steps...
You are now at the end of step 1. We hope this section has helped you get all the extra money
and other help you can.
Step 2 is called ‘Working out your business and household budget’. Doing a budget will
help you decide what your options are for dealing with your debts. This section will give you lots
of useful guidance and tips on working out your budget.
Turn to page 17 to begin.
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Freephone 0800 197 6026
A business and household budget is an essential tool to help you
tackle debt problems. Use this section to guide you through filling
in your business and household budget sheet.
The first part of this step will help you work out how much
you have coming into your business and what is going out.
You can then see how much the business can afford to pay
you (your drawings). This is called your business budget.
You should then fill in your household budget using the second
part of this step. This will help you see how much is left over so
you can work out the best way to deal with your debts.
Step 2
Freephone 0800 197 6026
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17
Checklist
Use this simple checklist to make sure you take the right steps to work out your business budget.
Are you filling in the right business budget?
The business budget with this pack is for
sole traders to fill in. If you are included in a
partnership, are a director of a limited company,
or have a buy-to-let property, you will need to
fill in a different business budget sheet. You
can find other budget sheets on our website
at www.businessdebtline.org or you can
Work out a business budget sheet
Follow the advice and guidance in this section
to list all your income and outgoings so that you
can see how much the business can afford to
pay you (your drawings).
‘Working out your business income’ on
page 19 and ‘Working out your business
outgoings’ on page 20.
Can you increase your business income?
Before you start to look at your business budget,
check to see if there are ways of increasing your
business income.
‘Ways of increasing your business income’
on page 11.
Can you cut down on your business outgoings?
You might be able to cut down on some of
your business outgoings by budgeting better
or shopping around for the best deal.
‘Reducing your business outgoings’
on page 23.
Splitting business and household costs
There are some costs you may have for your
business and for your home. This can include
things like travel and phone costs. Remember
to work out how much of the cost is for business
use and how much is for household use.
‘Working out your business outgoings’ on
page 20 and ‘Working out your household
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Warning: the business budget
with this pack
Only complete the business budget included
with this pack if you are a sole trader. If you
are a partnership or a limited company, you
can find other budget sheets on our website
at www.businessdebtline.org or you can
Information: limited company
budget sheets
If you are a director of a limited company,
we advise you to ask your accountant for
help to work out a company budget. This
is because the company is a separate legal
entity to you and its finances should be
separated from yours. You should then be
able to work out how much the business
can pay you. This will help you to fill in a
household budget sheet based on your
household income and spending. You can
find a household budget sheet on our
website at www.businessdebtline.org
or you can contact us for advice.
to work out your budget online
If you think you are a sole trader and will
find it easier to fill in your budget online,
see our website, www.businessdebtline.org
which has a budget tool kit.
Doing a monthly budget
The business and household budget sheet uses
monthly figures for income and outgoings. If you pay
for some things weekly or fortnightly, remember that you
will need to change these figures to a monthly amount.
If your circumstances change, you should update your
business and household budget sheet with the new
information.
If you have problems working out your business budget,
Working out your
business income
Calculation box: do a monthly budget
Both budget sheets use monthly figures
for income and outgoings. If you pay
for some things weekly or fortnightly,
remember that you will need to change
these to a monthly amount.
To change weekly figures
to monthly figures
Weekly figure x 52 (weeks) divided
by 12 (months).
To change fortnightly figures
to monthly figures
Fortnightly figure x 26 (payments)
divided by 12 (months).
To change four-weekly figures
to monthly figures
Four-weekly figure x 13 (payments)
divided by 12 (months).
With your copy of Dealing with your business debts,
you should also have a business and household
budget sheet. Contact us if you need more copies
of our budget sheets.
You might prefer to work out your budget online. See our
website at www.businessdebtline.org which has a
business and household budget sheet you can work out
online to see the best way to deal with your debts.
Working out your
business budget
Working out a business budget is important because
it helps you:
• see how much money is coming into your business;
• see how much money you are spending on business costs;
• work out roughly how much income tax, National Insurance
and value added tax (VAT) you will have to pay;
• how well your business is doing and where you may be able
to cut costs;
• decide what you can really afford to draw (take) from
your business each month;
• plan your household budget around how much you
are going to draw from your business;
• Use your business accounts, books and bank statements
to work out how much money you have taken for sales over
the last three months. This will help you work out what your
average monthly business income is, as most businesses,
income is not the same every month. Do not include money
for work you have done or things you have sold but have
not yet been paid for. Only include money you have actually
received.
• Divide this total by three to get an average for each month.
• If your receipts or takings go up and down a lot over the
year, you may need to work out the average over a longer
period, for example, 12 months. This could be because
your business is seasonal.
• Make sure you use a period of time that reflects the
current income of your business.
on page 11.
Extra advice: tax returns
We would not normally recommend you use
your last tax return to work out these figures.
This is because your tax return figures are
usually over 12 months old.
Also, the figures you work out for income
tax, National Insurance and VAT on your
budget sheet are only estimates. They
should not be used to complete the tax
returns you send to Her Majesty’s Revenue
& Customs (HMRC).
Security over business assets
Some creditors, such as banks, may ask for security
over your business assets. This could mean you don’t
have the right to sell the assets yourself. If you can’t
pay the creditor, they may go to court to take these
assets to reduce the amount you owe them. This
means you could struggle to keep trading if the assets
are essential to your business. If you are not sure
whether you have given security over any business
assets, contact us for advice.
• work out affordable offers to your creditors if you think
this is the best way to deal with your debts.
Freephone 0800 197 6026
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Working out your
business outgoings
Fixed costs are those that are the same amount each
month, for example, business rent and business rates.
What if I am not sure how much to include?
If you pay business rent every three months, divide the
amount by three to work out how much the rent costs
each month. You may find it easier to budget by paying
the rent each month. You can ask your landlord or the
agent about this. Otherwise, work out the monthly rent
and put this amount aside every month so you can pay
the bill every three months.
•h
ow to work out the right amount to put in your
business budget for your regular bills and payments;
•h
ow to work out the right amount to put in your
business budget for any variable costs you might
have; and
•h
ow you might be able to reduce some regular bills
and payments.
Will my creditors think
my business outgoings
are reasonable?
Many of the figures in the outgoings section of your
business budget will be based on your regular bills
or direct debits and standing orders from your bank
account. You might not have much control over some
of these amounts. Your creditors know that this is the
case and it is important that the amounts you put in your
business budget are based on your true spending.
•B
e careful and be realistic
Do not include figures that are less than you are really
spending. If your figures on your business budget are
too low, this will mean that any payment arrangement
that you agree with your creditors will be higher than
necessary and you will find it hard to keep to it.
•B
e sensible about your spending
If your creditors do not think that the amounts are
reasonable, this will mean they are less likely to agree
to reduced payment offers. If you are not sure, contact
us for advice.
•G
ive reasons if your spending is high
Your business outgoings may be very different to
another business, even if that business offers the same
service or trade. Make sure you include everything
you are spending. If you think that any of your business
outgoings might be high, it is important that you tell
your creditors the reason why your spending is higher
in this area.
‘It’s your budget’ on page 28.
You can write this information in the extra information
section of your business and household budget
sheet or put this information in the letter that you send
to creditors with your budget.
¦
Fixed costs
Working out this part of your business budget will help you
identify all of the costs of running your business. At this
stage, don’t include any debts, arrears or credit payments.
In this section, we give you hints and tips on:
20
Types of business outgoings
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Business rent
Business rates
These are fixed each year and are normally paid in ten
monthly instalments. You can ask your council if you can
pay over 12 months to help you budget.
Business water rates
These are also fixed each year. You can ask if you can pay
each month instead of once a year. If you have a water
meter, bills are normally sent out every three months. Add
up the last four bills and divide the answer by 12 to work
out the cost each month.
Business loans
Your loan repayments are usually fixed. However, if you
are borrowing on a variable interest rate, your repayments
may change if the bank’s interest rate changes. If the loan
is not with the same bank where you have your business
bank account, and is not secured on your property, it may
be best to treat it as a credit debt.
‘Debts with your bank – overdrafts, loans and
credit cards’ on page 56.
Variable costs
Variable costs change depending on how much trade
you have done. They may include stock and employees’
wages. Do not include your own living costs or your drawings
(money you take from the business) here. These are included
in the household budget. If you work from home, you may
want to include a proportion of your household costs (for
example, heating and lighting costs). Contact us for advice.
Use your receipts, books and statements to work out
how much you have spent on variable costs over the same
number of months you used to work out your average
income. Divide the total variable costs by this number
of months to work out the average cost each month.
Business gas, electricity and phone bills
Value added tax (VAT)
Business gas, electricity and phone bills are normally sent
out every three months. Add up the last four bills and divide
the total by 12 to work out the cost each month. You may
find it easier to budget by paying your bills every month.
The rate of VAT depends on the types of goods or
services you supply. The rates can change depending
on decisions the Government makes. Our tax
information sheet is included with this pack. You can
use this to find out what the current rate of VAT is.
If you work from home, you may want to include a proportion
of your household gas, electricity and phone bills in your
business budget outgoings. Contact us for advice.
Travel costs
If you have a vehicle that you use for business only,
you can put all the costs in this part of your budget (for
example, road tax, insurance, repairs, services and fuel).
If you use your vehicle for personal or social journeys
as well as for business, you will have to divide the costs
between your business budget and your household
budget to show how much you use for each. You should
include fuel for journeys to and from your home and
business under your household budget outgoings.
Work out your transport costs each month by adding up
the yearly costs and dividing this by 12. Remember to put
money aside for road tax, insurance, repairs, services and
so on. You can then make sure that you are able to afford
the ongoing costs of running a vehicle.
Calculation box: example of
splitting costs between the
business and the household
In the example below, Pat and Eva want to
know how much of their travel costs are spent
on the business and how much are spent on
the household.
Step 1: Pat uses the car 70% of the time for
the business and 30% of the time for
personal household use.
Step 2: Pat has worked out that the total
travel costs including fuel, road tax,
insurance, MOT and maintenance
are £525.00 per month.
Step 3: To work out travel costs for the
business, Pat divided £525.00 by
100 and multiplied the answer by
70. This worked out as £367.50.
Step 4: To work out travel costs for the
household, Pat then takes away
the answer worked out at step 3
(£367.50) from the total travel
costs (£525.00). This worked
out as £157.50.
If your business does not have yearly sales that add up to
the registration level shown on the tax information sheet,
you do not need to be registered for VAT. If you are already
registered for VAT and you want to be removed from the
register, you will need to show that your turnover will be
less than the deregistration level (shown on the tax
information sheet) over the next 12 months. You could
use your business budget to show this.
Use your VAT return for the last quarter to work out the
average VAT you pay each month. Unless you do a lot
more (or a lot less) business from one quarter to the next,
this is usually a reasonably good guide.
If you need help understanding VAT, have problems working
out your costs each month or have any other questions,
Information: limited companies
If you are a sole trader or in a partnership, you are taxed on
your profit before drawings, not how much (or how little) you
draw from the business. This is different for limited companies.
Drawings
When you take your business’s average costs each
month from its average income each month, this will tell
you what your profit is before tax. To work out how much
you can afford to take from the business each month, you
should work out roughly how much tax you will have to
pay. You should set aside this amount for when you get
your next tax bill. You can also work out roughly how
much National Insurance you will have to pay and set
aside this amount too.
‘National Insurance’ on page 40.
Many self-employed people have difficulties paying their
income tax and National Insurance because they haven’t
budgeted for it as a cost before they take money out of
the business. If you do not account for income tax and
National Insurance, this may give the false impression that
you earn more from your business than you actually do.
Self-assessment – income tax
Under the self-assessment scheme, you have to keep
proper financial records, fill in a tax return and make
payments during the year (known as payments on
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21
account). It is important to know how to fill in the return
and to know when your returns need to be handed in.
You may have to pay a penalty if you are late handing in
your returns or late paying income tax. If you are unsure,
See our fact sheet: Income tax debt.
If you fill in the business and household budget sheet
online, your monthly income tax and National Insurance
will be worked out for you.
If you are filling in a paper business and household
budget sheet, you can use our tax information sheet
to work out how much you should be putting aside each
month for income tax and National Insurance.
If you have problems working out how much income tax
and National Insurance you have to pay, or you have any
questions about self-assessment, contact us for advice.
When you have worked out your income tax and National
Insurance, you should take these amounts from the figure
you got by taking your business costs from your business
income. This will show you the money you have available
for drawings (the money you can take from your business
to add to your household income).
Information: is my business viable?
Your business is viable if:
• you can pay all of your business outgoings
on time; and
• you can take (draw) enough money to live on.
Your business is also classed as viable if
you have a lot of assets which, if sold,
would pay off all your business debts. If you
think your business is not viable, contact
us for advice.
Are your business
outgoings more than
your business income?
If your outgoings are more than your income, you should
look to see if you can increase your income or reduce
your outgoings.
on page 11 and ‘Reducing your business
‘Help with managing your money and budgeting
for your business’ below.
If your outgoings are still more than your income after doing
these things, contact us for advice.
Calculation box: example of working out your
available drawings
In the example below Pat has already worked out the business
income and outgoings and has a figure for drawings. Pat then
used the following steps to work out available drawings (the
money the business can afford to pay as a wage).
Step 1: Work out your income tax and National Insurance. Our
tax information sheet can help you work out how
much you should be putting aside each month for
income tax and National Insurance.
Step 2: Take this amount away from the amount you worked
out as your drawings.
Step 3: The amount you have left is your available drawings.
This is the amount you can add to your household
income in your household budget.
Before you work out whether this is enough to cover your
household outgoings, you should see if there are ways to
increase your income or reduce your business outgoings.
on page 11 and ‘Reducing your business
If there is nothing left for drawings, contact us for advice.
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Help with managing your
money and budgeting for
your business
This section gives some useful hints and tips to help
you make the right decisions.
Planning ahead
Business income and outgoings can vary from month to
month. This can depend on a number of things including
the time of year and competition from other businesses.
There are also unexpected events, such as the loss of a
major customer, that could affect your business income.
These things can make it hard to pay bills on time or
repay debts.
The money that comes into your business is called cash flow.
We have a link to a cashflow forecaster on our website
at www.businessdebtline.org. Filling this in will help you
estimate your income and outgoings for the future. It can help
you see when you are likely to experience financial difficulties.
It is important to set aside some of the money from when
your business income is higher, to cover bills and debts when
business income is lower. You could open up a second
business bank account to keep this money separate from
everything else. Setting up a business overdraft can also help
you cope with differences in business income over the year.
Business bank accounts
It is important to set up a business bank account when
you are self-employed. This will help you to keep your
business income and outgoings separate from your
household income and outgoings. Set up an account
with a bank that you don’t have any existing debt with.
This will strengthen your position if you have difficulty
paying your existing bank debts in the future.
By keeping things separate, it will help you to keep records
that your accountant will need to fill in tax returns each year.
A second business account can help you set aside money
each month for your income tax, National Insurance and
VAT bills. You could also put money in this account based
on the results the cashflow forecaster gives you to make
sure that if your business income goes down, you still have
enough to pay your bills and any debts.
If you have difficulty setting up a business bank account,
Reducing your
business outgoings
You can look at your fixed and variable costs to see if
anything could be reduced. This could help to increase the
amount the business can afford to pay you (your drawings).
Fixed costs
Although these costs are usually the same each month, there
are still ways of reducing them or managing them more easily.
Business rent
You could try to negotiate better terms with your landlord
on your business rent, especially if the property is likely to
be difficult to rent out to someone else. If your landlord will
not reduce the rent, you could think about whether to end
the lease or pass the lease on to someone else and look
for cheaper premises.
It may be that you don’t need business premises to trade.
You could think about whether you could trade from home
as this would save you money on business rent, business
rates and utility bills.
See our fact sheet:
Business property leases.
Important: professional advice
Always get professional help from your
accountant or business adviser before making
any drastic changes to your business.
Business rates
You may qualify for a reduction on your business rates bill
depending on where your business is and what type of
business you are. The rules can be complicated and you
would need to contact your local council to find out what
you are entitled to. Contact us for advice.
Variable costs
The variable costs you have will depend on what type of
business you have, and how much trade you have done.
This may include things such as the cost of buying stock
and materials, and travel costs.
Business gas, electricity and phone bills
You may be able to shop around for better deals on these
types of bills. Check to see if you are tied into a contract
as there could be penalties if you try to leave a contract
early. If you are not tied in, you can compare the prices
of several suppliers. There are independent pricecomparison websites that can help you find the best
deal. Always check the terms and conditions to see what
would work best for your business.
You can also ask other suppliers, such as those supplying
you with goods, for better prices. Or you could consider
using cheaper suppliers. Ask for recommendations if you
are considering changing your supplier.
Other costs
Check to see if you are paying too much for your
accountant’s fees. Ask other businesses in the area
for recommendations and compare prices to see what
would work best for your business.
If you pay for advertising, consider the added business
this brings in. If your current way of advertising is not
bringing in a lot of business, consider changing the way,
and how often, you advertise.
Next steps...
You are now at the end of your business budget.
Don’t worry if your budget is only rough at this
point. If you need any extra help, contact us
for advice.
You now need to go to the next stage of step 2
‘Filling in your household budget’. You can use
your drawings (the money you can take from your
business) to start your household budget. Use the
checklist at the start of the next section to check
what you need to think about when doing a
household budget.
Doing the household budget will help you decide
what your options are for dealing with your debts..
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The next stage is to finish your business
and household budget by working out your
household budget.
A household budget is an essential tool to help
you tackle debt problems. Use this section to guide
you through filling in your household budget.
It is important that you do your business budget
first to work out what money you have coming into
your household from your business.
tep 2 ‘Working out your business
s
budget’ on page 19, before you start
to work out your household budget.
Once you have finished your household budget,
you can then see how much money you have left
over. This will help you work out the best way to
deal with your debts.
Checklist
Use this simple checklist to make sure
you take the right steps to work out your
household budget.
Can you increase your household income?
Before you start to look at your household budget,
check to see if there are ways of increasing your
household income.
‘Increasing your income’ on pages 11 to 15.
Can you manage your money better?
You might be able to cut down on some of your
household spending by budgeting better or
shopping around for the best deal.
‘Help with managing your money and
budgeting for your household’ on page 30.
Work out a household budget.
Important: your business and
With your copy of Dealing with your
business debts, you should also have a
business and household budget sheet.
Contact us if you need more copies of our
budget sheets.
Follow the advice and guidance in this section to list
all your income and outgoings so that you can work
out the best way to deal with all your debts.
‘Working out your household income’ on
page 25 and ‘Working out your household
eal with any priority debts you have before
D
deciding what to do about your other debts.
Once you have worked out your income and outgoings,
it is time to look at how you are going to deal with your
debts. Start with any priority debts you have as these
are the ones you need to deal with first.
to work out your budget online
If you think you will find it easier to fill
in your budget online, see our website at
www.businessdebtline.org which has
a budget tool kit.
‘Dealing with your priority debts’ on pages
33 to 49.
ecide on the best way to deal with your
D
non-priority debts.
Once you have worked out your income and outgoings
and any payments that you need to make to priority
creditors, you can decide on the best way to deal with
your non-priority debts.
‘Dealing with your non-priority debts’
on pages 52 to 61.
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Working out your
household budget
Working out your
household outgoings
Working out a household budget is important
because it helps you:
Filling in this part of your household budget will help you
work out how much money you need to spend on basic
living expenses. At this stage, don’t include any
debts, arrears or credit payments.
• see how much money is coming into your household;
• see how much money is going out;
• see how much money you have left;
• work out the best way to deal with your debts;
• work out affordable offers to creditors if you think
this is the best way to deal with your debts; and
• plan your future spending.
If your circumstances change, you should update your
business and household budget sheet with the new
information.
If you have problems working out your household budget,
Working out your
household income
Add up the income for you and your household. Include
the following.
• Your drawings from your business (or your wages after
tax if you are the director of a limited company).
• Wages and salary after deductions (normal take-home
pay) of your husband, wife or partner (not your business
partner). Only include overtime if this is regular. Check
with your local tax office that you have the right tax code.
• Benefits and tax credits, including Child Benefit.
• Contributions from other people who live in your home,
such as grown-up children and elderly relatives (known as
non-dependants). Try to make sure that any non-dependant
is paying enough towards the household expenses (and
don’t forget to include any extra housekeeping costs for
them in the outgoings section of the household budget.
• If you are on a low income, you may be entitled to benefits
that you are not claiming.
• If you are sick or disabled, you may be able to claim
a range of disability benefits. Contact us for advice.
‘Ways of increasing your household income’
on page 15.
What if I am not sure how much to include?
In this section, we give you hints and tips on:
• how you might be able to reduce some regular
bills and payments;
• how to work out the right amount to put in your
household budget for your regular bills and
payments; and
• how much is reasonable to spend on things
like housekeeping and clothing.
Will my creditors think
my household outgoings
are reasonable?
Many of the figures in the outgoings section of your
household budget will be based on your regular bills
or direct debits and standing orders from your bank
account. You might not have much control over some
of these amounts. Your creditors know that this is the
case and it is important that the amounts you put in your
household budget are based on your true spending.
• Be careful and be realistic
Do not include figures that are less than you are really
spending. If your figures on your household budget
are too low, this will mean that any payment arrangement
that you agree with your creditors will be higher than
necessary and you will find it hard to keep to it.
• Be sensible about your spending
If your creditors do not think that the amounts are
reasonable, this will mean they are less likely to agree
to reduced payment offers. If you are not sure, contact
us for advice.
• Give reasons if spending is high
If you think that any of your outgoings might be higher
than a typical household, it is important that you tell your
creditors the reason for this.
‘It’s your budget’ on page 28.
You can write this information in the extra information
section of your business and household budget
sheet or put this information in the letter that you send
to creditors with your budget.
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Household outgoings
Mortgage
Include your full mortgage payments here. Write any
Support for Mortgage Interest payments in the
household income section of your household
budget. Don’t write your mortgage arrears in the
household outgoings section. There is space to
include any mortgage arrears later on.
Rent
Include your full rent payments here. Write any Housing
Benefit you get as income in the household income
section of your household budget. Don’t write your
rent arrears in the household outgoings section. There
is space to include any rent arrears payments later on.
Pension
Only include what you actually pay into a private pension
yourself. If you are also employed, do not include any
payments that have already been taken out of your wages
by your employer.
Council tax
Check whether you can claim Council Tax Reduction.
You normally pay council tax in 10 monthly instalments, but
councils in England must allow you to pay over 12 months
if you prefer. Some councils will accept payments every
week or every two weeks. If you live alone, you will be
entitled to 25% off your instalments. The amount you include
in this section should be your full council tax. Include any
Council Tax Reduction you get in the household income
section of your household budget sheet. There is
space to include any council tax arrears later on.
Water rates
Most water companies will accept payments every month,
every week or every two weeks. Only include your ongoing
water bills here. Include any water rates arrears with your
other non-priority debts. You cannot be disconnected for
household water debt, but it is important to keep up with
your ongoing bills so the debt doesn’t get any bigger.
‘Help with your water bills’ on page 32.
Gas and electricity
If you are on a regular payment plan for your gas and
electricity, include the amount you are paying every month
in your household budget. If you are paying your bills
quarterly (every three months), work out the total cost of
your last four bills and divide this by 12 to find out the cost
each month. Gas and electricity cost less if you pay by
monthly direct debit from a bank account.
If you are behind with any energy payments, only include
your normal energy payments in the household
outgoings section of your household budget. There is
space later on to include details of any payments you are
making towards any arrears.
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‘Household gas and electricity’ on page 31.
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TV licence
Allow £13 a month for a colour licence. If you don’t have a
TV licence or you have fallen behind with your payments,
you will need to come to an arrangement to pay because
you can be fined for not having a licence.
‘Find the easiest way to pay your TV licence’
on page 31.
Magistrates’ court fines
These are priority payments and you should include them
in the household outgoings section of your household
budget. If you are behind with a magistrates’ court fine,
contact us for advice. These are different from county
court judgments, which you should include with nonpriority debts.
‘Magistrates’ court fines’ on page 47.
Maintenance or child support
This means maintenance which you or your partner pays
to someone else, not maintenance you or your partner
receives. Include voluntary payments and any payments
ordered by the court, the Child Support Agency (CSA) or
the Child Maintenance Service (CMS).
‘Child maintenance’ on page 48.
Hire-purchase or conditional-sale goods
and cars
In this section, include payments for any goods you
have bought under hire-purchase or conditional-sale
agreements. If you need a car for work or for mobility
reasons (and you have bought the car using a hirepurchase or conditional-sale arrangement), you will need
to include these payments in the household outgoings
section of your household budget or you may lose the
car. If you are behind with these payments or if you have
a Motability car, contact us for advice.
‘Household hire-purchase or conditional sale’
on page 49.
Childcare costs
This might include childminder fees, nursery fees and the
cost of after-school clubs. If you have extra costs because
your child is ill or disabled, or if you receive Disability Living
Allowance or a Personal Independence Payment because
your child is disabled, contact us for advice about how
to show these costs in your household budget.
Adult-care costs
Make sure you include any extra costs you have if you or
your partner is ill or disabled. If you would like help with how
to show these costs in your budget, contact us for advice.
If you have other essential spending that is not listed on
the budget sheet, put a short description in the space
given. For example, if you belong to a church or other
religious group, you may want to give a regular contribution
to them.
If you use your phone for your business as well, you will
have to divide the cost between your business budget
and your household budget to show how much you use
for each.
each person each week (or around £22 for each person
each month). Don’t forget the cost of school uniforms.
Only include non-dependants if you pay for their clothing.
Remember that your council may help with the cost of
school clothing. This will depend on your circumstances.
If there are reasons why you need to spend more on clothing,
Calculation box: you need to work
out a monthly household budget
‘Are you paying too much for your phone calls?’
on page 31 and ‘An example of splitting costs
between the business and the household’ on
page 21.
If you have a weekly plan for how much you
spend on housekeeping, don’t forget that you
will need to change this to a monthly figure.
To change weekly figures to monthly
figures
Travel
If one of your vehicles is for business use only, all the costs
for this vehicle should go into your business budget. If
you use the same vehicle for business use and social use,
you will have to divide the cost between your business
budget and your household budget to show how much
you use for each.
Housekeeping
Housekeeping covers lots of different costs, including food,
toiletries, cleaning materials, clothing and so on. Make sure
you include any extra costs you have because of an illness
or disability. For example, you might have a special diet
which means you spend more on food. Don’t forget to
include housekeeping costs for any non-dependants
who are included in your household.
A special word about clothing
Each nondependant adult
If you have more than one vehicle, use the extra information
section of the business and household budget sheet
to explain why this is.
Each child
14 to 18
• you live in a rural area where there is little or no
public transport.
Each child
under 14
• you and your partner need to travel to separate
workplaces; or
£57
to
£78
£102
to
£131
Up
to
£21
Up
to
£38
Up
to
£53
Monthly housekeeping budget
Each child
under 14
• someone in your household has a disability;
Weekly housekeeping budget
Couple
If you have a good reason why you need two vehicles, it is
very important to explain this to your creditors. For example,
creditors are likely to be understanding if you need two
cars because:
See the figures in the table below for a rough guide to
typical spending on housekeeping (including clothing).
Add the figures together for any children or non-dependent
adults in your household.
Couple
What if we have more than one vehicle?
for example, because of wear and tear due to a disability,
make sure you use the extra information section in
the business and household budget sheet to tell your
creditors the reason why.
Single person
‘An example of splitting costs between the
business and the household’ on page 21.
Multiply the weekly figure by 52 (weeks)
and divide the answer by 12 (months).
Single person
Include the costs of travelling to work, to school and for
shopping. Include the costs of using public transport,
buying travel season tickets and all the costs of running a
car or motorbike, if you have one. If you have extra travel
costs because of a disability or because you live in a rural
area, use the extra information section of the business
and household budget sheet to explain to your creditors
what these are.
SEE
£249
to
£340
£443
to
£569
Up
to
£93
Up
to
£164
Each nondependant adult
This includes your home phone and any mobile phones
you have. Only include your ongoing bill. Don’t pay more
than you need to for your phone.
Each child
14 to 18
Phone
Up
to
£229
The amount you spend on clothing will vary depending on
your circumstances. As a rough guide, allow £3 to £5 for
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Other household outgoings are made up of a mixture of
things that need to be budgeted for. This type of spending
will vary from household to household but might include
haircuts, children’s pocket money, house repairs, and cable,
satellite and internet services. Here is some guidance on
some of the other household outgoings you might have.
Health costs
Don’t forget the cost of prescription charges, dental
treatment, glasses and sight tests for the whole household.
Check to see if you can get help with these expenses.
‘Help with health costs’ on page 14.
Hobbies and leisure
This might include the costs of going to clubs and pubs, going
on outings, and the costs of sports and gym membership. Be
careful about how much you are spending on these things. If
you need to cut back, these are areas that you might look at.
Gifts
Don’t forget the costs of Christmas and birthday presents.
Other
If you have other spending that is not listed here, or
anywhere else on the budget sheet, write a short description
in the space given. Do not include any payments towards
your debts.
Repairs and house maintenance
How much do I have left
to pay my creditors?
School meals and meals at work
The business and household budget sheet has
sections for you to work out payments to both your
priority creditors and your non-priority creditors. The
amount in the money available for all creditors box is
the total you have available to pay all your creditors.
Don’t forget routine house repairs, repairs to washing
machines, maintenance contracts and so on.
Remember, you will save money if you take a packed
lunch to school or work. Check to see if you can claim
Income Support, income-based Jobseeker’s Allowance
or income-related Employment and Support Allowance. If
so, you can claim free school meals for your children. You
can also claim free school meals if you receive Child Tax
Credit, work less than 16 hours a week and your income
is below a set amount. If you get Pension Credit (Guarantee
Credit), you can claim free school meals. If you get Universal
Credit, you can claim free school meals in England. Contact
us for advice.
The next step is to work out how much of this money you
need to offer to your priority creditors. They have stronger
powers to get their money back, so you must deal
with them before you work out what to do about your
non-priority creditors.
Working out what to pay towards your
priority debts
‘Dealing with your priority debts’ on pages 35 to
49 for detailed advice on which debts you should
treat as a priority.
Extra advice: it’s your budget
Your household’s outgoings will be different from another household’s.
‘Housekeeping’ on page 27.
But remember, you may not spend as much as someone else, or
you may have extra expenses because of your circumstances such
as a special diet, the cost of a uniform at work, extra transport costs
due to disability, or if you live in a rural community and so on. It is
your household budget, so the figures should be your own.
Extra advice: be careful!
If you don’t take account of extra expenses,
or if your figures are much below our
guidelines, you may find it more difficult
to stick to any long-term repayment plan.
This could lead you into greater difficulties.
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Freephone 0800 197 6026
Once you have worked out what to pay your priority
creditors, you will need to contact them to make an
arrangement.
‘Dealing with your priority debts’ on pages 35
to 49 for advice on how to negotiate with your
priority creditors.
The next step is to include the agreed priority debt
repayments on your business and household budget
sheet under your priority debts. You can then add up
all your priority debt repayments and put the total in the
total priority debt repayments box.
Important: no money left to pay
your priority debts?
If you have no money left to pay your priority
creditors, you still have options.
‘What if I have no money left to
pay my creditors?’ on page 53,
or contact us for advice.
Decide on the best way to deal
with your non-priority debts
Now you have worked out your income and outgoings
and any payments that you need to make to your priority
creditors, you need to look at all your options for dealing
with your non-priority debts.
‘Dealing with your non-priority debts’ on pages
52 to 61.
If you decide the best option for you is to try to come to a
payment arrangement with your creditors yourself, the next
section explains how to work out your offers of payment.
Working out offers of payment
to non-priority creditors
Once you have worked out how much you can afford
to pay off your priority debts, see what money you have
left over for your non-priority debts. If you need help
to work out offers of payment, contact us for advice.
• You can work out what you have left for non-priority
creditors by taking away your priority debt repayments
from the total money available for all creditors.
• Write this figure in the money available for non-priority
creditors box.
• This is how much you have left to share between your
non-priority creditors.
If you have some money left after taking away your
total priority debt repayments from the money
available for all creditors, the next step is to divide
up your money between your non-priority creditors.
The best way to do this is called ‘pro-rata distribution’.
This is how the court would do it and means all your
creditors get a fair share of the money you have available.
In the calculation box opposite we show you how to
work out pro-rata payments. Use a calculator to work out
your payments. You should round the final figure up or
down to the nearest £1. Check the example on page 30 to
see how a typical list of pro-rata payment offers might look.
• Contact all your non-priority creditors to find out exactly
how much you owe each one.
• List each of the debts under your non-priority debts and
how much you owe each of them under total you owe.
• Add up all the individual debts to find out how much you
owe in total.
Important: no money left to pay your
non-priority debts?
If you have no money left to pay your
non-priority creditors, you still have options.
‘What if I have no money left to
pay my creditors?’ on page 53,
or contact us for advice.
Extra advice: what to do next
If you are not sure about what to do next,
or about the best option to deal with your
debts, contact us for advice.
Calculation box: working out payments
To work out pro-rata payments for each of your non-priority
creditors, you need to find out:
• how much you have left over to pay your non-priority
creditors. You can find this on your business and household
budget sheet in the total available for non-priority
creditors box (Box H); and
• how much you owe each of your non-priority creditors.
Step 1: list all your non-priority creditors and the amount you
owe each of them.
Step 2: add up the total amount you owe to all your non-priority
creditors (Box I).
Follow steps 3 and 4 for each of your non-priority debts.
Step 3: multiply your total available for non-priority
creditors (Box H) by the individual debt.
Step 4: divide the amount you worked out at step 3 by the
total amount you owe. This will give you the payment
offer you should make to your creditor.
‘Example budget sheet calculation’ on page 30.
• Write the total in the total owed to non-priority
creditors box.
• Work out the monthly offer of repayment for each creditor
by using the formula shown in the calculation box.
Extra advice: small offers
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.
Freephone 0800 197 6026
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29
What if I already have a county
court judgment?
You should include this debt with your non-priority
debts and work out the offer of payment in the
same way.
‘What if my creditors take court action?’
on page 59.
If your offer of payment is less than the amount the court
has ordered you to pay, you may need to apply to the court
to reduce the amount. This will mean you are treating all
your creditors fairly and you are not paying one creditor
more than you can afford. If you need to reduce the
amount that you have to pay on a county court judgment,
See our fact sheet: County Court –
suspending a bailiff’s warrant or reducing
instalments on a county court judgment.
Are your household
outgoings more than
your household income?
If your outgoings are more than your income, you
should look to see if you can increase your income
or reduce your outgoings.
‘Ways of increasing your household income’
on page 15.
‘Help with managing your money and budgeting
for your household’ below.
Total owed
How the
calculation
is done
Help with managing your
money and budgeting for
your household
Monthly
repayment
offers
In the example below, Pat and Eva have worked out their
income and outgoings. After taking account of an extra
£50 a month they are going to have to pay towards their
council tax arrears (which is a priority debt), they have £133
every month left over to pay their non-priority creditors.
Non-priority
creditors
Calculation box: example budget sheet
If your outgoings are still more than your income after
doing these things, contact us for advice.
£133 x £912 ÷ £16,981
= £7.14 (rounded down
to £7)
£912
£7
ABC business
bank loan
£2,381
£19
£133 x £2,381 ÷ £16,981
= £18.64 (rounded up
to £19)
Unicorn
credit card
£3,397
£27
£133 x £3,397 ÷ £16,981
= £26.61 (rounded up
to £27)
Alphabet
bank loan
£5,671
£44
£133 x £5,671 ÷ £16,981
to £44)
Flower
Financial
Services
Cheep
Telecoms
£4,514
£35
£133 x £4,514 ÷ £16,981
to £35)
Newhome
catalogue
Total nonpriority debts
£106
£1
£16,981
£133
£133 x £106 ÷ £16,981
= 83 pence (rounded up
to £1)
Eva and Pat will have paid off their council tax arrears in four
months. They will then be able to do their budget again and
increase their payments to their non-priority creditors.
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Freephone 0800 197 6026
This section gives some useful hints and tips
to help you make the right decisions.
Planning ahead
When money is tight, it is very hard to stick to repaying
debts when an important bill needs paying or the car or
house needs an urgent repair. You can spread out these
payments and make budgeting much less stressful if you
regularly put a bit of money aside to pay for expenses
such as these.
Christmas, birthdays and holidays also put a big strain on
your household budget. Think about opening a savings
account or joining a credit union. If you join a credit union
and start saving with them, you will also be able to apply
to borrow money once you have proved you are a reliable
saver. The Money Advice Service website has information
about credit unions.
‘Useful contacts’ on page 62.
Extra advice: think about opening
a budgeting account
Sometimes it is easier to cope with paying
bills if you open a separate bank account.
You can pay regular amounts into this
account to help you plan ahead and keep
up with your regular bills. Setting up direct
debits or standing orders will mean that
regular payments you have to make can
be automatically taken out of your account.
Find the easiest way
to pay your TV licence
Paying for your TV licence is a priority. This is because
you can be fined in the magistrates’ court for not having
a licence. If you don’t pay the fine set by the magistrates’
court, this can lead to bailiffs calling, or you could even
go to prison.
‘Magistrates’ court fines’ on page 47.
As well as having the fine to deal with, you will still need
a TV licence.
You will get 50% off your TV licence if you are registered
blind. The licence is free if you are over 75. There are
different ways of paying for a TV licence. Work out which
one will suit you best.
• You can use the TV Licensing savings card if you have at
least three months left on your current TV Licence before
it expires and want to save towards your next licence.
You can pay in small, manageable amounts, online,
by text or at PayPoint outlets in shops. To apply for
a TV Licensing savings card, call 0300 555 0281.
• You can pay for your TV licence by instalments either every
three months or every month by direct debit from your
bank account. Contact TV Licensing on 0300 790 6071.
• There is a payment scheme called the ‘TV Licensing
payment card’ which allows you to make payments
towards your licence every week or month. You can also
pay fortnightly once you have paid for your first licence.
You can only use the scheme for colour licences. You
can pay either, online, by text or at PayPoint outlets in
shops. Contact the helpline on 0300 555 0286 or see
the TV Licensing website at www.tvlicensing.co.uk.
Help with gas and
electricity bills
It is very important to budget for gas and electricity bills.
Your energy company should offer you different payment
options and budgeting schemes to suit you. You can ask
to pay your bills every week, every two weeks or every month.
‘Household gas and electricity’ on page 46 for
more information on payment options and what
to do if you are behind with your energy payments.
Help with high bills
If your heating bills are very high, contact the Energy Saving
Advice Service on 0300 123 1234 (Wales 0800 512 012
option 3) or visit the Energy Saving Trust website at
www.energysavingtrust.org.uk. The Energy Saving
Advice Service can give you information on grants and
payment schemes that may be able to help with energy
costs, and how to save money on heating bills. You can also
contact the Home Heat Helpline on 0800 336 699 or see
www.homeheathelpline.org. The Home Heat Helpline
can give you information on grants, benefits and payment
schemes that may be able to help with energy costs, and
how to save money on heating bills. In Wales, you can contact
Nest on 0808 808 2244 or see www.nestwales.org.uk.
Nest offers free home improvements to help people heat their
homes more efficiently and will also do a benefit check.
Getting the best energy deal
You might be able to save some money by switching to
another supplier. This may work out cheaper, particularly
if you have both gas and electricity from the same supplier.
If you owe money to your energy supplier, you may not be
accepted by a new supplier but you should be allowed to
switch if you have a prepayment meter and owe less than
£500. There are a number of independent price-comparison
websites that can help you find the best deal. Contact
the Citizens Advice consumer service for a list of
authorised companies.
Help from gas and electricity companies
Some energy companies have set up trust funds that may
be able to help you pay your energy bills if you are in financial
difficulties. Ask your energy company if they run a scheme
or contact us for details. You can also download a guide
to utility trusts and services from the Auriga Services Ltd
website at www.aurigaservices.co.uk. Select the
‘Schemes to help water and energy customers’ link.
You may be able to get a grant or loan to help with insulation,
draught proofing, central heating and other energy-saving
measures.
‘Help with gas, electricity and water costs’
on page 15.
Are you paying too much
for your phone calls?
Extra advice: complaining about
your energy supplier
Check your phone contract is the best you can find. You may
be able to make big savings if you switch phone companies.
Another way to cut costs is to use an ‘override provider’. You
won’t have to change your phone line. By simply dialling a
number before the phone number you are calling, you could
cut the cost of daytime calls and calls to mobiles.
You can complain to Ombudsman Services:
Energy about a billing or transfer problem.
Even if you don’t want to change your phone company,
there are other ways to cut down on your phone bills.
• Pay by direct debit.
• Use the internet. If you have access to the internet, you
may be able to talk for free using software such as Skype.
Freephone 0800 197 6026
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31
• Check your contract. Are there extras such as
voicemail that you don’t really need? If you have an
expensive package that allows you to make unlimited
calls at any time, do you really need it?
• See if your phone company has a social tariff. This
may be helpful if you are on certain benefits and only use
your phone occasionally.
• See if you can switch to paperless billing. If you agree
to get your bills online, you could save some money.
An outstanding bill
If you have a bill that you cannot afford to pay and you
want to keep the phone line, ask your phone company if
you can pay by instalments. Your phone company may
be more likely to agree if you set up a monthly payment
plan, perhaps by direct debit. They may also agree to
let you have only incoming calls for a short time to help
reduce your bills. When you have cleared your debt with
the phone company, you may be able to go back to your
normal phone package.
Extra advice: disconnected phone?
If you have been disconnected, treat the
bill as a non-priority debt.
‘Dealing with your non-priority
debts’ on page 52.
Help with your water bills
You may be able to reduce your water bill or get help
paying water debts in the following ways.
• Most water companies have trust funds or assisted
payment schemes and may be able to help you pay
your water bills if you are in difficulty.
• Water meters only charge you for the water you actually
use and this could make your bills cheaper. Ask your
water company for advice or use the water-meter
calculator at www.ccwater.org.uk.
See our fact sheet: Water-rates arrears
and water trust funds.
Remember: if you need extra help
You can always contact us for help,
information and advice. Call us on
0800 197 6026 or see
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Freephone 0800 197 6026
Next steps…
You are now at the end of step 2. Doing
a budget will really help you deal with your
debts, so we hope you found this section
easy to follow. Don’t worry if your budget
is only rough at this point. If you need any
extra help, contact us for advice.
Don’t forget to update your budget after
following the advice in steps 3 and 4.
You now need to go to step 3 ‘Dealing with
your priority debts’. Use the list at the start
of this section to check whether you have
any priority debts. If you don’t have any priority
debts, you can skip step 3 and move straight
to step 4 ‘Dealing with your non-priority debts’.
If you do have priority debts, this section will
explain the powers your creditors have to make
you pay. It also gives you advice on how to deal
with your debts.
Dealing with your
priority debts
You’ve worked out your business and household income and
outgoings (see previous section). Now you need to work out
which are the most important debts – the ones you need to start
paying off first. The rest of this section contains useful information
about the following priority debts, including guidance on what
to do and how much to pay.
Business priority debts
• Business priority debts
• Business mortgage and rent arrears
• Business rates
• Business gas, electricity and water charges
• Income tax, VAT and National Insurance
• Hire purchase, conditional sale and
equipment leases
• Major suppliers
• Some business overdrafts and loans
• Accountant fees
Step 3
Dealing with your
priority debts
Household priority debts
• Household mortgage and rent
• Council tax
• Household gas and electricity
• TV licence
• Magistrates’ court fines
• Parking penalty charges
• Child maintenance
• Tax-credit and benefit overpayments
• Hire purchase or conditional sale
Freephone 0800 197 6026
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33
Dealing with your
priority debts
Checklist
Use this simple checklist to make sure you take the right steps to deal with your priority debts.
Some debts are more important than others. These are called priority debts. It is important to use the
money you have for your creditors to make agreements to settle these debts first. If you are not sure
about how much to offer, contact us for advice.
‘What are priority debts?’ on page 35.
et some free, independent money advice
G
If you are reading this and haven’t yet spoken
to a money adviser, contact us or your local advice
centre for advice about all your options.
Explain your situation to your creditors
Even if you haven’t decided how to deal with
your priority debts, it’s a good idea to explain to
your creditors that you are struggling. Tell them
you are taking advice and doing a budget. This
may buy you some breathing space. Use the
Hold action on your account sample letter
included with this pack.
Work out a business and household budget
sheet
A business and household budget sheet is
very important as it will help you work out what
payments you can afford to make to pay off your
priority debts.
‘Working out your business budget’
on page 19 and ‘Working out your
household budget’ on page 25.
Pay as much as you can
It is important that you pay as much as possible
towards your priority debts. You will usually
need to pay enough to cover your ongoing
payments and offer a regular payment to reduce
the arrears.
34
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Freephone 0800 197 6026
Has the creditor taken further action?
Even if a creditor has said they will take further
action, such as disconnecting your energy
supply or repossessing your home, it is usually
not too late to come to an arrangement and
stop the action. Contact us for advice.
Can you increase your income?
You may be entitled to benefits, tax credits
or Universal Credit that you are not claiming,
or there may be other ways of increasing
your income.
‘Benefits, tax credits and Universal
Credit’ on page 12, ‘Ways of increasing
your business income’ on page 11 and
‘Ways of increasing your household
income’ on page 15.
Have you been treated unfairly?
If you think you have been treated unfairly,
you may have reason to complain. You may
be able to complain to an ombudsman service,
depending on what type of debt you are
complaining about. You will usually have
to complain to the creditor first. If you want
more advice about who you can complain to,
Dealing with your
priority debts
What are priority debts?
Some debts are more important than others. The law gives
different creditors different ways of getting their money back.
If you don’t act quickly, some creditors could:
• take away your business premises or your home
(repossession or eviction);
Creditors can take action on some priority debts without
going to court first. For example, gas and electricity
companies can disconnect you if you have a meter outside
your business premises or your home. Her Majesty’s Revenue
& Customs (HMRC) can use bailiffs to collect income tax and
VAT arrears, without a court order. Most other priority creditors
can only usually take action against you after court action.
• cut off your gas or electricity (disconnection);
• cut off the water supply to your business premises
(disconnection);
• send bailiffs to take belongings from your business
premises or your home; or
• ask the magistrates’ court to send you to prison.
It is important to use the money you have for your creditors
to make agreements to settle these debts first. If you are
not sure about how much to offer, contact us for advice.
‘How much do I have left to pay my creditors?’
on page 28.
Important: don’t panic
You should be given warning and, as long
as you act quickly, you should be able to
stop these things happening.
The chart below tells you what might happen if you delay sorting out different priority business debts.
Priority business debtSee this page
for details
Business mortgage
page 37
Second business mortgage or page 42
secured business overdrafts and loans Possible action against you
Repossess your business premises.
Repossess your business premises (or repossess your
home if the debt is secured on your home).
Business rent or lease arrears
page 37Evict you from your business premises. Use bailiffs.
You may also still have to pay the arrears, which could
result in court action for a money judgment.
Business rates
page 37Use bailiffs, bankruptcy or apply to the magistrates’
court to send you to prison.
Gas or electricity and water supplies to business premises
page 38 to 39
Cut off your supply.
Income tax, National Insurance and VAT arrears
page 39
Use bailiffs or bankruptcy.
Hire purchase, conditional sale or page 41
equipment leases (for your business)
Repossess the goods or apply for a court order to make
you hand them back.
Major suppliers
page 42
Some business overdrafts and loans
page 42You may need to maintain your bank account in order to
carry on trading. This will depend on the needs of your business.
Accountants
page 43They could take a ‘lien’ (where they keep your books).
This means, for example, you cannot access your figures
for tax returns.
Loss of supplies which could make your business fail.
Freephone 0800 197 6026
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35
Dealing with your
priority debts
Business and household
priority debts
You may have more than one priority debt. Some of these
may be business debts, for example, rent arrears for your
business premises. Some may be household debts, for
example, council tax arrears. It is important to deal with
all your priority debts. The first part of this step tells you
how to deal with any priority business debts you have.
The second part of this step tells you how to deal with
any priority household debts you have.
The chart below tells you what might happen if you delay sorting out different priority household debts.
Priority household debtSee this page
for details
Household mortgage
page 44
Second household mortgage or page 44
secured overdrafts and loans
Repossess your home (or repossess your home if the
debt is secured on your home).
page 44Evict you from your home. Use of bailiffs. You may also
still have to pay arrears, which could result in court action
for a money judgment.
Council tax
page 45Use bailiffs, deductions from your wages (if you are
employed), deductions from some benefits, or you
could be sent to prison.
Gas or electricity to your home
page 46
page 47Use bailiffs, deductions from your wages (if you are
employed), deductions from some benefits, a clamping order,
enforcement through the County Court or the High Court, or
you could be sent to prison.
Child maintenance
page 48This will depend on whether you pay maintenance through
the court, through the Child Support Agency (CSA) or the
Child Maintenance Service (CMS). In some cases, you
could have your driving licence taken away, or if you
deliberately refuse to pay, you could be sent to prison.
Benefit overpayments
page 48Deductions from most types of benefits, Universal Credit
and, in some cases, deductions from your wages (if you
are employed) and court action.
Tax-credit overpayments
page 49Deductions from your ongoing tax credits, Universal
Credit, or through your tax payments, or court action.
TV licence
¦
Repossess your home.
Household rent Hire purchase or conditional sale page 49
(for household items) 36
Possible action against you
Freephone 0800 197 6026
Cut off your supply.
Repossess the goods or a court order to make you hand
them back.
page 47Use bailiffs, deductions from your wages, deductions
from some benefits, a clamping order, enforcement
through the County Court or the High Court, or you could
be sent to prison.
Dealing with your
priority debts
Priority business debts
Business mortgage
A lender’s powers are different depending on whether you
take out a mortgage for your home or for business purposes
such as shop or office premises or a buy-to-let property.
Your mortgage lender may be more demanding if you took
the mortgage out for business purposes.
The Law of Property Act 1925 (LPA 1925) applies to
most business mortgages (for example, buy-to-let or
commercial mortgages).
The Law of Property Act gives your mortgage lender the
right to repossess the property or land without a court
order. To do this your mortgage lender will need to appoint
receivers (known as LPA receivers).
Your mortgage lender can appoint LPA receivers if you fall
behind with your mortgage payments. The receivers’ job is
to recover the money you owe to the lender. They can do
this by collecting the rent direct from the tenant (if this applies),
selling the property or both.
Warning: getting your property
back from the receivers
Even if you clear the debt in full, the receivers
do not have to hand the property back
to you. They can still put it up for sale.
If you feel that the receivers are acting
inappropriately, you may need to get legal
advice to help you make a complaint.
Business rent
If you do not keep up your rent payments, your landlord
can send a bailiff to your business premises to remove
your stock and equipment without a court order.
It is important to let your landlord know if you are in difficulties
and to come to an arrangement to pay off any arrears.
If you cannot make payments, your landlord could also
change the locks on your business premises to stop
you gaining entry. In some cases, the landlord may have
to apply for a court order to evict you.
Information: changing locks
and removing goods
Your landlord cannot change the locks on
your business premises and remove goods
at the same time. If your landlord has done
this, they must give you the chance to
come back to your business premises and
take your goods. Contact us for advice.
Any action your landlord takes will depend on your relationship
with them and the length of any lease you may have. It is
important to negotiate with your landlord as soon as you realise
you are in financial difficulties. You can use your business and
household budget sheet to help you do this.
If you stop trading, you may still have to pay rent on your
business premises. Check the terms of your lease. You
may also have to pay business rates until the term of the
lease has ended. Your landlord can still take court action
to recover any rent arrears you might owe, even if you
have stopped trading.
If you need more information about negotiating with your
landlord, contact us for advice.
Information: always try to negotiate
Be open and honest with both the
receivers and the mortgage lender. If you
can show that the property can continue to
be rented out to clear the debt rather than
it being sold, you may avoid losing the
property. Once you have cleared the debt
(and paid back the receiver’s fees), the
property may be handed back to you.
See our fact sheet: Business property leases.
Business rates
The amount of business rates (sometimes called nondomestic rates) you have to pay for business premises
is based on the rateable value, which is calculated during
a valuation carried out by the district valuer.
Can I reduce my bill?
If you want to appeal against the rateable value, you should
do this within six months of taking over the business premises.
Freephone 0800 197 6026
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37
Dealing with your
priority debts
It is a good idea to get professional advice from a specialist
in this field if you are thinking about making an appeal.
Phone your council’s valuation office for a list of reputable
firms in your area and be very careful when dealing with firms
who approach you first.
Warning: do not stop paying
You should not stop paying your business
rates just because you feel that the valuation
is wrong. You have to keep paying the set
rate until the valuation is changed.
It may be possible to claim a range of different reliefs to
reduce the amount you have to pay for business rates.
You may even be able to ask the local authority to grant
up to 100% relief. You have to demonstrate that you
would suffer severe hardship if you had to pay business
rates and that it is in the interests of other ratepayers for
them to grant relief. The local authority will usually only
grant 100% relief if you supply an important service to
the local community, and only in extreme circumstances.
If you stop trading, but are still responsible for your
business lease, you may still have to pay business rates.
Information: types of relief
For the range of different reliefs available,
see the official government website at
www.mybusinessrates.gov.uk.
What happens if I don’t pay?
The council will usually tell you to pay your bill in 10 monthly
instalments but they may also accept weekly payments.
You can also ask the council to let you pay your bill in 12
monthly instalments. If, at any time, you find that you can’t
pay the full monthly instalment, don’t just stop paying!
• Keep paying what you can afford.
¦
Once the council have got a liability order, there are a
number of ways they can make you pay. This includes
sending bailiffs to your business premises or home.
Even if they have a liability order, it is not too late to try to
make an arrangement to pay. Contact the council as soon
as possible if you have not paid or agreed a payment
arrangement with them.
Other types of action the council may consider include
bankruptcy. They may even apply to the magistrates’
court for an order that you be sent to prison. The court
can only do this if you have refused to pay, or neglected to
pay, even though you had the money to do so. If you are
concerned about this type of action, contact us for advice.
See our fact sheet: Business rates.
Complaining
You may be able to complain to the Local Government
Ombudsman if the council have not behaved properly
or if they have not followed the proper procedure. You
will need to complain to your local council first.
Business gas and electricity
Gas and electricity companies can cut off your supply in
a few weeks if you don’t pay them, but they should only
do this as a last resort. They must give you notice first.
How do I make a payment arrangement?
The energy supplier will usually want you to pay their bill
before the next bill is due. You can ask to pay your bills
every week, every two weeks or every month. If you have
arrears, phone or write to the supplier and ask for a
payment arrangement.
Use your business and household budget sheet to
support your offer of payment. This must cover the cost
of the energy you are using and an amount to reduce the
arrears. Even if the supplier does not agree to your offer,
start paying what you have offered immediately. Do not
offer to pay more than you can afford towards the arrears.
• Contact the council and try to come to an arrangement.
help explain your situation.
Ask if the supplier has a special department that deals with
arrears and payment arrangements. If the first person you
speak to is unhelpful, ask to speak to someone more senior.
If you don’t keep to any payment arrangement you make
with the council, they may apply to the magistrates’ court
to make a ‘liability order’. This is the same process that is
used to recover unpaid council tax.
By law, your supplier must give you 14 days’ notice before
they disconnect you. The Extra Help Unit may be able to
help you if you are threatened with disconnection. You
cannot speak to them direct, you must speak to Citizens
Advice consumer service first.
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Further action against you by the council
‘Council tax’ on page 45.
Freephone 0800 197 6026
Dealing with your
priority debts
Extra advice: What if I live at my business
premises?
Your energy supplier may have to offer you a
prepayment meter before disconnecting you
if you live at your business premises. This
depends on what type of contract you have
with your energy supplier. You may pay more
for your energy if you have a meter fitted but,
once you have one, your supplier cannot
disconnect you. Contact us for advice.
Complaints
If you complain to your energy supplier and you are not
happy with their response, you can complain to the
Ombudsman Services: Energy. They are an independent
organisation that will investigate your complaint and make
recommendations about how it should be sorted out.
For business premises, your water company will write to
give you a date when your water will be cut off. Contact the
company immediately and start paying the amount on your
current bill plus an amount you can afford off the arrears.
Even at this stage, you will usually be able to make an
arrangement to pay off the arrears.
If, at this stage, your water company asks you to pay
more than you can afford, contact us for advice.
Warning: risk of eviction
In extreme cases, the environmental risk of
your business being without water could
lead to you being evicted, whether you own
or rent your business premises.
Information: complaining
See our fact sheet: Commercial energy debt.
OFWAT is the regulatory body for water.
Their guidelines say that the company should
take your circumstances into account when
making an arrangement to pay. If you want
to complain about your water company,
contact your regional Consumer Council for
Water, which represents consumers of water
and sewerage in England and Wales. They
will look into your complaint about the water
company. You can find their contact details
at www.ccwater.org.uk, or see your local
phone book for your regional contact number.
Business water rates
Your water company can, as a last resort, cut off your supply
to your business premises if you do not pay your bills.
However, if you are in financial difficulty, ask to pay your
bills weekly, fortnightly or monthly to suit your budgeting.
If you have arrears, you will normally be expected to pay them
before your supplier sends your next bill. Use your business
and household budget sheet to make arrangements to
pay the arrears.
For mixed-use premises (where you use part of the premises
for business use and part for household use) remember to say
which bill the payment is for, and be careful not to get payment
books for different years mixed up. You should not be cut off if
you have only one supply for mixed-use premises.
Remember: household water supply
If you have arrears on your household
water supply, your supply cannot be cut
off. You should also not be cut off if you
have just one supply for both household
and business premises.
Income tax, VAT and
National Insurance
Income tax
You must contact HMRC as soon as possible to arrange
time to pay income tax arrears.
Make an offer to pay off the debt at a rate you can afford,
and use your business and household budget sheet to
support your offer. Even if your offer is refused, start paying
what you can afford, no matter how small the amount.
If you think your offer has been unfairly rejected, ask HMRC
to review it under their complaints procedure.
Freephone 0800 197 6026
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Dealing with your
priority debts
number of years, or if you agree a repayment offer and then
do not pay. They will look at making you bankrupt even if you
have no assets, and you will usually have to stop trading.
Important: tax returns
HMRC will not accept an offer to pay arrears
unless your returns are up to date. If you are
having trouble putting in your tax return, for
example, because you have lost your figures
or your accountant is holding on to your
books because you have not paid their bill,
‘Accountants’ on page 43.
If your tax return is late, HMRC will decide (‘determine’) how
much you owe them. If your debt has been worked out in this
way, you must send in your tax return as soon as possible.
You should do this even if you think you may be too late. This
may mean the debt is reduced and will also stop you being
charged penalties for not sending in your tax return. You
will be charged interest on any tax you are late paying.
HMRC can use a number of enforcement methods to
recover an unpaid tax debt. These include the following.
Debt collection agencies
• HMRC may pass your debt on to a debt collection
agency. They are not bailiffs and have no rights to force
entry to your business or home and take goods.
• Use your business and household budget sheet
to make them an offer to pay by instalments based on
what you can afford.
Bailiff action without a court order
• HMRC does not need a court order to visit your business
premises to take away your stock and equipment, up to the
value of the debt. This is known as taking control of goods.
• As with income tax, HMRC can take action to collect
VAT arrears without a court order and can take away
stock and equipment from your business premises. If
there is not enough stock and equipment to cover the
arrears they can visit your home address and take away
goods (unless the debt is owed by a limited company).
• You will usually have to pay any VAT arrears in full before
the next VAT return is due. Late payment penalties will
be added to the bill from the time it becomes overdue.
• The VAT officer will usually look at your past record of
VAT payments before deciding what payments to
accept. So start paying what you can afford immediately,
no matter how small the amount.
• If the arrears are based on an estimated assessment,
you must send in an accurate return, which could
reduce the bill. Even if you cannot pay, you may avoid
a penalty for not making a VAT return.
• If HMRC cannot recover the money you owe by taking away
your goods, they will usually apply for a bankruptcy order.
They can only do this if you owe them £750 or more. It is
important to let HMRC know if you stop trading, and you
should apply to deregister for VAT if your turnover is less
than the deregistration limit shown on the tax information
sheet included with this pack. It is then often easier to come
to an arrangement to pay off your VAT arrears by instalments.
National Insurance
There are four classes of National Insurance contributions
(NICs).
County Court action
• Class 3 NICs are voluntary contributions paid to help
people qualify for retirement pension and certain benefits.
• This includes a charging order where any properties you
own are used as security for the debt, taking money from
your bank account and taking money from your wages if
you are employed.
‘What if my creditors take court action?’ on page 59.
Bankruptcy
• HMRC can apply to make you bankrupt if the debt is for
£750 or more. This is more likely if you owe tax from a
¦
VAT
• If there are not enough goods at your business premises to
cover your debt, HMRC staff can go to your home and take
goods from there (unless you trade as a limited company).
If you refuse to let HMRC staff into your home or
business, they could get a warrant to force entry, but this is
rare. They are more likely to take you to the County Court for
a money judgment or to start bankruptcy proceedings.
• HMRC can apply to the County Court for a money
judgment. If you do not make the payments the court
has ordered, HMRC can take further action against you.
40
See our fact sheet: Income tax debt.
Freephone 0800 197 6026
• Class 1 NICs are deducted from an employee’s wages and
paid by the employer, along with income tax, under PAYE.
• Class 2 NICs are paid at a flat weekly rate by self-employed
people (see our tax information sheet included with this
pack for the current amount).
• Class 4 NICs are paid by self-employed people on top
of Class 2 NICs if earnings are above a certain threshold.
See our tax information sheet included with this pack.
Class 1 and Class 4 NICs are collected by HMRC in the
same way as income tax arrears. However, bailiff action
can only take place at your business premises.
Class 2 NICs are collected by the National Insurance
Contributions Office and, although they have the same
powers as HMRC have for Class 1 and Class 4 NICs, their
current policy seems to be to start proceedings through
the County Court.
Dealing with your
priority debts
Business hire purchase
or conditional sale
You can buy goods on different types of credit
agreements. With most credit, you own the goods straight
away and only owe the money to the creditor. The creditor
cannot ask you to return goods you bought with most types
of credit. However, with hire-purchase and conditional-sale
agreements, you do not own the goods until you have paid
the last instalment. The most common type of goods bought
on hire-purchase agreements are cars.
Can my lender take back the goods?
If you fall behind with your payments, the lender may be
able to ask you to return the goods and then sell them
to reduce the debt. You cannot sell the goods yourself
without the lender’s permission.
Have you paid less than a third of the debt?
If you fall behind with payments, the lender may be able
to repossess the goods. They do not usually need to go
to court first if you have paid less than a third of the debt.
However, they may have to go to court if you keep the
goods inside your home or business.
You may be able to return the goods.
‘Returning the goods voluntarily’ below.
Extra advice: what kind of agreement
do you have?
If you have a hire-purchase or conditional-sale
type of credit agreement, it should state this clearly.
This information only covers hire-purchase and
conditional-sale agreements which come under
the Consumer Credit Act. Your agreement will
not come under the Consumer Credit Act if it
was taken out by a limited company. If you are
not sure what type of agreement you have, check
your agreement or contact us for advice.
Have you paid off more than a third of the debt?
If you have paid off more than one third of the total owing,
the creditor must go to court to ask you to return the
goods. They cannot just come round and remove them.
Returning the goods voluntarily
You may be able to return the goods by writing to your
lender to end your agreement. This is only possible if your
lender has not already ended your agreement. You will
owe up to half the agreement amount, any arrears and
reasonable charges if the goods are damaged. If you have
already paid half of the payments under the agreement,
you will not usually be asked to pay anything more. Once
you have returned the goods, you can treat any debt you
still owe as a non-priority debt.
‘Dealing with your non-priority debts’ on
page 50 to 61.
Keeping the goods
If it is important to you to keep the goods, you may want
to treat this as a priority debt. If you do this, be prepared
to explain to your creditors why you need the goods (for
example, you need the car for your business or you live
in a rural area with very limited transport).
‘Working out your household outgoings’
on page 25.
If your lender will not agree to this, you may be able to apply
to the County Court for a ‘time order’. If this is granted, you
may be able to keep your goods and make smaller reduced
payments to your lender. Contact us for advice.
See our fact sheet: Time order –
hire purchase or conditional sale.
What if my lender takes court action?
If your lender has taken court action, you may not have to
return the goods as long as you agree to make the payments
that the court decides. You can ask the court to allow you to
pay less than your normal payments on the agreement if you
can show that this is all you can afford to pay.
See our fact sheet: Hire purchase
or conditional sale.
Extra advice: get help
The law about hire-purchase and conditionalsale agreements is fairly complicated. If
you are behind with payments on this type
of agreement, contact us for advice.
Business equipment leases
As with hire purchase, equipment leases may be a priority or
a non-priority debt. Most of your rights are set out in the terms
and conditions of your agreement. They will help you decide
whether to treat the lease as a priority or a non-priority debt.
Check your agreement very carefully to see whether you have
the right to keep the equipment at the end of the lease. Some
leases also state that you have to pay for the whole lease
whether you keep the equipment or not. Check whether the
debt will be reduced if you return the equipment.
Your agreement should also tell you what the lease company
needs to do to get their equipment back if you do not pay.
If you do have the right to keep the equipment, or if the
equipment is essential to keep your business running,
Freephone 0800 197 6026
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Dealing with your
priority debts
any arrears should be treated as a priority debt. Use your
business and household budget sheet to make an
offer of payment you can afford.
If the equipment is not essential to running your business, you
can treat it as a non-priority debt. Contact us for advice.
on pages 50 to 61.
Warning: selling your equipment
It can be a criminal offence to sell leased
equipment without first getting the leasing
company’s permission. Contact us for
advice.
Major suppliers
If you cannot get supplies from any other source, you
may have to treat a trade supplier as a priority creditor.
If you can use another supplier, you may be able to treat
a supplier as a non-priority debt.
However, if you owe suppliers £750 or more they may
threaten to make you bankrupt. If you are not sure how
to treat your supplier debt, contact us for advice.
Business overdrafts and loans
If your bank account regularly goes over any arranged
business overdraft limit, interest and charges will be
added to what you owe. You also run the risk of having
the overdraft limit cancelled or not renewed when the
agreement runs out. This can also happen if the bank
suspects you are in financial difficulty, for example, if they
see less money coming into the account than normal.
If you lose control of your business bank account, it can
be very difficult to manage your business and household
finances. Unpaid cheques, direct debits and standing
orders will make your debts worse. The bank may use
money you pay into your bank account to pay interest
and bank charges rather than to cover the payments
you need to make.
Extra advice: security for business debts
If your bank asks you to provide security for
an unsecured loan or overdraft (for example,
your property), contact us for advice. Always
check the interest rate and any arrangement
fees that will be charged. If you miss payments
on a secured loan, your property will be at risk.
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Freephone 0800 197 6026
You may find it easier to convert your overdraft into a loan.
However, remember that you will lose the flexibility of the
overdraft because your bank will only usually let you run
your bank account in credit from now on. You will also
have to make a monthly repayment on the loan. Make
sure you can afford this. Also, check that the interest rate
on a loan is no higher than your overdraft rate. Use your
business and household budget sheet to show the
bank you can afford the repayment.
If you cannot meet your current loan repayments or are
in danger of going over your overdraft limit, speak to your
bank and try to come to an arrangement. For example,
the bank may let you pay back what you owe over a longer
period. If you are able to, it is generally easier to deal
directly with your own branch than with a central debtrecovery unit. If you are able to reduce the balance to within
the overdraft limit, this may reduce borrowing charges.
If the bank threatens to close your account or refer it to a
debt-recovery unit, contact us for advice.
Secured or unsecured?
Bank overdrafts and loans may be secured or unsecured.
Secured
• This is where the bank has security over some or all of
your business assets. In some cases, they may also have
security over personal assets such as a family home.
A secured loan or overdraft must be treated as a priority
debt. You do not have the same rights as someone
with a personal debt, like mortgage arrears, if the lender
threatens you with repossession.
Information: limited companies
you may have signed a personal guarantee
that may be supported by a security over
your home. This must also be treated as
a priority debt.
All monies charge
This is a clause in one of your agreements that gives the
bank security for all of the debts you have with that bank. It
means that any borrowing with that bank in the past, now,
and in the future will be secured.
All monies charges must be treated as a priority debt. You
do not have the same rights as someone with a personal
debt, like mortgage arrears, if the lender threatens you
with repossession. Contact us for advice.
Dealing with your
priority debts
Unsecured
• Loans and overdrafts are unsecured if the lender
does not have any security. However, depending on
the circumstances, you may need to treat these as
priority debts if you feel that you cannot get a banking
service elsewhere and it is essential to keep your
business running.
If the bank threatens to stop cheques and put restrictions
on your account, contact us for advice.
Negotiating with your bank
If you are facing debt and cashflow problems, it is essential
that you speak to your bank. If possible, make an
appointment to see them. There are a number of options
that you could think about putting to the bank. These will
depend on your business plan.
Your local enterprise agency may be able to help you prepare
a business plan – phone your local Chamber of Commerce
for details of what’s available in your area.
Information: business plans
Accountants
If you have not paid your accountant, they may refuse to
return your books until your bill is paid. This is known as a
‘lien’. It means that the accountant has the right to keep
the books they have worked on if you have not paid their
fees in full. However, they should return any of your materials
used to create the books such as invoices, bank statements
and so on.
You may need to treat your accountant’s bill as a priority
if you need your books for things such as HMRC returns.
This is because if you do not send HMRC returns off on
time, HMRC can add penalties to what you owe.
Contact your accountant and explain that you cannot pay.
Explain that having your books back will help you put together
a repayment plan, which should mean you can make a better
payment offer to them. This is particularly important if you
have to deal with income tax or VAT assessments, as sending
these in may mean you get a refund.
You could take legal action to get your books back. However,
it is important to get a solicitor’s opinion about this first.
Contact us for advice about how to find a solicitor that
may be able to help you.
Your business plan is not just for the bank,
it is mainly for your peace of mind. It should
show you how you can trade out of your
difficulties and improve your business
performance. The proposals you put forward,
and the bank’s response, will depend on your
circumstances. Contact us for advice.
Should I consider changing my bank?
This is not an easy question to answer. It is often better
to stay with your current bank. This is because they know
you and are more likely to listen to your problems and help
you. However, in some situations, it may be appropriate to
change banks. For example, it may be better to open an
account at another bank if:
• your own bank will not listen to your proposals;
• you are finding it difficult to manage your banking; and
Information: always try to negotiate
Always try to come to an arrangement
with your existing bank before moving your
account. If you are in doubt or you would
like more information about business bank
accounts, contact us for advice.
• the debts you have with your current bank are unsecured.
However, if you have a poor credit history, you may find it
difficult to open another bank account.
Make sure you keep your new account in credit to avoid
running up another debt and making your problems worse.
If you are able to open a new account, treat any unsecured
debts with your old bank as non-priority debts.
on pages 50 to 61.
Remember to treat any secured debts with your old bank
as priority debts.
Freephone 0800 197 6026
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Dealing with your
priority debts
Priority household debts
Household mortgage
Mortgage arrears are very important because you could
lose your home if you do not pay them. They must be
treated as a priority debt.
Have you been treated fairly?
If you think you have been treated unfairly, you may have
reason to complain. You can complain to the Financial
Ombudsman Service but you must complain to your
lender first. You can get more information about making
a complaint from the Financial Ombudsman’s website.
Check all your loan agreements to see if they are
‘unsecured’ or ‘secured’ on your home. If they are
secured loans, treat them as priority debts because
lenders can go to court to repossess your home if you
cannot pay your monthly instalments. They can then
sell your property to pay off your debt.
Dealing with
mortgage arrears
Business Debtline has a detailed guide
to ‘Dealing with mortgage arrears’.
This covers the following areas.
Has your lender taken you to court?
You cannot be evicted from your home without a court
order. You will not be evicted on the day of the hearing.
• Coming to an arrangement with your lender
• What to do if you can’t afford your mortgage
Before a lender can take court action to repossess your
home, they should follow the steps set out in the pre-action
protocol for mortgage possession claims. Lenders should
consider all options before taking steps to repossess your
home. Courts should take into account the pre-action
protocol when deciding what order to make.
• What if my home is worth less than the mortgage?
• Second mortgages or secured loans
• What if my mortgage lender takes me to court?
For more information about the pre-action
protocol, see our detailed housing guide
‘Dealing with mortgage arrears’.
Dealing with mortgage or secured loan arrears
It’s never too early, or too late, to contact your lender. You
may not be behind yet or your lender may have started
court action. Whatever the situation, do not delay. Contact
your lender as soon as possible by writing, phoning or
making an appointment to see them. It is important that you
pay as much as possible towards your mortgage or secured
loan. If you have not paid anything for a while, you should
start regularly paying what you can, even if you can’t afford
the full monthly payment.
There may be benefits, tax credits or Universal Credit that
you are not claiming or other ways of increasing your income.
If you receive certain benefits, you can get help from the DWP
with some of the interest payments on your mortgage. Check
if you have any mortgage payment protection insurance that
you can claim.
See our fact sheet: Mortgages
– help with your payments.
For more information on what you can do,
see our detailed housing guide ‘Dealing with
mortgage arrears’.
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Freephone 0800 197 6026
See our fact sheet: Homelessness.
Household rent
Rent arrears are very important because you could lose
your home if you do not pay them off.
Your right to stay in your home depends on the type of
tenancy you have. Each type gives different rights. So it’s
important for you to find out what type of tenancy you
have. If you are not sure, contact Shelter or your local
citizens advice bureau.
Your situation could be made more complicated if you
use your premises for both business and household use.
In this case, you may only have a business lease covering
the whole of the property, which means you might not
have the same rights as a domestic (household) tenant.
‘Business rent’ on page 37.
You cannot be evicted from your home without a court
order. Even if you are taken to court, this does not always
mean you will automatically lose your home. Keep paying
your rent and make an offer to pay off the arrears. Even if
the court decides you cannot afford to stay there, you will
not be evicted from your home on the day of the hearing.
There are special rules for some types of tenancy.
Dealing with your
priority debts
Before a social landlord (such as a local council or a
housing association) can take court action to evict
you from your home, they should follow the pre-action
protocol for rent arrears. Courts should take the protocol
into account before deciding what order to make.
Dealing with rent arrears
It is never too early, or too late, to come to an arrangement
to repay your arrears. You may not be behind with your
payments yet or your landlord may have already started
court action. Whatever the situation, don’t delay. Contact
your landlord as soon as possible by writing to them,
phoning them or making an appointment to see them.
Make sure your rent arrears have been worked out
properly. Get a breakdown of your rent account from your
landlord. Check that all the payments you have made have
been added to your account. Ask for regular statements.
Keep your receipts.
If you have made an offer to pay the arrears, start paying
this as soon as possible, even if your landlord has not
accepted the offer. You also need to pay your normal rent.
If you haven’t paid for a while, pay as much as you can.
Have you been treated fairly?
If you think you have been treated unfairly, complain to
your landlord. If you are still not happy, you can complain
to the Housing Ombudsman Service (if you are a housingassociation tenant) or the Local Government Ombudsman
(if you are a council tenant).
‘Useful contacts’ on page 62. If you have
a private landlord, contact us for advice.
Dealing with rent arrears
Who pays what?
Only people over 18 can be made to pay the bill. If there
is more than one person over 18 living in your home, the
owner will normally have to pay the bill if they live in the
home. Joint tenants and owners may have to pay even
if their names are not on the bill, as long as the council
sends them a ‘joint taxpayers notice’.
If you are either married, live with your partner, or live
together in a same-sex civil partnership, both you and
your partner will be responsible for paying the bill.
Sometimes the owner of a house will be responsible for
the bill even if they don’t live there, for example, if the
house is unoccupied, or in ‘multiple occupation’ such as
bedsits. If you are not sure who is responsible for the bill,
Can I reduce my bill?
You may get a reduction if someone living in the house
has a disability. Apply to the council for this. Only some
properties will qualify. Contact a local welfare rights
agency or contact us for advice.
You will also get a discount in the following circumstances.
• If you are the only adult in the house.
• Or, if you share your house only with people who are
not taken into account, such as:
– a full-time student or student nurse;
– an apprentice or someone on a youth-training scheme
(only certain ones apply); or
– someone with a mental disability who is getting certain
disability benefits.
Tell the council if you think you may qualify for a discount.
Check how this works with your local council.
Business Debtline has a detailed guide
called ‘Dealing with rent arrears’. This
covers the following areas.
You may be able to claim a rebate called ‘Second Adult
Rebate’. Check how this works with your local council.
• What type of tenancy do I have?
The council will usually tell you to pay your bill in
10 monthly instalments but they may accept weekly
payments. You can ask the council to let you pay your
bill in 12 monthly instalments. If you find that you can’t
pay the full monthly instalment, don’t just stop paying!
• Housing Benefit
• What if my landlord increases my rent?
• How can I pay off my rent arrears?
• My landlord is refusing to agree to my offer
• What if my landlord takes court action?
• Eviction – what can I do?
Council tax
The amount of council tax you pay is based on:
What happens if I don’t pay?
• If your circumstances have changed, you may now
qualify for help with paying your council tax bill from
your local council. Contact us for advice.
• Contact the council and try to come to an arrangement.
help explain your situation.
• the value of your home (homes are placed in a
band – A to H in England and A to I in Wales); and
• the number of adults who live in your home and
their status.
Freephone 0800 197 6026
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Dealing with your
priority debts
If you don’t keep to any payment arrangement you make
with the council, they may apply to the magistrates’ court
to make a ‘liability order’ for the full amount they say you
owe, plus court costs. The order will state that you are due
to pay your council tax and have not done so.
Important: business gas
and electricity arrears
Further action against you by the council
Once the council has got a liability order, there are a number
of ways they can make you pay. Even if they have a liability
order, it is not too late to try to make an arrangement to pay.
Contact the council as soon as possible if you have not paid
or come to a payment arrangement.
The council can take the following action to make you pay.
• The council can order your employer to take a fixed
amount from your wages to pay the council tax you
owe. It is called an ‘attachment of earnings order’.
• Bailiffs can visit your business premises or your home
to try and remove goods.
• If you claim certain benefits, you or the council can ask
the DWP to take a set amount each week.
• The council can apply to secure the debt on any property
you own. This is called a charging order. You could lose
the property if you do not pay the debt. They can only
apply for a charging order if you owe more than £1,000.
• The council can ask for an order to send you to prison if
they think you have refused to pay, or had the money
and neglected to pay. It is unlikely you will be sent to
prison if you did not have enough money to pay.
See our fact sheet: Council tax recovery.
Complaining
You may be able to complain to the Local Government
Ombudsman if the council have not behaved properly
or not followed the proper procedure. You will need to
complain to your local council first.
Household gas and electricity
Gas and electricity companies can cut off your supply in
a few weeks if you don’t pay them but they should only
do this as a last resort. They must give you notice first.
They cannot cut off your supply unless they have first
offered you a range of payment methods to help you pay.
It is important to contact them as soon as you know you
are going to have problems. You should treat gas and
electricity bills as a priority debt.
How do I make an arrangement?
The energy supplier will usually want their bill paid before
the next bill is due. You can ask to pay your bills every
week, every two weeks, or every month. If you have
arrears, phone or write to the supplier and ask for a
payment arrangement.
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Business gas and electricity arrears may
need to be treated differently.
‘Business gas and electricity’ on
page 38 or contact us for advice.
support your offer of payment. This must cover the cost
of the energy you are using and an amount off the arrears.
Even if the supplier does not agree to your offer, start
paying what you have offered immediately. Do not offer
to pay more than you can afford towards the arrears.
All energy suppliers should agree, under their standard
licence conditions, to accept an offer of repayment in
instalments at a rate that you can afford.
If the first person you speak to is unhelpful, ask to speak
to someone more senior.
Ask the supplier for a copy of their code of practice. This
explains your rights and how to make a payment arrangement.
Most energy suppliers will not disconnect you if:
• you agree to a payment arrangement;
• you agree to have a pre-payment meter installed;
• the debt belongs to a person who lived in your home
before you;
• it is between October and March and all the adults
in the household are over retirement age; or
• you are considered vulnerable under the Energy UK
safety net.
Under the Energy UK safety net, member companies
will not knowingly disconnect you at any time of year if,
for reasons of age, health, disability or severe financial
hardship, you cannot protect your personal welfare or the
personal welfare of other members of your household. If
you are vulnerable because of one of these reasons, you
should not be disconnected.
Extra advice: Ofgem guidelines
Ofgem is the regulatory organisation for gas
and electricity. Energy suppliers must keep
to Ofgem’s guidelines, which say they should
take your circumstances into account when
making an arrangement to pay.
Dealing with your
priority debts
Extra advice: prepayment meters
If it is safe to install a prepayment meter, your
supplier must ask you if you want one before
your supply is cut off. If you have not fallen
behind on an arrears repayment arrangement,
the energy supplier cannot insist that you
have a prepayment meter installed. But you
can still ask for a prepayment meter if you
want one.
The supplier still wants to cut my fuel off
If you are threatened with being cut off, contact the social
services department of your local council or the DWP for
help. The fuel supplier will delay cutting you off if they are
told the social services or DWP are looking into your case.
They will usually hold action for 10 working days but may
agree to delay longer. This could give you time to make an
arrangement to pay. The Children’s Act 1989 gives
social services the power to make payments in certain
circumstances to families with children.
You should contact the Citizens Advice consumer
service if you are threatened with being cut off or have
been disconnected.
for not having a licence, it is a good idea to buy a licence
as soon as possible. You should send a copy of the
licence to the court to help your case. It is also a good
idea to plead guilty to not having a licence and explain the
reasons why (even if this is just that you simply forgot).
Remember: even if you have to pay a fine for not having
a licence, you still need to buy a licence as well.
‘Find the easiest way to pay your TV licence’
on page 31.
You may already have a fine for not paying your TV licence.
‘Magistrates’ court fines’ below.
The magistrates’ court may order you to pay a fine, for
example, for a driving offence, for not having a TV licence
or for some other offence. You must treat a magistrates’
court fine as a priority debt. The court has a range of
further types of action it can take, including using bailiffs
and taking money from your wages or your benefits. Also,
you could be sent to prison if you do not pay.
See our fact sheet: Magistrates’
court fines.
Help to pay your bill
Some fuel companies have set up trust funds that may
be able to help you pay your fuel bills if you are in financial
difficulties. Auriga Services has a useful list on their
website at www.aurigaservices.co.uk. Select the link
‘Schemes to help water and energy customers’.
‘Help with gas, electricity and water costs’
on page 15.
Extra advice: what type of court?
If you have been taken to court for a
non-priority debt such as a loan or credit
card, this would be in the County Court
and you cannot be sent to prison.
‘Dealing with your non-priority
debts’ on pagess 50 to 61.
Extra advice: complaining about
your energy supplier
All suppliers should follow a code of practice
when dealing with people in arrears. You can
complain to Ombudsman Services: Energy
about a billing or transfer problem but you
must complain to your supplier first.
TV licence
TV licence arrears are a priority payment because you
can be fined in the magistrates’ court if you do not have
a licence. In your business and household budget
sheet, put these payments under household outgoings.
If you are contacted by TV Licensing or are being prosecuted
Extra advice: golden rules
• If you have a magistrates’ court hearing
or have arrears from failing to pay fines,
• Always go to court hearings.
• Take your business and household
budget sheet with you.
• Try to make arrangements that you can afford
to pay or contact the court if you cannot pay.
Freephone 0800 197 6026
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47
Dealing with your
priority debts
Parking penalty charges
Many local authorities have made parking offences
non-criminal offences and instead enforce parking
penalty charges through the Traffic Enforcement Centre
in Northampton. There are special rules that apply if you
have this type of parking penalty. You cannot be sent to
prison but the local council can ask the County Court to
use private bailiffs to try to recover the money. If you have
a parking penalty charge, contact us for advice.
See our fact sheet: Penalty
charge notices (PCNs) for parking.
Extra advice: which type of parking penalty do I have?
It is important that you know the type of parking penalty you
have because the rules about what happens if you don’t pay
are different. You should check if you have a penalty charge
notice from the local council or a fixed penalty from the police.
The rules are also different if you parked on private land. If you are
unsure, contact us for advice.
Child maintenance
You can be ordered to pay maintenance either by the
court, as part of the separation or divorce process, or by
the Child Support Agency (CSA) or the Child Maintenance
Service (CMS).
Extra advice: the Child Maintenance Service
The CSA scheme is changing. Some child maintenance cases
are now dealt with by the Child Maintenance Service. This is
gradually replacing the CSA over a three-year period. This
means some of the rules will be different when you apply for
maintenance and there may be extra powers to make you pay.
Maintenance through the court
If the court has ordered you to make regular payments, you
can apply to reduce the payments if you cannot afford them.
If you do not pay, the court can order you to go to a hearing
to explain why you have not paid.
If the court decides that you are deliberately not paying,
they may try to:
• use bailiffs to seize goods and sell them;
• take payments direct from your wages; or
• order you to be sent to prison.
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Extra advice: maintenance arrears
If you are behind with your maintenance,
contact the court immediately. Take a copy of
your business and household budget
sheet to any court hearings and explain why
you cannot pay the full amount. The court
may reduce the amount you have to pay.
Maintenance through the Child Support Agency
or the Child Maintenance Service
If you have a child or children who do not live with you, the
CSA may ask you to pay child maintenance. The CSA will
decide the amount you have to pay by using a set formula.
If you do not pay, the CSA can collect it direct from your
wages, or from benefits without a court order.
The CSA can apply for a deduction order to take payments
out of your bank account. This can be for regular payments
or for a lump sum, but there are rules about how much
money the CSA are allowed to take out of your account.
If they cannot do any of these things, the CSA can ask the
magistrates’ court for a ‘liability order’. If they do this, they
may try to take further action. Contact us for advice.
Benefit overpayments
You may be told by the DWP that you have been overpaid
a benefit, such as Income Support, and that they want
you to pay this back. The DWP must tell you if the
overpayment can be recovered from you and why. If you
do not agree that you owe the money, you can appeal.
The law on overpayments is complicated, so before
deciding whether to appeal, contact your local advice
centre or contact us for advice.
The DWP can make deductions from most types of
benefits to collect overpayments. There are maximum
weekly amounts that can be taken. If this will cause you
hardship, contact the DWP and ask them to take less.
Use your business and household budget sheet
and explain why the payments will cause you hardship.
In some circumstances, the DWP will agree to ‘write-off’
the overpayment if your repayments are causing you
hardship. Ask your local MP to help.
If you are not on any benefits, you can treat the
overpayment as a non-priority debt.
on pages 50 to 61.
Dealing with your
priority debts
The DWP could take action against you in the County
Court to get their money back, but there are steps you
can take to deal with this. If the DWP threatens to take
court action against you, or if you receive any court
papers, contact us for advice.
Extra advice: special rules for
Housing Benefit and Council Tax Benefit
Household hire purchase
or conditional sale
The rules for dealing with hire purchase and conditional
sale are usually the same whether they are a business or
household priority debt.
‘Business hire purchase or conditional sale’
on page 41.
If your council says you have been overpaid
Housing Benefit or Council Tax Benefit,
special rules apply. Different rules may also
apply if the council say they have overpaid
you as part of the Council Tax Reduction
scheme. Contact us for advice.
Tax-credit overpayments
In some circumstances, you may be told that you have
been overpaid Child Tax Credit or Working Tax Credit.
If you do not agree that you have been overpaid, or that
the amount is correct, you may be able to appeal.
Overpayments can be recovered in different ways,
including deductions from your ongoing tax credits claim
or your Universal Credit claim, by reducing your tax code
or even through the same enforcement methods as a tax
debt. In some cases, you can also agree in writing for
deductions to be made from your benefits.
HMRC may agree not to recover the overpayment if it is
caused by a mistake by them and you have followed the
rules for reporting any mistakes you spot and changes in
your circumstances. Contact us for advice if you are in
this situation.
Extra advice: I cannot afford the repayments
If paying the tax credits back will cause you
hardship, you may be able to reduce the rate
at which you pay it back. You should speak
to HMRC and ask for time to pay it back at a
rate you can afford. Ask for a copy of their
code of practice ‘What happens if we have
paid you too much tax credit?’. In cases of
extreme hardship, or if there is evidence of
mental-health problems, they can consider
writing off all or part of the debt.
Next steps...
You are now at the end of step 3. If you have
priority debts, hopefully this section has helped
you work out how to deal with them. Make sure
you update your budget sheet with any payments
you have agreed to make to your priority creditors.
Step 4 is the last step in this pack and it’s called
‘Dealing with your non-priority debts’. This
step will explain which debts are non-priority, the
powers your creditors have to make you pay and
your options for dealing with your debts.
You will need the information from your
business and household budget sheet to
help you decide which option is right for you.
Go to the next page to begin.
Freephone 0800 197 6026
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49
Dealing with your
non-priority debts
Use this section to work out how to deal with your non-priority
debts. These are debts where the creditor hasn’t got extra
powers to make you pay (for example, they cannot take your
home). They are often called non-priority debts because of this.
Non-priority debts can usually be treated differently to priority
debts. Common non-priority debts include:
•p
ersonal loans with finance companies;
• s ome bank and building society loans,
overdrafts and credit cards;
•c
harge cards;
•c
atalogue debts;
•p
ersonal debts to friends and family;
Step 4
Dealing with your
non-priority debts
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Freephone 0800 197 6026
• doorstep-collected loans;
• payday loans;
• household water rates;
• non-essential business suppliers;
• some other business-related debts; and
• credit sale agreements.
Dealing with your
non-priority debts
Checklist
Use this simple checklist to make sure you take the right steps to deal with your non-priority debts.
Do you need a safe bank account?
Make sure that any money you receive (for
example, earnings from your business, wages
or benefits) goes into an account at a bank or
building society that you don’t owe any money
to. This means the bank or building society will
not be able to take any of your income to pay
your debt to them. This also applies to a
business bank account.
‘Opening a bank account’ on page 57.
ork out a business and household
W
budget sheet
A business and household budget sheet
is very important as it will help you decide what
options you have for dealing with your debts.
It will also help you to negotiate with your
creditors, fill in any court forms, or ask for your
debts to be written off.
‘Working out your business budget’ on page
19 and ‘Working out your household budget’
on page 25.
Deal with court forms on time
If any of your creditors have issued a county
court claim against you, you need to make sure
you have replied to the court forms. This means
filling in the forms the court sends you and
returning them to the right place by the
deadline. This will help you avoid any
enforcement action, such as bailiffs.
on page 59.
Explain your situation to your creditors
Even if you haven’t decided how to deal with
your non-priority debts, it’s a good idea to
explain to your creditors in writing that you are
struggling. Tell them you are taking advice and
doing a budget. This may buy you some
breathing space. Use the Hold action on your
account sample letter included with this pack.
Decide on a strategy
You may have more than one option for dealing
with your non-priority debts. You need to make
sure you understand what each option means,
and the advantages and disadvantages, so you
can be sure what you decide is right for you.
‘What are the options for dealing with
my non-priority debts?’ on page 52.
Extra advice: less straightforward
non-priority debts
There are some non-priority debts that are
not straightforward to deal with. You should
contact us for advice if you have debts
such as:
• arrears of business or household rent,
phone, gas or electricity from a previous
property or supplier;
• hire-purchase or conditional-sale debts
where the goods have gone back to the
company;
• equipment leases where the goods
have gone back to the company;
• debts with cheque-cashing services;
• gambling and spread-betting debts; or
• professional fees (solicitors’ and vets’ bills
and so on).
Freephone 0800 197 6026
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51
Dealing with your
non-priority debts
hat are the options
W
for dealing with my
non-priority debts?
Individual voluntary arrangements
An individual voluntary arrangement (IVA) is another option
instead of bankruptcy. This is a formal arrangement to pay
an agreed amount off your debts over a shorter period,
such as five years. The rest of your debts are written off.
There are different options for dealing with your non-priority
debts, depending on your circumstances. We have
outlined some of the main options below.
Which option is right for you will depend on things such
as your income, how much debt you have, your assets,
whether you own your home and the possible effect on
your business. Your credit rating will normally be affected,
whatever option you decide to take. This means it may be
difficult for you to get credit in the future.
See ‘Can I get credit again?’ on page 61.
What if I have some money
left to pay my creditors?
Pro-rata offers of payment
You can work out offers of payment based on a ‘pro-rata
distribution’ of your available income. This means you
offer all your creditors a fair share of what you can afford
to pay. You also need to ask your creditors to freeze any
interest and charges. You can write to your creditors,
sending them a copy of your business and household
budget sheet, and ask them to agree to your offers of
payment. Use the Pro-rata offers sample letter
‘Working out offers of payment
to non-priority creditors’ on page 29.
Free debt-management plan (DMP)
This means you make one payment every month to a
debt-management company to cover all your non-priority
debts. This will be divided up and sent to your creditors for
you. You will not have to negotiate direct with your creditors
to accept your offers and freeze the interest. Contact us for
advice. We may be able to help you set up a free DMP if:
• you have at least two debts;
• your money for non-priority debts is £50 a month
or more; and
• you owe at least £4,000 in total.
If your debts are with the same creditor, there are special
rules. Contact us for advice.
Bankruptcy
You may want to think about bankruptcy even if you have
some money left to pay your creditors.
‘Bankruptcy’ on page 53.
See our fact sheet:
Debt-management plans (DMPs).
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Information: IVA through Business Debtline
Business Debtline may be able to refer you
to an insolvency practitioner from a list of
providers that have agreed to follow special
guidelines (called the IVA protocol). Contact
us for advice.
The IVA will be set up by an insolvency practitioner whose fees
can be very high. Creditors can stop the IVA going ahead by
voting against it. An IVA is usually only an option if you have a
reasonable amount of money available every month to pay
your creditors or you have a lump sum or assets that you can
include. In rare cases, you may risk losing your home.
See our fact sheet: Individual voluntary
arrangements (IVAs).
Administration orders
If you have a county court judgment, you might be able to
apply for an administration order. This is a way of putting
all your debts together and making one monthly payment
to the court. The court then shares the money between
your creditors. The total of your debts must be no more
than £5,000. Your creditors can’t take any further action
against you if you have an administration order, as long
as you keep up the monthly payments.
You may need help in filling in the application form as local
courts deal with administration orders differently. If you want
to apply for an administration order, contact us for advice.
See our fact sheet: Administration orders.
Can I offer to pay a lump sum to clear my debts?
If you have a lump sum that is less than the full balance you
owe on your debts, you can ask your creditors to accept the
payment and write off the rest of the debts. This is known as
‘an offer in full and final settlement’. This may be an option if
you come into some money or have some savings you can
use. Creditors do not have to accept an offer in full and final
settlement but if your circumstances are unlikely to improve,
they may agree to your offer. If a creditor agrees to your offer,
make sure they confirm this in writing.
See our fact sheet: Full and final
settlement offers.
Dealing with your
non-priority debts
‘Consolidating your debts’ into a new loan
This is where you add all your debts together and take
out a new loan (a consolidation loan) to pay them off. You
need to think very carefully before deciding to do this.
This may not be the best option for you, especially if
your lender wants to secure the loan on your home.
This means you could have your home repossessed if
you do not keep up with the payments. Before agreeing
to a consolidation loan, contact us for advice.
What if I have no money
left to pay my creditors?
No payments or token payments
After paying your outgoings and making arrangements to
pay your priority debts, there may be nothing left to pay
other creditors. If you have nothing left, say so. Show your
creditors by sending them your business and household
budget sheet and a letter to back this up. Ask your creditors
to hold action until your circumstances improve. This is called
asking for a ‘moratorium’. If you prefer, you could offer a
token payment of £1 a month to each creditor instead. Use
the Token offers or no offer of payment sample letter
Debt relief order
You may be able to apply for a debt relief order (DRO).
DROs can be another option instead of bankruptcy and
are cheaper to apply for.
You may qualify for a DRO if:
• you owe under £15,000 in total;
• you can’t afford to pay more than £50 a month to your
creditors; and
• you have assets of less than £300 and a car worth less
than £1,000.
If you get a DRO, your debts are written off after 12 months.
You will need help from an approved advice agency, such as
a money advice centre, citizens advice bureau or Business
Debtline, to fill in an online application. You will have to pay a
fee to the Insolvency Service to apply for a DRO. Contact
us for advice.
See our fact sheet: Debt relief orders (DROs).
Bankruptcy
If you owe a lot of money and you cannot see a way out of
your debts, bankruptcy might be a good option for you. You
should consider going bankrupt if you have no assets or you
are prepared to lose your assets and possibly your business.
You must owe £750 or more before a creditor can make
you bankrupt (although two or more creditors can club
together and apply to make you bankrupt). Non-priority
creditors are less likely to make you bankrupt than priority
creditors because it costs them money in fees and costs.
They will probably not recover the debt and the costs of
making you bankrupt unless you have assets that can be
sold to pay your debts.
Once you are declared bankrupt, your creditors can
usually take no further action against you. Going bankrupt
can have important effects, particularly if you own your
home and it is worth more than the mortgage you have
left to pay. In this case, your home could be sold as an
asset. Being made bankrupt could also affect your ability
to carry on being self-employed. Bankruptcy may also
affect you if you are a paid employee, if your contract of
employment does not allow you to become bankrupt.
You can make yourself bankrupt but the fees are high.
Your bankruptcy will normally last for one year. After this,
usually debts that have not been paid are written off and
you are ‘discharged’ from the bankruptcy. You may still
have to make monthly payments for a total of three years
under the terms of your bankruptcy order. If a creditor has
threatened to make you bankrupt or you think it may be
an option for you to consider, contact us for advice.
See our fact sheet: Bankruptcy.
Will my creditors write off my debts?
If you have no money for creditors and no assets, creditors
may agree to write off your debts. This is very rare but may
be an option if your circumstances are extremely difficult
due to illness, age or a death in the family. You will need to
give your creditors evidence of your circumstances.
Extra advice: sample letter
Business Debtline have a sample letter
you can use to ask your creditors to write
off your debts. Call us on
0800 197 6026 or see
Dealing with your creditors
Check the name on the agreement
Only the person who signs an agreement is responsible
for the debt. If you take out an agreement jointly with
another person, you are each responsible for the whole
debt and not just part of it. This is called joint and several
liability. Make sure the creditor knows that someone else
is also responsible.
Check your credit agreement carefully. If you don’t
understand the terms or want to check that the
agreement is in the correct format and that you are
legally responsible for the debt, contact your local trading
standards department or contact us for advice.
Freephone 0800 197 6026
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Dealing with your
non-priority debts
Information: partnerships
and limited companies
In a partnership, business partners are liable
for all partnership debts. This is called ‘joint
and several liability’.
‘Partnerships’ on page 07.
you will not be personally responsible for the
company’s debts unless you have signed a
personal guarantee.
‘Limited companies’ on page 08.
Under 18s
People under 18 can only be made to pay for ‘essential goods
and services’ bought on credit, such as energy supplies. If
you are under 18 and have an agreement for non-essential
goods or services, the creditor cannot ask the court to make
a county court judgment for the debt. However, it is not
always clear which things are ‘essential’. The court can decide
this for each case. Generally, parents are not responsible for
their children’s debts unless they have signed a guarantee.
Guarantors
Creditors may ask for a guarantor before agreeing to lend
money. This means that if the person who has borrowed the
money does not pay it back, the guarantor will be asked to
pay. If you have a guarantor for one of your non-priority debts,
or are a guarantor for someone else, contact us for advice.
Interest
Debts have two parts – the money borrowed and the interest.
Interest is part of the charge for lending you the money. Debts
have interest added in different ways.
• Fixed-term loans. Interest is worked out at the beginning
of your loan and included in your monthly payments.
Sometimes, if you miss a payment, extra interest called
‘default interest’ is charged. Ask the creditor to freeze any
default interest they are adding.
• Revolving credit agreements. These cover credit cards,
bank overdrafts and some loan agreements. Interest is
added to your account daily or monthly. This means your
debt grows unless the payments you make are higher than
the interest being added. The company may also change
the interest rates and add extra charges. Ask the creditor to
freeze all the interest and charges.
• Late-payment interest. In the case of business-tobusiness transactions (involving sole traders, partnerships
or limited companies), the creditor can claim late-payment
interest under the Late Payment of Commercial
Debts (Interest) Act 1998. Contact us for advice.
To find out if interest is still being added to any of your
debts, check your agreement for details.
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Important: still paying interest?
Your debt will continue to grow if your new
monthly offer of payment to the creditor is less
than the interest being added. Ask the creditor
to stop charging interest. Ask for regular
statements and check them. When a creditor
accepts your offer, if they do not say they have
frozen the interest, you should check this with
them again. The creditor may also try to add
administration and late-payment charges.
Ask them not to charge these (‘waive’ them).
What if a creditor refuses to freeze the interest?
Write to them again. If any of your other creditors have
agreed to freeze the interest, point this out.
‘What if a creditor refuses my offer?’
on page 55 or contact us for advice.
See our fact sheet: Payment offer – what
to do if a creditor refuses. This includes sample
letters you may find useful.
Copies of credit agreements
and account statements
You usually have the right to ask for a copy of your credit
agreement and an account statement. There are different
laws which allow you to ask for different types of information.
You have to pay a small fee when you make your request.
If your lender does not provide the information you have
asked for, they may be limited in the further action they
can take against you.
See our fact sheet: Credit agreements –
getting information. This includes sample
Warning: claims management companies
There are lots of companies out there who say
they can get your debts written off for you, or
get compensation for you by claiming that your
credit agreements cannot be enforced. Be very
careful! Most of these firms charge you large
up-front fees for each agreement they agree
to check. However, there is no guarantee that
they will be successful. In most cases, you will
not get your money back. Before signing up
with a claims management company, contact
us for advice.
Dealing with your
non-priority debts
Making payments – ways to pay
If you have made arrangements with your creditors, you
will need a convenient way to pay. There are several options.
• Open a basic bank account which offers free standing
orders. Standing orders are regular payments you ask
your bank or building society to make for you. There are
basic bank accounts available for business banking and
for personal banking. Contact us for advice.
• Ask your creditors for a paying-in book. Make sure there
are no fees to pay.
• Some creditors accept payments through their website.
Check with your lender.
• Check whether you have a PayPoint or Payzone outlet
at a local shop and if your creditors are part of a scheme
which accepts payments in this way. For details of your
nearest PayPoint, see www.paypoint.co.uk. For details
of Payzone, see www.payzone.co.uk.
• You may be able to pay at a creditor’s local office or retail
outlet, such as a shop.
• If you send cheques or postal orders, make sure you
send your reference number, and a covering note.
• Keep a record of all the payments you make.
Reviewing your offers
of payment
Your creditors will often write to you after you’ve made an
agreement, perhaps every three or six months, to see if
you can now afford to pay more. If you can’t increase your
payments, write back telling them this. Enclose a copy
of your business and household budget sheet.
What if a creditor refuses
my offer?
Sometimes a creditor will refuse to accept the offer of
payment you have made on your business and household
budget sheet. They may demand more than you can afford.
Sometimes they may refuse to freeze the interest. If a creditor
accepts your offer, double-check that they have frozen the
interest if they do not state this in their letter. Don’t give up.
You can usually persuade creditors to accept your offer of
payment by using the following steps.
• Start paying the amount you have offered anyway
as a gesture of goodwill.
• Contact us for advice on how to approach your creditors
if they refuse your offer or refuse to freeze the interest.
‘Interest and charges’ on page 57.
• Write to the creditor again and ask them to reconsider
their decision. Tell them your offer is reasonable and is
all you can afford.
• If some of your creditors have accepted your offer of
payment, and frozen the interest, write to the creditors
who have refused and tell them this.
• If a collector calls for your payment, you should not let them
persuade you to pay more than the amount you have
offered. Otherwise, you will not be able to afford the
payments you have agreed with your other creditors,
particularly for your priority debts.
• Most creditors are members of a trade association and have
agreed to a code of practice. The code usually says creditors
should be sympathetic in cases of genuine difficulty.
• Creditors may ask you to fill in their own budgeting
form.Ask them to accept your own business and
household budget sheet instead as this has all the
information they need.
Contact us for advice if you feel a creditor is acting
unreasonably. We can give you details of their trade
association, advise you about the Financial Conduct
Authority’s Consumer Credit sourcebook (CONC). CONC sets
out rules and guidance which organisations must follow when
collecting debt. We can also tell you about making a complaint
to the Financial Ombudsman Service (FOS).
See our fact sheet: Payment offer – what
to do if a creditor refuses. This includes sample
Extra advice: what if creditors ask for proof?
Sometimes, creditors ask for extra information
or ‘proof’ such as wage slips or letters from
other creditors. You may want to help with
reasonable requests but if the creditor wants
proof of all your bills, point out this would not
usually be asked for by the court. Contact us
for advice.
Important: don’t pay more than
you can afford
The offers of payment in your business and
household budget sheet are fair to all your
creditors and the most you can afford. If you
allow one creditor to persuade you to pay
more, you will not have enough for your
outgoings and other creditors.
What can I do if creditors
harass me?
If you do not pay, your creditors are allowed to keep
reminding you from time to time but they must not act
illegally. If they threaten or harass you to try to make you pay,
they may be committing an offence under the Consumer
Protection from Unfair Trading Regulations 2008.
Freephone 0800 197 6026
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55
Dealing with your
non-priority debts
The Financial Conduct Authority (FCA) has issued the
Consumer Credit sourcebook (CONC). It sets out rules and
guidance that organisations must follow when collecting
debt. If an organisation breaks these rules or guidelines,
the FCA may question their fitness to be authorised to
provide consumer credit. Contact us for advice.
Collection agencies
The creditor may pass or sell your debt to a collection agency.
Don’t worry. A collection agency has no greater powers than
the creditor. They are not bailiffs and have no rights to come
into your business or home. If you feel a collection agency is
behaving unfairly, contact us for advice.
‘What can I do if creditors harass me?’
on page 55.
You should negotiate payments with the collection agency
in the same way as your other creditors. Some collection
agencies may try to charge you extra fees for collecting
the debt from you. You may be able to complain about
this. Contact us for advice.
See our fact sheet: Harassment
by creditors and debt collectors.
and even reducing the balance or ordering your lender to
pay the loan payments back to you. For more information
about the unfair relationships test, contact us for advice.
See our fact sheet: Complaining about
your lender.
What if I already have
a county court judgment?
If you already have a county court judgment, you should
include this debt with your non-priority debts and work
out an offer of payment in the same way.
on page 59.
If this offer of payment is less than the amount the court has
ordered you to pay, you may need to apply to the court to
reduce the amount. This will mean you are treating all your
creditors fairly and you are not paying one creditor more than
you can afford. If you need to reduce the amount that
you have to pay on a county court judgment, contact us
for advice.
Extra advice: loan sharks
A loan shark is someone who lends money
but does not have a legal licence to do so.
They often use violence and threats to make
people pay and usually there is no written
agreement. If you are worried about an illegal
money lender, you can contact the ‘Stop
Loan Sharks’ helpline.
What if I have a complaint
about my credit agreement?
You have a right to complain to the Financial Ombudsman
Service about how your lender or a debt collection
agency has dealt with your account. You will have to
follow your lender’s complaints procedure first, but
your lender only has one opportunity to deal with your
complaint before you can ask the ombudsman to look
at it. To make a complaint to the ombudsman, you need
to fill in their complaints form. You can either do this over
the phone or download the form from their website.
You may also be able to ask the County Court to look at
the relationship between you and your lender. This could
lead to the court changing the terms of the agreement
56
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Freephone 0800 197 6026
Debts with your bank –
overdrafts, loans and credit cards
Many people use their current account with a bank or building
society to have drawings from their business or wages
paid into and to pay household bills. This can cause
problems if you have a number of debts and your current
account becomes overdrawn.
With an overdraft, you pay interest and charges on the
amount owed. If you have a loan with the bank or building
society, the full monthly instalment will usually be taken
from your current account too. This may mean that you
do not then have enough money to pay priority debts such
as your mortgage, rent, council tax, gas or electricity.
You need to be very careful in dealing with debts to your bank.
Some banks or building societies will react by taking all the
money in your account to clear the overdraft or loan. They
can also try to do this if you have a credit-card debt with your
bank. This is called the ‘right of set-off’. Before negotiating a
repayment arrangement with your bank, you should consider
opening an account elsewhere to have drawings from your
business or wages paid into. Do this immediately if the bank
or building society does not agree to your offer. If your bank
tries to take money from your account in this way, contact us
for advice.
Dealing with your
non-priority debts
Interest and charges
Extra advice: the Lending Code
and the right of set-off
The Lending Code (opposite) has guidance
for banks and building societies when they
are applying the right of set-off and the
customer is in financial difficulties. See
www.lendingstandardsboard.org.uk. The
code says, if your bank or building society
uses the right of set-off, you should be left
with enough money to meet your reasonable
day-to-day living expenses and priority debts.
‘The Lending Code’ opposite.
If you are trying to make an arrangement to repay an
overdraft, you should ask the bank or building society to
stop the charges and interest, so that the amount you pay
reduces the debt. If the staff at your local branch are not
able to agree to this, contact the regional or head office of
the bank or building society and ask them to agree to do
so. Point out that The Lending Code says banks ‘should
be sympathetic and positive when considering a
customer’s financial difficulties’. The code applies to small
businesses’ overdrafts as well as personal overdrafts.
The Lending Code
The Lending Code sets out how banks, building societies
and credit-card providers should treat you when you have
financial problems. Under the code, your lender should:
• look at your options with you;
Opening a bank account
You may have difficulty opening a business or personal bank
account if you have missed payments to your creditors.
However, opening a basic bank account should not normally
involve a credit check. Basic bank accounts allow you to
have wages or benefits paid in and take cash out. Some
accounts let you have direct debits and standing orders.
You are not usually allowed chequebooks, cheque-guarantee
cards or an overdraft. Shop around the high-street banks and
building societies for the best deal or contact us for advice.
If you are on benefits and don’t want a basic bank account,
you can choose a post office ‘card account’. You can have
your benefits (including tax credits and pensions) paid into this
account and can take money out at a post office counter.
Important: does your bank charge
you a fee for a ‘packaged’ account?
Some banks charge you a monthly or
annual fee to have a particular account with
them, because they offer extra benefits such
as mobile phone insurance. Check if you
are paying a fee for your account and think
about whether the benefits you receive are
really necessary, or if you could get them
cheaper elsewhere.
Extra advice: basic bank accounts
Contact the Money Advice Service for a list
of basic bank accounts on 0300 500 5000
or see www.moneyadviceservice.org.uk.
• look at your income and outgoings and other debts;
• try to agree a debt-repayment plan with you; and
• make sure you have enough money to cover your
day-to-day expenses and pay your priority debts.
For more information, contact us for advice.
Voluntary charges on your home
If you have a large overdraft or a personal or business
loan, you may be asked to agree a voluntary legal charge
on your home in return for reduced payments. This would
mean that the debt would be secured on your home and
you could then lose your home if you didn’t keep up the
payments. Banks will sometimes ask you to agree to a legal
charge, which means any future borrowing or overdraft you
have with the bank is also secured on your home.
Warning: before you agree to a
voluntary charge
If you are asked to agree to a voluntary legal
charge either by one of your creditors, or if
your partner asks you to sign an agreement
to a legal charge on your home, you must get
legal advice first. Contact us for advice.
Secured overdrafts
You may have a bank overdraft secured on your home.
The interest charges can be high, with no fixed monthly
instalment to pay.
Sometimes, the bank will secure all the money you owe
them now, and all the money you may borrow from them
in the future, on your home. This is called an ‘all monies
charge’. This usually applies to business lending such
as business loans and overdrafts.
If the bank takes you to court, it may be difficult to suspend
a possession order to pay off the overdraft or an all monies
Freephone 0800 197 6026
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57
Dealing with your
non-priority debts
Payday loans
Warning: beware of consolidation loans
Beware of adverts in newspapers and on
television offering loans to clear all your debts
(often called ‘consolidation loans’). They can
be very expensive and will put your home at
risk. Contact us for advice.
charge in instalments. If you have an overdraft secured
on your home, contact us for advice.
If your bank is asking you to agree to secure an overdraft
on your home or wants you to sign an all monies charge,
Complaints
Banks should have a complaints procedure under The
Lending Code and they should make the procedure public.
If you have a complaint, you need to follow your bank’s
complaints procedure. If you are not satisfied with how
they have dealt with your complaint, you may be able to
complain to the Financial Ombudsman Service. They can
only deal with certain types of complaints. For information,
contact the Financial Ombudsman Service direct.
See our fact sheet: Complaining about
your lender.
Extra help
In this section, we give information and advice on some
non-priority debts that can be more difficult to deal with.
They are:
• charge cards;
• payday loans;
• catalogue debts;
• personal debts to friends and family;
• household water-rates arrears; and
• non-priority business debts.
Charge cards
You may have a debt on a charge card such as American
Express, where you have to pay the full balance off each
month rather than in instalments as with a credit card.
It can be more difficult to negotiate reduced offers of
payment on charge cards as they are not ordinary credit
agreements. You should still include them with your
other non-priority debts. If your charge card company is
threatening to take further action, contact us for advice.
58
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Freephone 0800 197 6026
A payday loan is a short-term loan, usually for a small
amount of money. Many people use these loans to help
them if they have run out of money before their next
payday. The interest rates on these types of loans can be
very high. Charges will also be added if you cannot pay the
loan back on payday. This means that the debt can build up
so you end up owing a lot more than you borrowed.
A payday loan is a non-priority debt but it can be difficult to
deal with as you may have given what is called a ‘continuous
payment authority’ to the loan company. This means that
you have given the loan company permission to take money
from your bank account. You may not realise you have given
this permission, but you can get a continuous payment
authority stopped by telling the bank or the payday loan
company. Contact us for advice.
See our fact sheet: Payday loans. This
includes sample letters you may find useful.
Catalogue debts
Mail order catalogues offer a way of buying goods by post
and spreading the payments over a period of, typically, 20
to 40 weeks. Orders for goods and the collection of payments
are sometimes undertaken by a local part-time agent; often
a friend, relative or neighbour.
You should treat catalogue debts as a non-priority debt in the
same way as your other non-priority debts. Goods ordered
from a catalogue belong to you and cannot be taken back if
you do not pay. If you have a dispute with the company or an
agent about how much you owe, contact us for advice.
If you have a catalogue that you took out before 6th April
2007, you may find that this debt is not enforceable if
you did not sign a credit agreement. This is complicated
and will depend on a number of factors. Contact us
for advice.
Extra advice: liability of agents
If you act as an agent for the catalogue
company and sell goods, or collect money
for the company, you need to be careful. You
should create a separate account for each of
your customers. If you do not do this, then the
catalogue company may hold you responsible
for any payments missed by your customers.
As long as you set up separate accounts, you
(as an agent), should not be held personally
liable for your customers’ missed payments.
Dealing with your
non-priority debts
Personal debts to friends
and family
You may owe money to friends and family. You should usually
treat these debts the same as ordinary non-priority debts and
make offers of payment in the same way.
on pages 50 to 61.
You may be able to agree to make no payments until
your circumstances improve so you can pay off your other
creditors faster. Sometimes, you may want to make higher
payments on a personal debt because lending you the
money has caused hardship to someone you know or your
relationship may suffer if you don’t. This can be difficult,
as your other creditors may be unhappy if you are paying
more on a personal debt than is strictly ‘fair’. You need to
explain the reasons to your other creditors and point out,
for example, that if you pay off the personal debt quickly,
you will be able to pay more to everyone else.
Household water-rates debt
Include any water-rates arrears with your other non-priority
creditors, but keep up with your ongoing bills so your debt
does not get any bigger.
them to discuss your repayment options. They should
also send you a list of free, independent advice agencies
you can contact.
• The rules allow you to ask your creditor for time to get
debt advice if you need to, before they take court action.
• If the creditor goes on to take court action, you will receive
a ‘claim form’ from the court. The claim form will include
details of the debt, known as the ‘particulars of claim’.
• If you do have to go to a court hearing, your name will not
appear in the local paper, so don’t worry about other people
finding out.
• The court staff and the District Judge who decide the
cases are used to dealing with people who do not have
a solicitor.
If you receive a claim form or letter from the court,
Important: defences
If you don’t agree with the amount the
creditor says you owe, you will need to
put in a defence. Putting in a defence or
counterclaim is complicated. Contact
us for advice.
See our fact sheet: Water-rates arrears
and water trust funds.
Non-priority business debts
Information: sole traders, partnerships and
limited companies
If you do not need to continue to trade with a particular
supplier or service provider, you could treat any debts you
have with these companies as non-priority debts. However,
you may need to take care as some business suppliers are
more likely to take court action, or make you bankrupt. If you
are not sure whether to treat a business debt as a priority or
a non-priority debt, contact us for advice.
• If you are a sole trader, you can use the information in this
pack as a general guide if you don’t dispute the debt.
hat if my creditors
W
take court action?
Many people are frightened of courts especially when they feel
guilty because they owe money. The County Court is not a
criminal court and is not there to judge anyone as guilty or
innocent. It is there to settle disputes about money owed and
how to repay it. The court is not there to protect the interests
of creditors alone. Under court rules on ‘pre-action conduct’,
the court is keen to see you come to an arrangement with
your creditors without court action. If court action is taken,
you will not usually have to go to a court hearing. Most of the
procedure is done through the post.
• Your creditor should send you a letter before they start
court action telling you how to pay and how to contact
• If you are in a partnership, the creditor should serve a copy of
the claim form on each of the partners. You should discuss
the case with your partners before deciding what to do and
agree a common approach. A majority of partners needs to
agree to offer payment or defend the action. If you can’t reach
an agreement with the other partners, you need to get legal
advice from a solicitor. If the partnership has been dissolved
(ended), creditors can take court action against each partner
individually. If the partnership has been dissolved, you can
use the information in this pack as a general guide if you don’t
dispute the debt.
• If you are a director of a limited company, court action
should not be taken against you as an individual unless you
signed a personal guarantee or have been made personally
liable by the court following a formal liquidation of the company.
If action is taken against the company, the directors need to
agree how to reply. If you have been taken to court as an
individual, even though the business is a limited company and
you have not signed a personal guarantee, you should get
advice from a solicitor immediately. If you are are being taken
to court as an individual and there is no dispute, use the
information in this pack as a general guide.
Freephone 0800 197 6026
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59
Dealing with your
non-priority debts
If you agree you owe the debt
There will be a reply form with the claim form for you to make
your offer of repayment. This is called the ‘admission form’.
There are instructions included on how to fill in the form. It
looks quite like a household budget and asks for similar
information on your income and essential outgoings. You
should fill this in and send the court a copy of your business
and household budget sheet so it has a full picture of your
circumstances. Contact us for advice.
See our fact sheet: County Court
– replying to a claim form.
reference agencies. This may make it difficult for you to get
credit in the future. If you pay off your county court judgment
within one month, you can ask to have the entry removed
from the register.
‘Can I get credit again?’ on page 61.
• If you do not pay the monthly amount which the court
orders, or the court orders you to pay the whole amount
straightaway, the creditor may take further action against
you. So make sure you pay your monthly payments or apply
for them to be reduced if you cannot afford the first amount
that the court fixed.
‘Reducing payments on court orders’ below.
How to get help with court fees
Important: do make an offer
of payment
In the claim form, there is a section you can
fill in to include your priority debt payments.
You also have space to include any other
court judgments you have, and to list all
your non-priority debts. It is important to
make an offer of payment in the ‘offer box’.
If you leave it blank, the court will decide
you have not made an offer and tell you to
pay the whole debt at once, or order you to
pay what the creditor asks for.
If my creditors take court action, what are
the advantages?
• The court will stop interest being charged on most
ordinary credit agreements. This means that the amount
you owe cannot increase. Some creditors may tell you
they can charge interest on a debt before and after
judgment. If this happens to you, contact us for advice.
– interest charges.
• In most cases, the court is likely to let you pay a monthly
amount which you can afford. But it can only do this if
you explain your income, outgoings and other debts on
the reply form to the county court claim.
• Usually, you won’t have to go to the court for a hearing.
Most of the procedure is done through the post.
If my creditors take court action, what are
the disadvantages?
• Court costs are added on to your debt, although creditors
cannot add on what they want. The amount of the court
costs will depend on the amount of money you owe.
• Details of judgments are recorded on the Register of
Judgments, Orders and Fines and are available to credit
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Freephone 0800 197 6026
If you need to apply to the court, there may be a fee to
pay. You may not have to pay the fee, depending on your
circumstances, for example, if you are on benefits or a
low income. Contact us for advice.
Reducing payments on court orders
If you cannot afford what the court has decided you
should pay, you can write to the court to ask it to look at
your offer again. This is called a ‘redetermination’. There
is no fee for doing this. You must do this within 14 days of
getting the order. The District Judge can decide to have a
hearing or make a decision by looking at the papers. You
can ask for a hearing when you write to the court to ask it
to look at your case again. The case should be transferred
to your County Court hearing centre if there is a hearing.
If more than 14 days have passed since you got the court
order, you cannot apply for a redetermination. Instead, you
must apply for the monthly payment to be reduced. Contact
us for advice.
Further action the creditor can take
Usually, if you do not pay the monthly amount the court
orders, the creditor can ask the court to take further action.
The following methods are most commonly used.
Bailiff’s warrant
The creditor can ask the court to instruct bailiffs. You do not
have to let the bailiffs in. The bailiffs cannot force their way
into your home unless you have let them in before. Bailiffs
can force entry into a business premises with the court’s
permission. The court can only grant permission for this if
there is no living accommodation attached to the business. If
a creditor is threatening to use bailiffs, contact us for advice.
Dealing with your
non-priority debts
Attachment of earnings
If you are also employed, the court can order your employer
to make deductions from your wages to clear your debt.
The court uses a set formula to work out the rate of the
deductions. This order can be suspended if it might affect
your employment and you can make the payments yourself.
If a creditor is threatening to make an attachment of earnings
against you, contact us for advice.
attachment of earnings orders.
Charging orders
If the court makes a county court judgment, the creditor
can ask for a legal charge on your business premises or
home. This is called a ‘charging order’. This only applies if
you own or have a mortgage on your business premises
or home, and not if you rent or lease them. The charging
order means the debt is secured like a mortgage and may
put your property at risk.
There must be a hearing in the court before a charging
order is made final. It is up to the court to decide and
there are several arguments you can use against a
charging order being made. If a creditor is threatening to
apply for a charging order, contact us for advice.
– charging orders.
Can I get credit again?
There is no such thing as a ‘credit blacklist’ but if you do
not pay your debts, you may find it difficult to get credit in
the future.
When you apply for credit, most companies will consult a
credit-reference agency. They keep records of all county court
and high court judgments, bankruptcy orders, IVAs, DROs
and details about credit accounts. This information is kept
on file for six years. It will show if you are behind with your
payments. If you are in arrears or have a county court
judgment, you may be refused credit.
If you are refused credit, you have a right to ask if the finance
company has used a credit reference agency. They must give
you the agency’s name and address.
The finance company should give you good reasons why they
turned you down for credit. This includes telling you if they
have used a credit-scoring system. To get a copy of your
credit report, you need to contact the credit reference
agencies and fill in an application form. There is a fee of
£2. You can usually apply in writing, by phone or online.
The Information Commissioner’s Office publishes a useful
guide to credit reference agencies called Credit Explained.
See our fact sheet: Credit reference
agencies and credit reports.
Credit-repair companies
You may have heard of companies that offer to clear
your credit record if you pay a fee. These are known as
credit-repair companies. Be careful. Many credit-repair
companies promise to remove judgments when they
cannot legally be removed. Credit-repair companies
must be authorised by Financial Conduct Authority
(FCA). You can check which companies are authorised
on the FCA website www.fca.org.uk. Type ‘consumer
credit register’ into the search box. You can complain to
the Financial Ombudsman Service about something a
credit-repair company has done.
See www.ukcreditrepair.co.uk, which gives more
information on credit repair, or contact us for advice.
Next steps...
You are now at the end of step 4, the last step in
this pack. We hope you have been able to follow
the steps easily and now feel better able to deal
with your debts. There is a lot more help available
if you need it.
Sample letters
There are sample letters included with this
pack which you can use to help you write to
your creditors. You can also use our sample
letter suite to fill in sample letters on our
website at www.businessdebtline.org.
Useful contacts
See page 62 for useful contact details
for other organisations.
Fact sheets
See www.businessdebtline.org for a list
of the fact sheets that we produce. These
cover specific subjects in depth that are
not included in this pack.
Remember – you can always contact us for help,
information and advice on 0800 197 6026 or see
Freephone 0800 197 6026
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61
Useful contacts
We have included phone
numbers and website addresses
where they are available.
GOV.UK
Benefits, tax credits
and grants
LawWorks
Guide to utility trusts and services in
the ‘Essential Guides’ section of the
home page.
www.aurigaservices.co.uk
Lawyers For Your Business
Carer’s Allowance Unit
Complaints
www.gov.uk/carers-allowance-unit
For complaints about water companies.
Phone: 0121 345 1000
Email: enquiries@ccwater.org.uk
Online resource for businesses.
www.gov.uk/business
Free legal help from solicitors.
www.lawworks.org.uk
Auriga Services Ltd
Information about Carer’s Allowance
claims.
Phone: 0345 608 4321
Child Benefit helpline
HMRC advice about Child Benefit claims.
Phone: 0300 200 3100
www.hmrc.gov.uk/childbenefit
Child Maintenance Service (CMS)
and Child Support Agency (CSA)
Advice and information about the statutory
child maintenance services.
www.gov.uk/child-maintenance
Disability Benefits Centre
Information about benefits for people with a
disability and their carers.
Disability Living Allowance
Phone: 0345 712 3456
Attendance Allowance
Phone: 0345 605 6055
Personal Independence Payment
Phone: 0345 850 3322
www.gov.uk/disability-benefitshelpline
GOV.UK
Find out what benefits you could get and
how to make a claim.
www.gov.uk/browse/benefits/
entitlement
Pension Service helpline
Information about the State Pensions,
Pension Credit and benefits.
Phone: 0800 731 7898
www.gov.uk/contact-pensionservice
Tax Credit Helpline
Information about Child Tax Credit and
Working Tax Credit.
Phone: 0345 300 3900
www.gov.uk/child-tax-credit/
how-to-claim
Turn2us
Provides advice about charitable grants
and benefits.
Phone: 0808 802 2000
www.turn2us.org.uk
Winter Fuel Payment centre
Information about payments to help older
people keep warm.
Phone: 0845 915 1515
www.gov.uk/winter-fuel-paymenthelpline
Business debts
Legal advice for businesses.
Phone: 0207 405 9075
www.lawsociety.org.uk
Consumer Council for Water
www.ccwater.org.uk
Financial Ombudsman Service
(FOS)
For complaints about banks, building
societies, loans and credit, hire-purchase
agreements, mortgages, insurance,
investments, endowment policies and
pensions.
Phone: 0800 023 4567 or 0300 123 9123
Email: complaint.info@financialombudsman.org.uk
www.financial-ombudsman.org.uk
Housing Ombudsman
For information on limited companies.
Phone: 0303 123 4500
www.companieshouse.gov.uk
Federation of Small Businesses
Promoting and protecting the interests
of self-employed people and owners
of small firms.
Phone: 0808 202 0888
¦
www.ombudsman.org.uk
Consumer organisations
Age UK
Advice about money, benefits and other
issues for older people.
Phone: 0800 169 6565
www.ageuk.org.uk
Citizens Advice consumer service
Helpline for consumer and energy
problems.
Phone: 0845 404 0506
www.adviceguide.org.uk
Report a loan shark
Advice on how to deal with loan sharks
- unlicensed money lenders.
Phone: 0300 555 2222 if you live in
England or 0300 123 3311 if you live in
Wales.
Email: reportaloanshark@stoploansharks.
gov.uk if you live in England or imlu@cardiff.
gov.uk if you live in Wales
www.gov.uk/report-loan-shark
Trading standards
Information Commissioner’s Office
(ICO)
Financial advice and financial
services
www.ico.gov.uk
Regulator for financial services, such as
banks and credit companies, insurance
companies and mortgage lenders.
Phone: 0800 111 6768
Email: consumer.queries@fca.org.uk
www.housing-ombudsman.org.uk
For advice about data protection and
freedom of information.
Phone: 0303 123 1113
Legal Ombudsman
Organisation to contact about complaints
to do with solicitors.
Phone: 0300 555 0333
Email: enquiries@legalombudsman.org.uk
www.legalombudsman.org.uk
Local Government Ombudsman
(LGO)
For complaints about councils and other
organisations.
Phone: 0300 061 0614
www.lgo.org.uk
Office of Communications (Ofcom)
An independent organisation that regulates
phone, television and radio companies.
Phone: 0300 123 3333 or 020 7981 3040
www.ofcom.org.uk
Office of Water Services (Ofwat)
An independent organisation that regulates
water companies.
Phone: 0121 644 7500
Email: mailbox@ofwat.gsi.gov.uk
www.ofwat.gov.uk
(For your local Consumer Council for Water
committee, check your Yellow Pages or
visit www.ccwater.org.uk.)
For complaints about phone, mobile and
broadband companies, energy companies
and estate agents.
Phone: 0330 440 1614 (phone, mobile
and broadband companies)
Phone: 0330 440 1624 (energy
companies)
Phone: 0330 440 1634 (estate agents)
www.ombudsman-services.org
www.fsb.org.uk
62
Investigates complaints about UK
Government departments or the NHS in
England.
Email: phso.enquiries@ombudsman.org.uk
Phone: 0345 015 4033
Investigates complaints about all
social-housing providers.
Phone: 0300 111 3000
Email: info@housing-ombudsman.org.uk
Ombudsman Services
Companies House
The Parliamentary and Health
Service Ombudsman
Freephone 0800 197 6026
Local trading standards offices.
Phone: local numbers available on the
website
www.tradingstandards.gov.uk
Financial Conduct Authority (FCA)
www.fca.org.uk
Money Advice Service
Responsible for helping consumers
understand financial matters and manage
their finances better. Use the ‘Health
check’ to get advice about how to manage
your finances.
Phone: 0300 500 5000
www.moneyadviceservice.org.uk
Unbiased.co.uk
For a list of independent financial advisers.
Phone: 0330 100 0755
www.unbiased.co.uk
Fuel
Energy Saving Advice Service
Government-funded telephone advice
service offering unbiased energy-saving
advice for homes and businesses.
Phone: 0300 123 1234
www.energysavingtrust.org.uk
Energy UK
Represents the main gas and electricity
companies on important issues affecting
suppliers and consumers.
www.energy-uk.org.uk
Home Heat Helpline
Gives advice about paying fuel bills and
keeping warm during the winter.
Phone: 0800 336 699
www.homeheathelpline.org.uk
Housing
Council of Mortgage Lenders (CML)
Trade association for mortgage lenders.
Phone: 0845 373 6771
www.cml.org.uk
Shelter
Free housing advice helpline.
Phone: 0808 800 4444
www.shelter.org.uk
Insolvency
Insolvency enquiry line
For information about the bankruptcy
process.
Phone: 0845 602 9848
www.bis.gov.uk/insolvency
Legal advice
Civil Legal Advice
A telephone service providing free,
confidential and independent legal advice.
Phone: 0345 345 4345
www.gov.uk/civil-legal-advice
Law Centres Network
They do not give advice but you can check
on their website to see if there is a law
centre near you.
www.lawcentres.org.uk
Law Society
You can search for a solicitor on their
website.
Phone: 020 7242 1222
www.lawsociety.org.uk
Rights of Women
Legal advice for women.
Phone: 020 7251 6577 (family law advice)
Phone: 020 7251 8887 (criminal law
advice)
Phone: 020 7490 7689 (immigration and
asylum law advice)
www.rightsofwomen.org.uk
Mental health
Samaritans
Confidential emotional support.
Phone: 0845 790 9090
Email: jo@samaritans.org
www.samaritans.org
Sane
Support for people with mental illness.
Phone: 0845 767 8000
www.sane.org.uk
Tax
Her Majesty’s Revenue & Customs
(HMRC)
Government department responsible for
tax, VAT and National Insurance.
Phone: numbers for specific areas are
available on the website
www.hmrc.gov.uk
TaxAid
Free, confidential advice about tax
problems.
Phone: 0345 120 3779
www.taxaid.org.uk
TV Licensing
General enquiries about payment
schemes.
Phone: 0300 790 6131 (general enquiries)
www.tvlicensing.co.uk
You will also find the following local
services listed in The Phone Book
or online.
AdviceUK
Network of independent advice agencies.
Phone: 0300 777 0107
www.adviceuk.org.uk
Citizens Advice
Offering independent and confidential advice
on issues such as debt, money problems and
welfare benefits.
Phone: 0844 477 2020 Wales
Phone: 0844 411 1444 England
www.adviceguide.org.uk
www.citizensadvice.org.uk
GOV.UK
Find out what benefits you could get, how
much you could get and how to make a claim.
www.gov.uk/browse/benefits/
entitlement
Helplines Partnership
For information about helplines.
Phone: 0300 330 7777
www.helplines.org.uk
Jobcentre Plus
Speak to your local office to claim most
benefits if you are unemployed.
Phone: 0345 604 3719
www.gov.uk/contact-jobcentre-plus
About Business Debtline
Business Debtline and the Money Advice Trust
Business Debtline, part of the Money Advice Trust, is a
helpline offering free, expert, professional advice over the
phone. This unique service helps the self-employed and
small businesses deal with their debts in an informed
and active way. Business Debtline offers advice about
business debts, cashflow problems and personal debts.
It also offers both self help solutions, debt-management
plans, debt relief orders and individual voluntary
arrangements to people with many debts. Please call
0800 197 6026 or visit www.businessdebtline.org.
The Money Advice Trust is a charity formed in 1991to
help people across the UK tackle their debts and manage
their money wisely. As well as running Business Debtline,
the Money Advice Trust also runs National Debtline
(www.nationaldebtline.org) and provides an online
service: My Money Steps (www.mymoneysteps.org).
Our partners
Local council
Provides a range of services. Contact your
council to claim Housing Benefit and help
with your council tax or to apply for housing.
Law centres
For legal advice on housing, state benefits,
immigration and sometimes debt.
Money advice centres
You might be able to get local advice on
dealing with debts.
Welfare rights agencies
For local advice on claiming state benefits.
This may be part of your local council.
Business Debtline – our aims and services
We aim to provide a high-quality service. You can expect
the following.
• To speak to an expert adviser who is approachable,
supportive and trained to a high standard.
• A guarantee that any information you give about your
situation will be kept strictly confidential. We keep
records of our calls on a database. If you need to
contact us again, this means you don’t have to tell
us about your situation all over again. We do not
pass your details on to any other organisation without
your permission.
• We may ask your permission to be contacted by another
research organisation. This is either for the purpose of a
phone call or written questionnaire on the quality of our
service, or to help with research about debt.
• You do not have to tell us anything, such as your name
and address, if you would prefer not to. Please contact
us if you do not want us to keep your details on file. If
we do not hear from you, we will assume that you
agree to us doing so.
We work with leading UK agencies to achieve our aims.
• Although our lines are very busy, we will do all we can
to answer your call promptly.
• Advice NI
• We are committed to equal opportunities in all our
services and will tackle any prejudice and discrimination
to make sure this happens.
• AdviceUK
• Citizens Advice
• Citizens Advice Northern Ireland
• Citizens Advice Scotland
• Institute of Money Advisers
• Money Advice Scotland
• Payplan
• StepChange Debt Charity
Information:
getting in touch by post
If you would like to write to us, either
to request further information or to make
a complaint, our postal address is:
Business Debtline
Tricorn House
51-53 Hagley Road
Edgbaston
Birmingham
B16 8TP
Funding
We at the Money Advice Trust would like to thank all of
our supporters for their generosity in supporting Business
Debtline and the work of the Trust. In particular, we
thank the following.
Barclays
British Business Bank
British Gas
Clydesdale Bank
Co-operative Bank
Department for Business, Innovation and Skills
EDF Energy
Eon
HSBC
Lloyds Bank
National Australia Bank
nPower
Royal Bank of Scotland
Santander
Scottish Power
SSE
Start Up Loans Company
Yorkshire Building Society
Freephone 0800 197 6026
¦
63
Freephone
0800 197 6026
Monday to Friday 9am to 5.30pm
Follow us on Twitter
@Biz_Debtline
Authorised and regulated by the Financial Conduct Authority
Business Debtline England and Wales 2014-15
© Business Debtline and Money Advice Trust
Copyright notice: You may not copy the information in this booklet, other
than one copy strictly for personal use. If you do, we may take court action.
Business Debtline is part of the Money Advice Trust.
Money Advice Trust is a registered charity number 1099506.
A company limited by guarantee. Registered in England and Wales, number 4741583.
Registered office: Money Advice Trust, 21 Garlick Hill, London EC4V 2AU.
June 2014. All information in this booklet was accurate when this edition was issued.
We cannot be held responsible for future changes to the law.

Dealing with your business debts

Transcription

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