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Luton Borough Council

Support with debt issues

Always avoid loan sharks

Illegal money lenders take advantage of people struggling who feel they have nowhere else to turn. If you are offered money with little paperwork but high charges, always say no and get free help from a debt advice charity.


Debt can happen to anyone. If you find it hard to make ends meet, or your debt is increasing each month, ask for help. Ignoring it will only make it worse.

There are many options for free debt advice and support to help reduce how much you pay each month.

Increasing your income, even by small amounts, can make a big difference to your situation.

If you are struggling to pay your debts, don’t panic! Follow these simple steps to help you deal with your debt:

  • work out a personal budget
  • deal with your most urgent debt first
  • don’t forget to deal with your non-priority debts.
  • make sure you have considered all the available options to deal with your debts
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First of all, you need to create a personal budget. This will show all the money you have coming in and all the expenses you have going out.

There may be ways you could increase your income, for example:

You may also find you can reduce some of your expenses, for example:

If you’re not sure how you are spending your money, you should keep a spending diary for about a month. This will give you a clearer picture of where you spend your money. Also, if you’re part of a couple and have joint expenses, you should both complete the budget sheet.

You can use online budgeting tools to create a personal budget. See:

Once you’ve completed your budget, you’ll know how much money you have left once your essential expenses have been paid.

Start by making a list of who you owe money to and how much you owe them.

When you've made a list of all the money you owe, you need to work out which debts are the most urgent. Some of your debts are more urgent than others. This is because the consequences of not paying them can be more serious such as:

  • losing your home
  • disconnecting your gas and electricity
  • being imprisoned

These are known as priority debts.

Less urgent debts are known as non-priority debts. You might feel pressure to pay these, but you must pay the priority debts first. Not paying them could lead to significant consequences.

Priority debts include:

  • mortgage, rent, or service charge arrears - if you don’t pay these you could lose your home
  • gas and electricity arrears - if you don't pay these, you can have your supply disconnected
  • Council Tax arrears - if you don't pay these, an enforcement agent could take your goods, or you could have money taken from your benefits or wages or even be sent to prison
  • magistrates court fines - if you don't pay these, an enforcement agent could take your goods or even send you to prison
  • maintenance arrears for children or ex-partners, including arrears to the Child Support Agency - a court can use enforcement agents to take your goods or even send you to prison if you do not pay
  • TV licence or TV licence arrears - it’s a criminal offence to use a television without a licence and you could be fined and sent to prison if you don't pay the fine

You may have other debts which are very important for you to pay. For example, if you need a car to get to work or due to your disabilities, you may need to make sure you keep up to date with the payments.

You need to think carefully about which debts you treat as the most important ones. You must have good reasons. You might have to convince a court or your other creditors why you think these debts are more important than others.

You should contact your priority creditors with a copy of your budget sheet showing your payment offer.

If you’re not sure if your debts are priority debts, or if court action has been taken, or if you need help making offers to your creditors, please seek further advice.

When you have sorted out your priority debts, you should deal with non-priority debt. You should use any leftover money to make arrangements to deal with your non-priority debt.

Non-priority debts include:

  • credit debts such as overdrafts, loans, hire purchase, credit card accounts, and catalogues
  • water and sewage charges - you can not be cut off for water debts
  • student loans
  • money borrowed from friends or family

You cannot be sent to prison for not paying non-priority debts. But if you don't make any offers to pay, without explaining why your creditors may take you to court.

If you still fail to pay when the court has ordered it, your creditors can take further action. For example, they can get another court order which allows them to send bailiffs around to take your property away. This will be sold to cover your debts.

If you don't make arrangements to pay off non-priority debts, your creditors may take you to court. You may not have much money left to pay these debts and can only offer a small amount towards your debt (such as £5 per month). This is called a token offer.

If you have no spare income to offer, consider asking the creditor to put a hold on any recovery action for a while in the hope that your financial situation may improve.

When writing to a creditor, you should also include a copy of your personal budget and provide details of your particular circumstances.

For templates to use when contacting creditors, see the National Debtline sample letter library.

Please seek further advice if you need help writing to your creditors or making an offer.

There are various options in dealing with your debts, but not all options may be suit you.

You should look at all the options carefully. There are advantages and disadvantages to each option. There are costs involved with some options.

You’ll need to decide which option is the most suitable for you. More details of the options available can be found here: National Debtline: ways to clear your debt.

Alternatively, see the debt and money section on Citizens Advice.

Please seek further advice if you need help deciding the best option for your situation.

Useful contacts

Help and advice with debt and money management

Savings and bank accounts

  • Money Matters Community Bank - covers postcodes LU1 to LU7, and offers an alternative to High Street Banks
  • Credit Union - a financial co-operative which provides savings, loans and a range of services to its members
  • Help to Save on GOV.UK - a government savings account for certain people entitled to Working Tax Credit or Universal Credit to get a bonus of 50p for every £1 they save over 4 years

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