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Luton Borough Council

Debt counselling

All debts are important, but some are more pressing than others.

The ultimate consequences of not dealing with a particular debt - in other words the worst that can happen - depends on what the debt is for.

Some debts carry severe penalties and you should deal with these debts first. These are your priority debts. The list below shows what may eventually happen if priority debts are not dealt with.

  • mortgage - repossession of your home (eviction)
  • second mortgage/secured loan repossession of your home, eviction
  • rent - eviction from your home
  • council Tax - distraint*, deductions from wages/benefit, imprisonment
  • water rates - supply disconnected
  • gas/electricity - Supply disconnected
  • unpaid Magistrates Court fine - distraint*; deductions from wages/benefit; imprisonment
  • unpaid maintenance/child support
  • distraint*, deductions from wages/benefit; imprisonment
  • Income tax/VAT/National Insurance - distraint*
  • bankruptcy
  • telephone - disconnection
  • hire purchase (not normal credit) -repossession of HP goods
  • unsecured credit card debts - County Court Judgement - impaired credit rating

* Distraint is the seizure of some of your goods by bailiffs.

The worst thing you can do when you owe money is to ignore the problem, hoping it will go away. The earlier you contact your creditors, the more flexible they're likely to be in coming to an agreement with you.

Decide which debts are priority debts and which are not. The list above explains what may happen if you fail to pay priority debts. Write to your creditors, or phone, and indicate that you want to work out an arrangement which will reduce the debts.

If you make any arrangements over the phone, ask the name of the person you speak to. Write down what was said and then follow up with a letter to confirm the arrangement. Remember to quote your account reference and to keep a copy of all letters you send.

Don't make promises you can't keep
Don't be bullied into agreeing to repayment arrangements which you cannot keep. Arrange a rate of repayment that you can afford to keep up, based on the figures in your personal financial statement. Otherwise, sooner or later, you are likely to default or miss payments elsewhere and find yourself back in trouble. The aim is not just to solve the immediate problem but to get things organised so that you can afford to pay your creditors and meet your other expenditure for the foreseeable future.

Make regular payments
Many firms are computerised and these systems are programmed to send reminders and warnings automatically if payments are missed. It is better to make regular payments, however small, rather than make large occasional payments.

The law is on your side
Although the law gives creditors the power to take action to recover the money you owe them, it also makes them go through fixed procedures before the final action can legally be taken. So the law also gives you protection. For example, you cannot legally be evicted from your home without the creditor having been to court and obtained the necessary authority.

Don't be unduly intimidated
Harassing people in debt is illegal. If you are harassed by creditors seek advice immediately. You can make a complaint to the local Trading Standards Office or the Police. If the person is your landlord, you should contact our housing service.

National Debtline
Freephone helpline for debt advice - telephone 0808 808 4000 (Monday - Friday, 9am to 9pm. Saturday 9am to 1pm). See our related links section at the top right of this page.

© 2024 Luton Council, Town Hall, Luton LU1 2BQ