Debt Advice for Vulnerable People
When you have a low income, understanding how to manage your money & budget is key to resolving your debt issues. The first step is to draft a realistic budget which includes planning for unexpected expenditure like replacing household appliances or the expense of special occasions. The second and more difficult step is to stick to the budget you’ve drawn up. This can be a disheartening process when money is tight and there never seems to be anything extra for treats or holidays. You can feel under pressures to spend outside your income just to keep up with the lifestyle of others.
Sometimes just writing down everything that you spend your money on and comparing that to your income can help you to see why you are getting into debt. It can be easy to overspend if you do not have a firm grasp of your outgoings. Once you can see clearly where your money is going, you may be able to identify ways to reduce your expenditure on some items and prioritise your spending. You may find cheaper alternatives, for example buying items from charity shops or discount retailers. You can use price comparison websites to reduce your household bills such as energy or insurance.
Unmanageable debt and the stress it causes has been linked to mental health problems and relationship breakdown. A debt adviser can help you deal with your debts and negotiate on your behalf with creditors. The first step is to seek help and identify priority spending.
Different creditors have different sanction options if you don’t pay your debts.
Mortgage or rent payments are seen as priorities as your home is at risk if you fall into arrears on these payments. By running up these debts your home could be repossessed or you could be evicted so these should always be your priority to repay.
Rates are also a priority and all home owners are liable to pay rates although if you rent these are generally the responsibility of your landlord. If you’re not sure then check your tenancy agreement. If you get into arrears with your rates and do not contact them to make an offer of repayment then ultimately court proceedings will be commenced to recover monies owed.
If you don't pay utility bills such as gas, electricity or phone you could be disconnected, however it is more common that the supplier would remove the ability for you to pay by credit bill and install a prepayment meter. This meter can then recover the debt owed by taking a percentage back every time you top up your meter.
Payment of credit debts, such as credit cards or loans are seen as non-priority debts. These types of debts are usually the easiest to negotiate repayments with the creditors, particularly if you are seen as being vulnerable, as these creditors have particular protocols they must follow to try and assist you.
If you are unable to work, looking for work, have a low income, are disabled or have responsibility as a carer for someone then you may be entitled to help from state benefits. Assessing whether or not you are maximising your income from state benefits is a complicated matter and it is therefore important to seek professional advice on this.
Advice NI provide a Welfare Changes helpline and a Tax & Benefits helpline. These offer free and qualified advice and assistance in checking your benefit entitlement.
If you are retired or still working but have a low income you may be entitled to help from welfare benefits. Below are some of the key benefits you may be entitled to:
- State Pension
You may be entitled to a state retirement pension if you are not working and aged over 66.
- Pension Credit
If you are of pensionable age and living on a low income you may be entitled to the guaranteed element or the savings element of Pension Credit which gives you additional monies. You might get increased Pension Credit if you have caring responsibilities, severe disabilities or certain housing costs.
- Attendance Allowance
Attendance Allowance can be paid if you need help looking after yourself. If you receive Attendance Allowance you may be entitled to other additional benefits such as Pension Credit. It is not means tested.
- Cold Weather Allowances for Older People
If you are receiving certain benefits you may be entitled to extra financial such as the Cold Weather Payment to help in certain cold weather situations. People over state retirement age are entitled to receive the Winter Fuel Payment paid automatically in November or December.
- Free Public Transport
Residents of Northern Ireland aged 65 and over are eligible for free travel on Translink buses and trains with a Senior Smartpass. If you are aged 60-64 you are entitled to a 60+ Smartpass which gives reduced rates for travel.
- TV License
Until June 2020 people, aged 75 years or older are entitled to a free TV Licence. After that date only people aged over 75 and receiving Pension Credit will be entitled to a free licence.
- Health Costs
Anyone aged over 60 can get a free sight test. If you receive Pension Credit or have a low income then you could also get help with the cost of a dental check-up or treatment, the cost of your glasses and the cost of fares to and from hospital for treatment.
- Reduced Housing Rates
If you are aged 70 or over, live alone and still pay rates, you could be entitled to a 20% reduction on your rates bill.
If you are or could be going to prison, or a family member is already in prison, this can have a major impact on household income. Thinking about your debts will help in the future if you address them now.
Plan ahead to deal with your debts if there is any risk that you may be given a custodial sentence. It’s also important to keep any creditors informed as if you don’t, you may find that your debt situation gets worse while you are in prison and your debts may be more difficult to deal with once you’re released. Creditors can still take action to collect money from you while you’re in prison - they may be able to start court action or make you bankrupt. They are more likely to do this if they are not aware that you are in prison.
If you have arrears on priority bills these creditors can take action and this may affect other people in the home you live in when you’re in prison. For example, if you have rent arrears, your tenancy could be ended and you and anyone else in the property could be evicted. If you have utility bill arrears, the provider could apply for a warrant to disconnect your supply or fit a pre-payment meter. These reasons are why it is very important to make creditors aware of your situation.
If you having an upcoming court hearing and you’re at risk of prison, we recommend you take the following steps before the hearing:
- Contact your creditors to let them know you may be going to prison and for how long
- Appoint a trusted friend or family member to deal with your account while you’re inside. Some companies may allow you to do this over the phone, but most will ask for this in writing
- If you don’t manage to contact your creditors before you go to prison try to do it as soon as you can afterwards.
- While you’re in prison your income is unlikely to be enough to pay your creditors. Your best option may be to ask for a payment break until you’re released. You can take steps while inside to deal with your debts, but this can be harder to arrange
If a partner or someone else close to you has been sent to prison, they may need your help to deal with their debts. You can contact their creditors for them if they give their creditors permission to speak to you. If you have any joint debts the creditor will usually contact you and expect you to make the full payments. If you live together, you’ll also find that you’ll have to cover all the household expenses yourself, which can make it hard to budget.
When you’re living with an illness or you’re on long-term sick leave it can be challenging both mentally and physically. It’s likely that your financial situation may be affected which can often lead to stress.
Below are some things you should take into account if you are suffering from long term illness:
- Support from your employer
If you’re ill you may need to take some time off for appointments, to recover or to cope with the stress you’re experiencing. Your employer should take steps to support you during and after your treatment, and make reasonable adjustments so that you’re not put at a disadvantage because of your illness. You can get Statutory Sick Pay (SSP) from your employer for up to 28 weeks as long as you were earning £112 per week or more in the two months before you were unable to work. The current entitlement is £88.45 per week paid for up to 28 weeks.
- Income Tax Refund
If you have had to stop work due to long-term illness or work reduced hours you may be entitled to a refund of some of the income tax you’ve paid that year. This is called a tax rebate.
- Entitlement to grants, loans and financial assistance
Some charities offer small grants to help people with the costs of living with illnesses. You should be provided a pack with contact details of charities when you are diagnosed with a serious illness.
- Insurance Policies
If you have an insurance policy with long-term or terminal illness cover, it should pay out a lump sum if you are diagnosed. Some policies have mortgage or income protection insurance that covers your mortgage repayment or provides a monthly income in the event you are unable to work. However, you should remember that an insurance pay-out can affect your entitlement to a lot of state benefit payments.
- Travel and Parking
If you have reduced mobility you may qualify for a blue badge which lets you park free of charge in many car parks and on-street parking bays. You can also then park in disabled spaces which are generally closer to entrances and allow wider parking bays if you have difficulty entering and exiting your car. If you have additional hospital appointments, you should speak to them to see what travel support payments they have available.
- Power of Attorney
If you are worried about the deterioration of your health, and are likely to lose the capacity to manage your finances, you can nominate a third party to look after your affairs, called power of attorney. The government offers an online service to create a lasting power of attorney. There is currently an £82 fee to do so, however you may qualify for an exemption for this to be free or a reduced rate. Visit www.gov.uk/power-of-attorney for more information.
Land and Property Services
7 Lanyon Plaza
t: 0300 200 7801
Housing Rights Service
The Skainos Centre
239 Newtownards Road
t: 02890 245640
Age NI Advice Service
t: 0808 808 7575
Advice NI HMRC Tax and Benefits Service
t: 0800 988 2377
Advice NI Welfare Changes Service
t: 0808 802 0020
4 Amelia Street
t: 02890 320157
Adelaide Depot – Building B
8 Falcon Road
t: 02890 666630
t: 0300 790 6130
Money Talks Tools:
We have gathered a selection of online tools that may help you manage your money. These tools are provided by organisations that work with Advice NI.
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Find out options for dealing with debt including information on Debt Relief Orders, Debt Management Plans, writing off your debts and how to get debt advice.