Can’t make all your payments? Make the right ones

Some repayments are more critical than others. If you have some hard choices to make, Elaine Jefferys from The Charity for Civil Servants helps you to decide how to prioritise payments.

All of the UK is facing a winter of uncertainty and coronavirus is still at the front of our minds. With an ever-changing picture, how can we prepare for an unpredictable few months?

What help is available?

Furloughing (the Coronavirus Job Retention Scheme) has now been extended to March 2021. This will help to protect businesses that have been forced to close or to reduce their opening times because of local restrictions. Employees will continue to be paid up to 80% of wages (up to £2,500 per month)  However, there is uncertainty about when the scheme will end and this still means that many households face a reduced income well into the spring of 2021.

Don’t ignore the problem

Ignoring a problem can make it worse. One in nine of us have fallen behind with essential payments during the pandemic. So, if you have problem debt, you’re not alone – nine million of us are struggling and yet only 1.5 million people are seeking help.

If you haven’t done so yet, now is the time to review your finances. It’s much better to anticipate the issues you’re likely to face – so that you can prepare by getting the correct advice. If you think that you may be affected by a reduction in your household income, you can take steps to get on top of things before they become more difficult to manage.

Prioritise payments – Make a list of expenses like rent or mortgage, council tax, fuel and a TV Licence and be sure to prioritise these payments. Priority payments are those that carry the most severe sanctions if they are missed – for example eviction, court enforcement or even imprisonment. Confusingly, priority creditors don’t always ‘shout the loudest’, which is why people sometimes make the wrong choices on which payments they should make. When a priority creditor takes further action, it can be frightening and deeply stressful.

Essential payments – Think about your essential payments. These are payments that may not be priorities, but are essential to your household. This could include housekeeping, buildings insurance, travel costs and if you have children at school or you work from home, the internet. Although it may be possible to reduce some costs by shopping around, these expenses remain necessary for your household to function effectively.

Non-priority payments – These include consumer credit debts like credit cards and unsecured loans. If you find, after paying your priority and essential payments, that there isn’t enough left to cover contractual payments on these debts, it may be possible to negotiate lower payments. Talk to your lender sooner rather than later as they are far more likely to agree to an affordable arrangement if they are aware of your situation before you miss a payment. If you aren’t able to agree a new arrangement, get some expert advice. A debt adviser can help you with strategies for dealing with debt and help you to move forward.

Check your budget – Take a look at your bank statement to see if you’re making any payments for services or insurances that you don’t use. If you haven’t seen a reduction in your income already, you could put payments for these services in a separate account to help you build a buffer.

Maximise income – Check to see if you’re entitled to additional help. A drop in income may mean that you are entitled to some additional benefits. You can calculate your benefit entitlement at Entitled To. Also, check whether your local authority offers support or help with council tax payments or any other government schemes to top up your income.

Get help – If you’re struggling already, please don’t wait to ask for help, a simple conversation might put your mind at ease or help you to work out how to deal with problems. We have a team of qualified, experienced and dedicated Money Advisers who can help to sort out your finances. We give advice on a range of personal debt issues from complex situations to budgeting. We also help you to decide on the right solutions for you, whether that’s formal insolvency, debt management or self-help. In some circumstances, we may be able to give financial assistance in the form of a grant for priority or essential payments. We also provide emergency assistance with advice to help you when you need it most.

Don’t delay – Financial worries have a profound impact on your mental wellbeing. Having the right information will give you the confidence required to take back some control.

If you require some confidential, non-judgmental advice and help, talk to us today.   


Elaine Jefferys is the head of money advice services at The Charity for Civil Servants

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