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If you're having trouble paying off debts or loans, or meeting your credit commitments, there are ways to get help, especially if you contact your lenders or creditors early.
However, if you can manage to still pay your bills, it's better to try and stay on track as much as possible. Keep in mind that even if you use a payment plan that can temporarily pause or reduce your payments for a specific period, you will still be liable for the full amount when the payment arrangement ends.
That's why it's better to try and pay your bills for as long as you can, to reduce your debt and avoid any additional costs and a negative impact on your credit record.
However, there may come a time where you simply can't make ends meet. Here's what you can do.
When you lose your income, your debt payments will be at risk and you'll need to take action immediately.
It’s best to let your lenders know right away, reduce unnecessary spending, or apply for a payment holiday (payment breaks) for your highest-interest debt. Although these are just temporary measures, it can go a long way in giving you the relief you need while you are figuring out what to do.
The first step would typically be to get in touch with your creditors.
If you cannot make your payments on time, want to discuss payment options, or have any questions, contact your lender to explain your situation. If you fall behind on your regular payments, it could have a lasting impact on your credit score and how you're viewed by lenders.
Credit card companies and banks may be able to offer you a number of options. This can include waiving certain fees, like overdraft, ATM, and late payment fees, or allowing you to delay or skip some payments in some cases.
Some lenders will also not report an outstanding balance to credit reporting agencies, and they may be willing to waive late fees for borrowers in deferment due to a loss of income.
When contacting your lenders, have the following information ready:
Your financial and employment situation
How much you can afford to pay
When you may be able to resume normal payments
Your household income, expenses, and assets
Depending on your financial situation, your lender may be able to offer you a tailored solution to help you manage your debt and get back to your original agreement as soon as possible.
Credit counselling organisations are usually non-profit organisations that provide financial advice and help you with a personal budget. Some may also be able to help you negotiate with creditors.
Credit counsellors are trained professionals who often provide independent debt advice for free, and they'll work with you to discuss the best options available. They can also help you set up a budget.
You can check if you qualify for Universal Credit or rental loan. It might not cover all of your expenses and housing costs, especially if you live in a privately rented house. If this is the case, you may also qualify for a Discretionary Housing Payment (DHP) from your local council that can help cover your rent shortfall.
Keep in mind that you can only claim for a DHP if you have already received your first Universal Credit payment. The Universal Credit replaces some benefits and tax credits, including the Working Tax Credit, Income Support, Child Tax Credit, and Housing Benefit.
Contact your energy supplier immediately and inform them about your situation and that you're unable to afford your current bills. You need to ask them for help to find a solution. Ask them if they can offer you a payment plan that works well for you - this means having a fixed monthly payment you can afford.
They might say they'll disconnect you if you don't agree with a plan, so check what you need to do if this is indeed the case. Do your best to find an affordable repayment plan, even if it's just a temporary measure.
You may qualify for charitable grants or schemes to help you manage your energy bills, if the following applies to you:
You are at State Pension age - you can check the specific age on GOV.UK;
You have a disability; or
You have no income.
You can check to determine whether you qualify for the energy company's Priority Services Register (PSR). They provide free support services to older people or people with disabilities. Suppliers may not disconnect supplies to your home if they know you're on the PSR during the winter months.
You can typically qualify for discounts if you get a Pension Credit or if you're on a low income. If you are not currently getting a credit, check if you qualify on the GOV.UK website.
Households may also qualify for Winter Fuel Payment assistance. This is worth £200 to £300 and paid directly to homes with at least one member that is at pension age. This covers nearly all U.K. pensioners.
Talk to your water company and see if they can help you by spreading your payments over a longer period of time or moving you to a cheaper contract with lower rates. If you don't let them know, they might not disconnect you but may take legal action that lands you in court and liable for legal fees.
Most water companies have schemes available to help you get a cheaper tariff on your water bill, so ask them about their schemes and if you qualify due to your circumstances.
To help you with charges for water, you can also check if you are eligible for the WaterSure scheme. If you are, you won't pay more than the average water bill in your area.
If you're struggling financially, there are things you could do to cut down on your regular expenses. Try to cover your essential living costs and pay your priority debts first, then cut any unnecessary spending.
If you're struggling with paying for food, check out how to get help at a food bank.
If you struggle with mortgage repayments, ask your mortgage provider if they can help you. They might be able to change the way you pay. For example, they may let you make interest-free payments for a while.
If you are already in arrears, you'll owe money to your provider, and you need to find some way to pay what you owe, and keep up your payments going forward. So it's best to get an affordable repayment arrangement in place as soon as possible.
If you don't pay, they may be able to take you to court or even try and take your home. However, they can only do this if they've explored all other options.
Try to pay as much as you can on your mortgage, even if you can't afford the full amount at once. Keep in mind that your mortgage provider can't take you to court unless you owe a total of three months' worth of payments.
If you’re struggling to pay your rent, you should talk to your landlord or housing association as soon as possible. It's better to address the issue sooner rather than later, even if it's unpleasant.
When you speak to your landlord, explain your financial situation and why you'll be late with payment. Be clear about the fact that you are addressing the problem and ask for an extension if possible.
Your landlord might withhold your deposit to cover your arrears if you move out and still owe money on rent. If you have missed payments for a few months, it may lead to an eviction and also a bad reference, making it difficult for you to find another property to rent.
You can contact organisations like Citizens Advice or Shelter to get advice, or Advice Direct Scotland if you live in Scotland. If you live in Northern Ireland, you can contact the NIE Networks.
If you are being threatened with eviction, you can get advice from Shelter or Shelter Cymru in Wales.
If you're struggling with paying your council tax bill, you need to talk to HMRC right away. Explain your financial situation and ask if you can spread your payment over a longer period.
The contact details for the HMRC income tax helpline is 0300 200 3300 and you can reach them from Mondays to Fridays from 8am to 8pm.
Every local authority has its own Local Council Tax Support (LCTS) scheme available that can provide reductions in council tax for residents with no or low incomes. You may also find more help with a range of exemptions or discounts that can be applied to your council tax bill.
Depending on your household income, you may qualify for a tax credit. There are two types of tax credits available - Working Tax Credit (WTC) and the Child Tax Credit (CTC) and it depends on many factors, such as your annual income and whether you receive other grants or credits.
They have different eligibility requirements, but you can only make use of one claim form.
The Financial Conduct Authority (FCA) has also put measures in place to make sure those with temporary difficulties can request payment deferrals or a break from payments for up to six months in total, on:
Motor finance or leasing contracts
Rent-to-own agreements
Pawnbroking agreements
Buy-now-pay-later agreements
Personal loans, credit cards, or store cards
If you have financial difficulties or struggle to pay your credit card balance, you can request a payment deferral on high-cost short-term credit loans, or other credit commitments, for at least one month. Your credit card provider may be able to come up with a customised payment plan for your specific needs.
Consumers who have already received six months of payment deferrals or who received tailored support will not be able to get another payment deferral. Instead, lenders can offer tailored support according to the customer’s individual circumstances. You may be able to defer further payments with this option.
The best way to avoid a situation where you cannot make ends meet is to put money away and build up your savings. Even if you have to cut unnecessary expenses or get an additional income, it's important to set money aside for unforeseen situations of financial hardship.
If you're thinking of applying for bank loans or budgeting loans to cover your outstanding debt repayments, remember that it's usually more expensive to take out a loan as you'll have the extra cost of interest payments. Plus, you might end up with a bad credit rating due to missed monthly instalments.
Rather, contact your creditors and relevant organisations and work out a reasonable payment plan.
If you do decide to take out a loan, always compare loan offers first and make sure you can pay off the loan without getting into more debt. Also check that the lender is registered on the FCA website.
