Behind on bills?
In arrears with bills
If you’ve fallen behind on bills or think you might miss payments, it’s essential you react quickly. Here we provide information on what to do if you’re falling behind on essential bills.
Council tax arrears
Falling behind on council tax can lead to court action and councils tend to move quickly on this – so if you miss a payment the best thing to do is contact your local council straight away.
Step 1:
You should establish how much you can pay on top of your normal council tax bill to clear arrears – you will need to make sure this is affordable and within your budget so that you do not miss payments on other bills such as rent, credit cards and loans and fall deeper into debt.
Step 2:
Contact your local council and explain your situation and make an offer on a repayment amount you can afford so that you can avoid further arrear costs and court action.
For professional advice or urgent help, please call our advice line on 0800 015 3135†.
What to do if your council refuses your repayment proposal
If the council refuses to accept your repayment proposal, you should continue to make future payments in full and contact your local Citizens Advice Bureau for help.
Some local authorities can insist that arrears are paid before you resume normal payments. If they refuse to accept payments towards the current year until the arrears are paid, then you should consider making a complaint by contacting your Local Government Ombudsman on 0207 915 3210.
It’s important to stress to the Local Government Ombudsman that by not allowing you to make payments for the current year, you could fall further into arrears, your debt level could increase and you could be subject to court action.
Mortgage arrears
Mortgage repayments can be our biggest monthly outgoing; therefore it should be a top financial priority. Failure to keep up with repayments can have serious repercussions, including home repossession. This won’t happen immediately but the more you fall behind, the harder it will be to get back on top of repayments.
Information on dealing with mortgage arrears:
1) Act quickly
Do not let arrears become unmanageable. Speak to your mortgage lender straight away and explain your situation. Don’t forget, lenders often charge late fees which will increase your debts – so it’s important to act fast!
2) Negotiate with your lender
If you’ve fallen into arrears, negotiate an affordable repayment rate so that you can get back on track with repayments. If your financial situation has changed dramatically, for example: you or your partner may have lost a job, you should discuss this with your lender if you think you will face problems with repayments as they may have a solution for you.
3) Mortgage payment protection insurance
An insurance policy that offers mortgage payment protection is a great support to all homeowners. Most people normally take this insurance out at the start of their mortgage. If you don’t have cover, you may want to seek advice on this type of insurance product when your mortgage payments are up-to-date.
Other ways people manage mortgage repayments
- Taking a payment holiday (this depends on the lender)
- Switching to a different mortgage provider
- Adding your arrears to mortgage repayments
- Extending the number of years on a mortgage
- Reducing or stopping capital repayments temporarily
- Reducing or stopping an endowment policy (or other investment) temporarily
- Surrendering or selling your endowment policy or other investments
Before doing any of the above, you should always seek financial advice.
Hire purchase loan arrears
Goods such as cars or furniture bought on hire purchase (HP) is known as a conditional sale agreement. This means you do not own the goods until the final payment is made. Until then, they will continue to belong to the creditor.
If you miss payments before you have paid a third of the total amount owed, the creditor has the legal right to take the item back. However, they can only do this if the item is in a public place. Basically, this means they can repossess a car, but cannot enter your home to remove furniture without your permission or without an order from the court.
If you’ve repaid over a third of the total amount owed but fail to meet repayments on a regular basis, creditors can being court proceedings to reclaim their property. If this happens, you will receive a hearing date when the court will decide if you must return the item or enforce a repayment structure. If your financial circumstances have changed and hindered your ability to meet repayments, you could request a time order at the court hearing, where the court can grant repayments at a rate you can afford.