Dealing with your Creditors
8th April 2020
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Take control of what you can
While sitting at home reflecting on all that is happening around me, I thought to myself, “What can I do to be useful and supportive, and provide help”. I realised that many people will be concerned about their personal finances, so I decided to share my tips learned throughout my experience working with MABS.
My name is Margaret, and I started working with MABS a long time ago, almost 17 years; I certainly had a lot fewer wrinkles back then, that’s for sure. My family (including the dogs) are all home because of the current lockdown and social distancing. My family are of varying ages and interests, so keeping them entertained is a fun challenge.
I, along with some of my colleagues, will be sharing useful tips, guidance and helpful information on managing your money through this blog series. We plan to release a new blog each week discussing different topics. This week I’ll be looking at dealing with your creditors (*see below) and taking control.
Many of us have found ourselves all of a sudden, living on a reduced income or the threat of it and are seeking advice on managing our money better. We still need to address the regular day-to-day business of running the family home, including reviewing our budget and dealing with creditors if need be.
Working as a Money Adviser, I have met a broad range of people. During a recent education group session (pre COVID-19), the participants highlighted that contacting their creditors can be stressful. Not because they didn’t want to make the call, but because they felt they had broken their arrangement, their end of the bargain so to speak and it was a poor reflection on them. This promoted anxiety and fear, ultimately leading them to panic and putting off dealing with the matter – sound familiar? How many of us have said to ourselves that we’ll “deal with that tomorrow”?
The participants felt intimidated and didn’t know what to say or what would be asked of them. There was a concern they wouldn’t be able to make a payment at all. There was a risk they may then lose a vital service like electricity or heat. They wanted to know if they should prioritise certain bills over others like a mortgage or rent, for example – all valid questions.
Simplicity reigns when panic sets in – so take a step back and review your situation, but don’t panic!
This website has most of the tools you need. I say most because the most important item is you. If you need support, then perhaps you could start by deciding to change what you can control. I suggest you write out what you want to achieve, being realistic and focusing on home life now.
Follow these three steps as a starting point for taking control:
Step 1 - List out all creditors and their next payment date
- Home mortgage/rent - see last week's blog from Liz Daly for ideas or a standard financial statement
- Check receipts for those forgotten costs such as clothing, donations, etc.
- Go into each room in your home to remind you of expenses such as console insurance, new bed, boiler service needed, and so on.
- Don’t forget dental, medical and eyes
- Travel expenses, possibly bus and car, car insurance, car tax...
- Don’t forget the annual payments that might be coming up soon. For example, Local Property Tax (LPT), or annual insurances if you don’t have a direct debit plan set up.
Step 2 - List them in order of priority to be paid. To help you decide which is the most important, I have listed below a few things as a starting point – you may have more to add. We know from our experience in MABS that we all live our lives differently. The necessary costs associated with running a home can vary, so consider whether you actually need it or just want it. What would the loss of it mean to help prioritise some more essential items?
- Rent/Mortgage, management fees, local property tax and insurances
- Court Orders, fines
- Transport for work and associated costs - possibly currently due
- Education (possibly broadband for this purpose)
- TV Licence if you have a Television
- Financial contracts, credit union, loans with legal processes started or threatened
- Subscriptions for on-going activities with penalty fees
Step 3 - Contact your creditors to see if you can organise a payment holiday, a monthly reduction or a reduction in an interest rate until you can afford to pay more.
Please remember the creditor may need written evidence of our change in circumstances to do this.
If it’s your first time, I’m sure you’re wondering, what details will the creditors want from you? In general, it’s basic account details; name, address, account number, what has happened, the next step of recovery and of course, the option to pay. With the change in data protection and the GDPR since May 2018, there may be some additional questions since your last contact with them, but don’t be alarmed.
In the case of a mortgage, you may need to complete a specific document. This is called a Standard Financial Statement (SFS) and is a more detailed breakdown of your financial situation.
When you contact a creditor, you may be asked to make a payment immediately, so have your payment card ready, if appropriate. You may be asked by utility suppliers for an agreement over 12 months or asked if a prepayment meter would be more suitable.
There are different options available, it’s best to call and discuss. Have a pen and paper to hand, make notes and don’t be afraid to ask questions. Keep a record of what was said on the call, so you have it should you need it in future, and ask for it in writing if you are agreeing to anything.Tweet #Tweetable
Sometimes knowing where to start is the biggest hurdle. That’s where MABS comes in. Money Advisers can help you get started on taking control – don’t be afraid to ask, that’s what we’re here for. Taking control early can mean less pain in the long run.
The above exercise is an excellent opportunity to consider what we truly need to live. Balance that out with what we want and/or have planned for in the future. This gives us the opportunity of listing these items, including those other family members’ items, and prioritising accordingly for your family’s need.
It’s a great time to teach our children some life skills. Children seldom see a bill being posted through the door because of online billing and, may be oblivious to the actual cost of running a home. See…benefits already!
See which of your creditors needs to be contacted. Gather their contact details and your account numbers. Some utility creditors have decided not to disconnect for the moment. The Government has introduced temporary laws to prevent evictions, a freeze on rent increases, and many other provisions to support us in this time of crisis.
This current crisis will pass, and we will have to deal with these things at some point. Why not take control of these things now and then take a breather, proud in the fact that you took control!
Look after your mental health which may be effected without action. Write, email, call or send a letter if possible but take the first step to help your financial recovery by making contact with the creditor(s) you need to.
So, to recap. Don’t leave it too late. Contact your creditors to discuss what options are available, and don’t panic. Help is out there. Get organised, make the call and then take a breather.
Right, I’m off to the kitchen again, I look forward to our next chat soon. - MargaretDo you have a story to share, or a money saving tip that maximises your income? Get in touch and we’ll see about sharing them on our social media. Perhaps you have a question that you would like us to cover in this blog – get in touch on Facebook, Twitter, Messenger and now Instagram.
* A creditor is a person or company that lends money or someone you owe money to because of receiving a service. This service might be electricity, mobile phone or your gas supplier as an example.
MABS is open, and money advisers are available to take your queries over phone or email and to provide guidance. You can find details of your local office here, or call the MABS National Helpline on 0761 07 2000.Follow @MABSinfo