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Priority debt and expenses
Prioritise your debt
Some bills are classed as priorities. This is
because the consequences of not paying them are more serious than
the consequences of not paying others.
Therefore if you’re struggling to make your
repayments on time, you need to look at all your debts and split
- priority debts
- non-priority debts
Once priority debts and living expenses, such
as food, have been paid, you will need to pay your
non-priority debts based on how much money you have left.
Read the Money Advice Service's guide on how to prioritise your
If you have nothing left to pay non-priority
debts, you must say so. Show your creditors by sending them
your financial statement.
A financial statement is the document
sent to creditors to represent your financial circumstances. Great
care must be taken to ensure it is fair and correct. From the
financial statement you will be able to calculate whether or not
there is any income to make offers to non-priority creditors.
Contact debt advice charities for further help.
Manage your expenses
When you are in debt and owe creditors, you should work out how
much money you have to pay out each month on basic living expenses
first. This will ensure you have enough money to pay for items such
as food and fuel. You should include these on include these on
your financial statement.
Look around for good deals and cut costs where you can:
- Council Tax - Check whether you are entitled
to help to pay your council tax and see if you
can pay in weekly or monthly instalments. Many councils ask for the
amount paid over 10 months rather than 12
- Water charges - Water companies may accept
weekly or monthly payments rather than half yearly
- Gas and electricity - Work out the cost of
your bills over the year. Divide by 12 if you are budgeting
monthly. You can ask to pay by budget scheme or have a meter
installed. Ask your local council about home insulation grants. If
you are on Income Support or Job Seekers Allowance (JSA) you can
pay for your arrears by Fuel Direct
- Food and household items - For food, put down
the amount you spend on your weekly shopping. You should also
include the cost of household items, for example, washing powder,
soap, shampoo, toothpaste, sanitary towels and razors. If you are
not sure exactly how much you spend on food and household items,
allow about £20 per week for each person who lives with you.
However, if you or anyone else who lives with you needs a special
diet (for example, a diabetic) or has other special needs, you will
need to increase this amount. You should explain this on any letter
you write to your creditors
- TV licence - Spread the cost of your colour TV
Licence in weekly or monthly payments, from as little as £5.60 per
week. Visit the TV licensing website to find
- Essential travelling expenses - These should
include travelling to work, school and for shopping. If you are
running a car, include the cost of tax, insurance, repairs, MOT
and servicing as well as petrol
- Clothing - Look at your clothing expenses over
a year. Only include non-dependants if you pay for their clothing.
Remember to include school uniforms. As a rough guide, allow £5 per
person per week.