10 February 2012
A drop in income can be devastating for you and your family. You may lose your job or be asked to go on short-time working. You may be struggling to keep your home. Older people living on their savings have seen prices soar whilst their income decreases. Your debt problems may seem out of control. But however the economic situation may be affecting you, there are ways to help yourself and there are organisations that can help you cope if you are struggling. Here are some simple tips to help you get on top of things.
Ignoring a problem will only make it worse. Don’t ignore calls or letters from anyone you owe money to (your creditors). Contact them to explain why you’re having problems. The sooner you do this, the more options you'll have for solving your financial problems.
For more information about dealing with debt, see Help with debt.
There are many organisations which offer free and independent advice such as Citizens Advice, Shelter, National Debtline and the Consumer Credit Counselling Service. Their advisers can assess your situation and work out the best course of action for you.
For the websites of useful organisations, go to Further help.
If you have debts, there are some you need to pay first before others, because the consequences of not paying them can be much more serious. For example, mortgage or rent debts are a priority because if you don’t pay these, you could lose your home. Debt advisers can help you plan your budget and pay your priority debts first.
For more information about dealing with debt, see Help with debt.
Work out how much money you've got coming in and going out of your household on essential expenses like food, bills and travel to work. You can download a budget form to help you do this. Or you can use our interactive budget tool to work this out for you. Check to see if you can save money on your bills and whether you are claiming all you benefits (see below).
When you've drawn up your budget, work how much you've got left over to pay creditors. If you can't afford to pay back all the money you owe, work out how much you can afford and offer to pay this. A debt adviser can help you do this.
If you're on a low income, you may be able to save money by getting help with your health costs such as prescription charges and dental costs. You may be able to claim help with education costs such as school meals and clothing.
You may be able to get a grant to help you pay for things like fitting home insulation and improving energy efficiency. Some people can get free help. This can help cut down the fuel bills.
Your gas and electricity supplier may be able to help you if you have fuel debts. To find out if you can get help, visit the British Gas Energy Trust website at: www.britishgasenergytrust.org.uk or the EDF Energy Trust website at: www.edfenergytrust.org.uk. You may qualify for cheaper tariffs, called social tariffs. Check with your fuel company. You might get a better fuel deal with another company.
There are some charities which give grants to people to help pay their bills or buy essential items. You can find details of these charities on the Turn2Us website at: www.turn2us.org.uk.
Are you getting all the money you're entitled to? There may be benefits or tax credits you can get which you haven't claimed.
If you are in work, you might get Working Tax Credit even if you don't have children. If you have children, are you claiming Child Tax Credit? Even people with quite large salaries are entitled to this benefit. You may be able to get Council Tax Benefit or Housing Benefit to help you pay your council tax and rent. You don't necessarily have to be out of work to get these.
If you lose your job, go to your local Jobcentre Plus office and start claiming benefits as soon as you can. You might be entitled to benefits like Jobseeker's Allowance which could automatically entitle you to other benefits like Council Tax Benefit or Housing Benefit. You can also get help with your mortgage interest after a few weeks of becoming unemployed.
In some cases, whether you are in or out of work, you can make a backdated claim for benefits, that is, you can get money for a period in the past.
In some cases, you can work for a few hours a week without your benefits being cut.
For more information about benefits, see our benefits section.
An adviser can help you claim your benefits. Go to Further help for the contact details of organisations which can help.
If you take out another loan, you may end up paying back a lot more than you borrowed and at very high interest rates. You may not be able to afford the repayments and the loan may be secured against your home which you could then lose.
Make sure you understand exactly what a new loan might mean for you and get advice before you sign anything.
For more information about debt, see Help with debt.
There are rules about the steps that mortgage lenders must take before they can start court action against you – so try and get advice as soon as you start getting into difficulty with your mortgage.
Selling your home and renting it back might seem like a quick fix to your debt problems. But many sale-and-rent-back schemes offer very little security. You could end up paying very high rent or even being evicted. Get advice before you sign up to one of these schemes.
If you are struggling with mortgage repayments, you may be tempted to send the keys to your lender or abandon your property. Don’t do this without advice. You could still be responsible for the debt on the property and may be chased for it years later.
Always attend any court hearings yourself, and with an adviser if possible. Court proceedings do not mean that you will automatically lose your home. The court process acts as a final check to make sure repossession is the last resort. Some courts have advice desks which can provide last-minute assistance.
For more information about what to do if you have problems paying your mortgage, see How to sort out your mortgage problems.
Make sure your employer gives you your legal rights if you lose your job. You might need advice about your employment rights. For example, you must not be dismissed unfairly and you must not be chosen unfairly for redundancy. You may have the right to a redundancy payment and other money you are owed, like unpaid holiday pay.
You can get help to look for another job. You can get advice on how to fill in application forms and prepare for job interviews. There’s extra support if you’re a lone parent, disabled, over 50, leaving school or college, or if you’ve been unemployed for a long time. Learning new skills could improve your career prospects for when the recession ends. Some courses are free, or you may be able to get financial help.
You can get free, confidential career and training advice if you phone: 0800 100 900.
For more information about your employment rights, see Basic rights at work. For more information about redundancy, see Redundancy.
Your local authority has a legal duty to provide help to certain people who are homeless or threatened with homelessness. You may qualify if you are in priority need. This could be because you have dependent children or are pregnant. Or it could be that you are vulnerable because you're elderly or have a physical or mental illness or disability. Get expert advice about how to make an application for housing if you lose your home.
For more information about getting local authority help with housing, see Finding accommodation.
Websites
Here are some other websites that could help you cope with the effects of the recession:
A useful leaflet
The TUC, together with Citizens Advice, have produced a new leaflet called Coping with economic downturn: a practical guide for working people and their families. It gives you information about:
You can download a copy of the guide from the TUC website at: www.tuc.org.uk.
Please note that although most of the guide applies to England, Wales and Scotland, a few of the contact details apply only in England.
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