Dealing with debt
Further information in this section
Do you feel swamped with credit card debts and store card bills? Does it seem like the only way to keep up payments is to get into more debt? When you feel like your debts are spiraling out of control it can all seem too much. Try not to panic. Don't bury your head in the sand. Help is here!!
However much debt you have managed to get yourself into you always have options. You may be scared and find it easier to ignore those red letters but you can't do that forever. It can seem overwhelming but it is possible to get those debts under control. Try not to be embarrassed about seeking help.
Financial advisors are used to dealing with people with debt problems. They understand and are empathetic to the causes of debt and will not judge you whatever your situation.
Remember the quicker your debts are dealt with the better. But it is never too late. Come to see a student advisor who can guide you through process of debt management and help you get on a debt management plan.
What will happen?
The first thing to do is to the bite the bullet and face up to exactly how much you owe. Make a list of all your creditors and how much you owe them.
Note whether you are supposed to be making monthly payments and if you are behind on these. For each creditor find out what stage the warning letters have reached.
The first thing to do is separate priority and non-priority debts. Priority debts are those from which non-payment could result in the loss of your home, disconnection of electricity, bailiff action or in extreme cases imprisonment. They tend to be rent arrears or debts to the council and Inland Revenue. For information on how to deal with these see fact sheet priority debts.
Now it is time to make a budget and financial statement. List all income (student loans, bursaries, tax credits and benefits) and all expenditure. Calculate each total monthly figure and then the difference between the two. You may be left with a deficit between income and expenditure in which case you are unable to offer creditors any repayment.
You may be left with a surplus which then needs to be split between creditors. Either way you will probably need to consider ways of maximizing your income and reducing your expenditure (see budgeting section).
Any surplus income needs to be split between creditors on a pro rata basis depending on how much you owe each one in total. You can then contact creditors with these offers. Alternatively if you have no surplus you must contact creditors explaining that you are unable to make any offer of repayment at this time.
Write a letter to each creditor. In these letters you must explain your reasons for financial hardship (i.e. you are a student living off a student loan) and make if possible an offer of repayment. Include your financial statement to show exactly how you came up with this offer. Give a time frame for when your situation may improve.
For example say you will review your situation when you will graduate and can go into full time employment or when you break up for summer and can work full time. Or you may say you will contact them in a few months when you are hoping to have found some part time work. Ask them to suspend all interest and charges on your account for this time.
Wait for responses from all creditors. If offers are refused it will then be time for a financial advisor to step in. With your authority an advisor will contact each of your creditors on your behalf offering payments if possible and asking for interest to be suspended. If your creditors are still unwilling to accept your offer of repayment then the financial advisors will negotiate directly with that company.
Book an appointment with one of the advisors in the Student Finance office who can guide you through the negotiation process and contact creditors on your behalf.
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