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Self Help Debt Pack

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					Self Help Debt Pack

According to The National Union of Students “Money worries are the
greatest cause of angst for students during their time at University.” It
is easy to spend money quickly, but if you get into debt it’s usually
much harder to pay it off. This self help debt pack will help you deal
with your debt and remove the pressures of being in debt by providing
you with basic advice and simple guidelines on how to deal with money
problems.

As a student on a limited income you have to be very careful with your
money. The last thing you want is to find yourself with unmanageable
debts and carry over a bad credit rating into your future working life.
But if you do get into debt, it is very important that you do not panic
and that you do something about it. Ignoring debt will not make it go
away.

With careful budgeting, you can avoid getting into debt or limit your
debt by planning your spending so that you know your incomings,
outgoings and how much you have left to play with. It is better to do
this at the beginning of each academic year or each term before you
get your funding. The pattern of student financial support payments,
termly rather than monthly, presents its own challenges but with
careful planning it is manageable. To help you budget a personal
budget sheet is available with this pack. If you want help with
budgeting please get in contact with the Student Money Adviser in
Student Services on 01248 383637 or e-mail aos03c@bangor.ac.uk

Before you start tackling your debt problem here are some guidelines
you should follow:

   Don’t ignore the problem. It won’t go away and the longer you
    leave it the worse it will get.
   Don’t borrow more money to repay your debt. Think of ways you
    can earn more money or increase your income instead.
   Check that you are claiming all the financial support you are
    entitled to, whether Student Financial Support, Benefits or Tax
    Credits. For further information contact the Student Money Adviser.
   Get in contact with your creditors straight away and explain your
    difficulties. Go and see them or phone or write to them.
   Use this pack to work out a Personal Budget. Make sure you show it
    or send it to all of your creditors when you tell them about your
    difficulties.
   Make sure you tackle your priority debts first.


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   Use this pack to help work out a reasonable offer to repay the
    money owed. Don’t worry if it appears small, if that is all you can
    afford. Creditors prefer you to pay a small amount regularly than
    make an offer you can’t afford.
   Contact everyone you owe money to. If you make arrangements to
    pay some creditors but not others, you could run into difficulties
    again.
   If the first person you speak to is unhelpful, ask to speak to
    somebody more senior who may be able to agree to what you want.
   Don’t give up trying to reach an agreement even if creditors are
    difficult.

Step 1 Working out your income

The first step is to list your income. Fill out the first box on the
Personal Budget Sheet. Remember to fill in your income in either
weekly or monthly figures – do not mix the two. Although your student
financial support arrangements are paid termly, you can work out a
monthly or weekly figure by dividing the amount of loan and grants
you get for the term with the number of weeks/months in the term.
You will need to include the income of your partner if you live
together.

To find out if you’re claiming all the financial support you are entitled
to contact the Student Money Adviser in Student Services on 01248
383637 aos03c@bangor.ac.uk

If you think that you could increase your income by gaining part-time
employment, visit the University JobMart for information about
employments in the local area. Further information can be found at the
end of this pack.

Step 2 Working out your outgoings

Work out how much money you have to spend each week/month on
basic expenditure – at this stage do not include any debts or arrears or
any credit payments. Remember to only include your basic
expenditure. At this stage you might see that there are areas or
expenses you can cut down on. Again remember to fill this in either
monthly or weekly figures, not both.

Remember to be realistic. Remember to plan ahead for example if you
live in a shared student house and you haven’t received a fuel bill yet,


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get in contact with your landlord or your fuel supplier to get an
estimate of how much your fuel will be. By doing things like this you
won’t get caught out with an unexpected bill.

If you pay things monthly and want to get a weekly figure multiply
your figure by 12 and divide by 52. Or if you pay weekly and want a
monthly figure multiply your figure by 52 and divide by 12.

Special note about housekeeping: this should include food, toiletries,
cleaning materials, newspapers etc and a small amount for
entertainment and miscellaneous expenditure. The National Debt Line
gives a rough guide:
Single person    £35 - £45 per week
Couple           £60 - £75 per week
Each Child       £20 - £35 per week

Step 3 Money left over for creditors

This is calculated by subtracting your total outgoings from your total
income. If your income is more than your outgoings, you have an
amount of money to pay creditors on the personal budget. If you have
worked out your personal budget weekly you will need to convert it to
monthly by multiplying your “money for creditors” by 52 and divide by
12.

Are your outgoings more than your income?
If this is the case you should:
      Check with the Student Money Adviser to see if you are entitled
       to any extra financial support for example any benefits or the
       Hardship Fund.
      See if you can cut down on any of your outgoings, but try not to
       cut down on basics like food, gas, electricity and course related
       costs
      Are there any possibilities to increase your income such as
       gaining part-time employment?

If your outgoings are still more than your income after doing these
things you will need to seek professional advice from a professional
agency. A list of contact details are included in the back of this pack.




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Step 4 Dealing with your Priority Debts

You will need to make a list of all your debts. Collect all the paper work
you have for all your debts and divide them into two categories, priority
and non priority debts. Your priority debts will need to be tackled
before the non priority debts.

What are Priority Debts?

It is difficult to give a comprehensive list of these debts because
circumstances will vary from one person to the next. However, the law
gives different creditors different ways of getting their money. Priority
debts are debts owed to creditors who can take the strongest legal
actions against you if you do not pay. It’s not the size of the debt that
makes it a priority but what the creditors can do to recover the money.
Child Poverty Action Group defines priority debts as: “where non
payment would give the creditor the right to deprive the debtor of
his/her home, liberty or essential goods and services.” Using this
definition these are some examples of priority debts:

   Rent arrears: Rent arrears can lead to possession action by the
    landlord and homelessness.
   Mortgage arrears: Mortgage arrears can lead to the lender
    recovering the money borrowed by repossessing the property and
    selling it.
   Gas and electricity charges: Being in arrears of Gas and
    Electricity charges could lead to disconnection.
   Council Tax arrears: non payment of council tax could ultimately
    lead to imprisonment

As a student in Higher Education, your tuition fees and other
debts to the Institution should also be treated as a priority
debt. If you do not pay your University debts you may be excluded
from your course, refused progression onto subsequent years of your
course or your final degree may be withheld.

Other examples of priority debts:
 Fines, maintenance and compensation orders
 Tax and VAT
 Hire Purchase/ Conditional Sale
 National Insurance contributions

If you have any of these debts, you must deal with them before you
offer to repay any of your non-priority debts.


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Using the Personal Budget Sheet list the balance owed to each of your
priority debts and offer a monthly repayment you can afford. There are
no hard and fast rules about calculating payments to priority creditors.
The usual opinion is to pay the normal payments plus something for
the arrears. This will depend on your circumstances and how close the
creditor is to taking the ultimate sanction available.

Step 5 What’s left after paying your priority debts?

Once you have calculated an offer of repayment to your priority
creditors you will be able to calculate how much money you have left
for your non priority debts.

Step 6 Non priority debts

Non priority creditors can not take the harsh legal action against you
as priority creditors can. You cannot be imprisoned for not paying non-
priority debt. You are unlikely to lose your home or your essential
goods. However, if you make no offers to pay, without explaining why,
the creditors will take you to court. If you still fail to pay when the
court has ordered it, the creditors can take further action – for
example, they can get another court order allowing them to send
bailiffs in.

Examples of non-priority debts:
 Credit Cards and Store Cards
 Bank overdrafts
 Unsecured loans
 Money borrowed from friends and family
 Benefit overpayment
 Catalogue arrears

Although these are non priority debts they should not be ignored. The
most common form of student debt is the overdraft. Don’t be fooled in
thinking that as a student you have a “right” to an interest free
overdraft. If the bank is unhappy with the way you conduct your
account, for example if you regularly go over your agreed overdraft
limit, they can call the debt in at any time. They could close your
account just after you receive your student loan instalment which
means you would be without money until your next instalment. That’s
why it’s very important that you inform your creditors as early as
possible if you get into financial difficulties.


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If you have any money left after Step 4 the best way to calculate
repayments to non priority creditors is through pro rata distribution.
This is how the court does it and it means that all your creditors get a
fair share of the money available.

You will most probably need a calculator to work your repayments
offer in this way.

The first thing you will need to do is get in contact with all of your non
priority creditors to find out exactly how much you owe them. List
these in Step 6 on your Personal Budget Sheet. Make sure you write
down all of your non priority debts. You will need to add up each
individual debt to find out how much you owe in total. Put this figure
down in the box in Step 6.

The formula for working a pro rata distribution is:

     Money available to non priority debts x Individual debt
                    Total non priority debt

For example Susan is £2000 overdrawn and the bank is asking for the
money back, she has a Credit Card with a balance of £550 and a Store
Card with a balance of £435. Her total non priority debt comes to
£2985. Her total money available for non priority debt is £35.

Overdraft = £35 x £2000       = £23.45
              £2985

Credit Card = £35 x £550      = £6.45
                £2985

Store Card = £35 x £435       = £5.10
               £2985

Total repayments offered      = £35

Don’t worry if your offers look very small. Your creditors would rather
you pay a small amount regularly than make promises you can’t keep
to.

Sample letters in the back of this pack can help you negotiate with
your creditors. Make sure you get in contact will all your creditors and
sent your Personal Budget Sheet to all of them. It can be a long


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process, waiting for response from creditors. While you are waiting for
a response from them DO NOT stop repaying them. Pay the amount
you are offering regularly to show that you are trying.

Not all debt problems are straight forward to deal with. Possibly you
won’t have any money left over to offer to repay regularly. You might
have to offer token payments i.e. one off payments until your situation
improves or offer no payments for a specific time. You can use the
sample letters to help.

If your circumstances change let the creditors know as soon as
possible. This could mean going through the whole process again, but
it’s very important you keep them informed of your situation.

Dealing with Callers

If your creditors do not accept your proposal for a reduced payment,
they have other courses of action open to them. Do not be intimidated
or bullied into agreeing to pay more than you can reasonably afford.
Some companies will make phone calls, which can be quite distressing.
Stick to your guns and inform them that you will only deal with them
in writing. If they send representatives to your home, you do not
have to speak to them nor do they have a right of entry into your
home. If they persist, you can pursue an action against them for
Harassment under the Administration of Justice Act. If you have
asked them to leave and they refuse, they are trespassing and you can
call the police.

Dealing with a Summons

If you have offered a reasonable repayment plan it is unlikely that
your creditor will resort to issuing a summons but if you are served
with one – don’t panic. You must not ignore it and you may be asked
to go to a hearing. You should take this opportunity to put your side
across to the Judge and present to the court, your offer letter and a
copy of your personal budget sheet. If your offer was reasonable and
all you could afford, it is likely that the Judge will make an order for
payment in line with your offer. The Judge could also order a payment
lower than your offer.

Dealing with Bailiffs

A visit from the Bailiff can be quite alarming. These enforcement
officers do not have a right to force entry into your home (unless you


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owe money for a fine or community charge). Do not invite them
into your property and do not sign anything. They may ask you
to sign a ‘walking possession order’ which gives them the right to
return at a later date when they can force entry. The best way to deal
with the situation is to be polite but firm. Tell them that you will make
an offer of payment to them and, if they won’t accept, that they will
have to leave. Generally, they will be happy to come to an
arrangement with you but if you can’t make an offer, they will have to
report this back to the creditor, who will consider further enforcement
action. In this situation, always try to make an offer of payment even
if it is only a few pounds a month but do not be tempted to make
promises that you can’t keep, as you will find yourself in exactly the
same situation in a few months time.

Credit Rating

Financial bodies share information about their customers with credit
reference agencies. When you apply for credit, for example a bank
account, credit card or loan, the lender will check your record with
these agencies. Your credit history is not just your financial history; it
also includes public records such as electoral roll information, County
Court Judgements (CCJ’s) in your name plus files for bankruptcy. Your
credit record will also show whether or not you are keeping up with
repayments and if you fall into debt. This information is kept on your
file for six years. Bad credit rating could prevent you from getting
credit, such as a car loan or a mortgage.

The information kept on file will usually relate to you and members of
your immediate family who live at the same address. This means that
people who lived there previous or who are not related to you should
not affect your credit rating. You can ask the credit reference agency
for a “disassociation” to be put on your file so that other people’s
details do not show up.

You can find out what information an agency holds about you by
requesting a copy of your file and enclosing £2. If the information is
incorrect, you have the right to request that it’s changed. The three
main Credit Reference agencies are Experian Limited, Equifax plc and
Callcredit plc. The information held by these agencies can differ so it
may be worth checking with them all. The addresses are shown below:




                                    8
Experian Limited                     Equifax plc
Consumer Help Service                Credit File Advice Centre
PO Box 9000                          PO Box 1140
Nottingham                           Bradford
NG80 7WF                             BD1 5US

 0870 241 6212                       0870 010 0583
 www.experian.co.uk                  www.equifax.co.uk


Callcredit plc
PO Box 491
Leeds
LS3 1WZ

 0870 060 1414
 www.callcredit.co.uk


Further information

Student Money Adviser
Money Support Unit
Student Services
3rd Floor Students’ Union Building
UWB
01248 383637 / 383566
aos03c@bangor.ac.uk
http://www.bangor.ac.uk/ar/main/ssc/money.htm

Students’ Union Advice Centre
2nd floor Students’ Union Building
UWB
01248 388015
advicecentre@undeb.bangor.ac.uk
www.undeb.bangor.ac.uk

JobMart
1st floor Students’ Union Building
UWB
01248 388200
jobmart@bangor.ac.uk



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Gwynedd and South Anglesey Citizens Advice Bureaux
0870 750 2350
www.citizensadvice.org.uk

National Debt Line (free phone)
0808 808 4000
www.nationaldebtline.co.uk




This pack was created using information from the following sources:
www.nationaldebtline.co.uk
www.citizensadvice.org.uk
www.nusonline.co.uk
www.adviceguide.org.uk
Child Poverty Action Group,(2004) Debt Advice Handbook 6th ed




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PERSONAL BUDGET SHEET
Name:

Address:

STEP 1                          INCOME                        STEP 4        PRIORITY DEBTS
                                                                                                     Monthly
Student Loan                            £
                                                                                     Balance Owed    Offer of
Student Grants                          £                                                           repayments
Parental Contribution                   £                     Mortgage arrears       £                £
Wages                                   £                     Rent arrears           £                £
Partner’s wages                         £                     Council Tax            £                £
Benefits                                £                     Gas                    £                £
Tax Credits                             £                     Electricity            £                £
Other                                   £                     Other Fuel             £                £
                                                              Tuition Fees           £                £
Total Income £                                                Mag Court Fines        £                £
Monthly/Weekly
                                                              Maintenance            £                £
                                                              HP arrears             £                £
STEP 2                  OUTGOINGS                             Other                  £                £
Mortgage                                £
Rent                                    £                     Total Priority Debts Repayments
Water rates                             £                                                    £
Gas                                     £
Electricity                             £                     STEP 5
Council Tax                             £                     Money for Creditors            £
Content/Buildings Insurance             £                                            Take away
Other fuel                              £                     Total Priority Debts
Housekeeping                            £                     repayments                     £
TV Licence                              £
Travelling expenses                     £                     Money for non priority Debts
Clothing                                £                                                     £
Laundry                                 £
Telephone/mobile phone                  £
Childcare Costs                         £                     STEP 6 NON PRIORITY DEBTS
Tuition Fees                            £                                                             Monthly
Course related costs                    £                     Creditor               Balance Owed     Offer of
                                                                                                      repayment
Other 1                                 £
                                                              1                       £                   £
         2                              £
                                                              2                       £                   £
         3                              £
                                                              3                       £                   £
                                                              4                       £                   £
Total Outgoings £                       Monthly/Weekly
                                                              5                       £                   £
                                                              6                       £                   £
STEP 3                                                        7                       £                   £
Total Income                            £                     8                       £                   £
                            Take away
Total Outgoings                         £                     Total Owed £
                                                              Total monthly repayment £

Money for creditors                     £                     This is an accurate record of my financial position

Monthly conversion                      £                     Date:
(Multiply by 52 divide by 12)
                                                              Signed:

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Use this example letter if you are making pro rata offers to
your creditors

Creditors name and address                Your address
                                          Date

Dear Sir/Madam,

Account NO ______________________________________________

Since making the above agreement with you, my circumstances have
changed. I cannot now afford the agreed monthly payments because
(e.g. I am a full-time student and I have been unable to secure
employment). I enclose a Personal Budget sheet that shows my total
income from all sources, and my total outgoings. As you can see I
have only £________ per month left for my creditors.

The offers I have made to my creditors have been worked out on a pro
rata basis, and I have written to all my creditors asking them to accept
reduced payments.

In view of my circumstances, please accept a reduced offer of
£_____per month. If interest or other charges are being added to the
account I would be grateful if you would freeze these so that all
payments made will reduce what I owe you.

Should my circumstances improve I will contact you again.

I would be grateful if you would send a (paying in book) (standing
order form) to make it easier to pay you.                   (choose)

Thank you for your assistance. I look forward to hearing from you as
soon as possible.

Yours faithfully,


Under signature – your name in printed capitals.




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Use this example letter if you are making no offer of payment
or token payments

Creditor’s name and address                 Your address
                                            Date

Dear Sir/Madam,

Account No. _______________________________________

Since making the above agreement with you, my circumstances have
changed.

I cannot now afford the agreed monthly payments because (e.g. I am
a full-time student and I have been unable to secure part-time
employment).

I enclose a Personal Budget sheet that shows my total income from all
sources, and the total expenditure of my household. As you can see I
have no money left to make offers of payment to my creditors.

In view of my circumstances, would you please accept (no payments
at present) (a token offer of £1.00 per month) to be reviewed in six
months. If interest or other charges are being added to the account I
would be grateful if you would freeze these so my debt does not
increase.

Should my circumstances improve I will contact you again.

I would be grateful if you would send a (paying-in book) (standing
order form) to make it easier to pay you. (only include this if offering
a token payment and you choose which one)

Thank you for your assistance. I look forward to hearing from you as
soon as possible.

Yours faithfully,



Under signature – your name in printed capitals




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