Managing Debt St 1: Can you stick these in the post for me on your way home please? St 2: Yeah…Sure. What are they? St 1: Begging letters to all the millions of people I owe money to…. most are to my credit card companies, one’s going to my landlord and one to the council to try to get them off my back about the council tax thing. St 2: You must owe millions..what happened? St 1: Yeah…. I owe more than I can afford to pay on my credit cards even if I just pay the smallest amount they will let me get away with … and the killer is that now I am in danger of losing my home. St 2: God… I’m sorry to hear it. Look, if I had the money I’d lend it to you but I really don’t. It’s so tight with me I’m only just scraping by myself. St 1: Thanks.. but it wouldn’t be the answer, anyway, I’ve spoken to the money adviser on campus and they’ve helped write these are letters that they tell me should help to reduce my monthly payments. St 2: Excuse the ignorance but how? Surely they tell you how much you owe and you have to pay it ...and you have no choice….
St 1: The adviser explained all about the difference between what they called priority & non priority debt, they told me that there are different penalties for not paying different types of debt and ways of being able to negotiate payments down to something that I can actually afford.
St 2: Types of debt….what’s that? Isn’t debt, well… just debt really? I mean after all isn’t it just it’s all the money you owe. St 1: Ok…let me explain…, I have been making repayments to all of my credit cards as they keep sending me threatening letters. Cos I’ve had to pay my credit cards I’ve stopped paying my rent. My landlord didn’t kick up about me not paying for ages. Then last week out of the blue I got this letter telling me I owed eight weeks rent and that he was going to the court to get me out ..to evict me. St 2: Woe there..that’s not good. St 1: The adviser told me that debts such as rent arrears, secured loans and council tax arrears we called ‘priority debts..cos if they remained unpaid then I could lose all my possessions, my home or even end up in prison. However debts such as credit cards or store cards were called ‘non priority debts’ on these those that I owe money to were only able to ask a court to order me to pay the money I owe. St 2:Cool.. I see. So by paying your credit card instead of your rent, you could have ended up making yourself homeless. If you had paid your rent and not your credit card then you would keep your home but just get letters from the credit card companies, and, although these letters could threaten all kinds of action, in reality they have a small number of ways by which to get back the money you owe ‘em. St 1: Yep.. that’s pretty much it. St 2: So the situation you are in at the moment, what can you do about it? I mean you mentioned something called..what was it?...manageable repayments? What are they all about? St 1: The adviser helped me to complete what she called a Financial Statement. From this she was able to work out what I could afford to offer my landlord each week on top of my rent to pay off my arrears of what I owed him.
St 2: Great but what about your all those credit cards? St 1: Again the adviser used the financial statement to work out what I can afford to offer each of the credit card companies. But the best is..and I had no idea that this was even possible…I’ve been able to ask that they freeze the interest on what I owe ‘em while I’m studying at Uni, accept the minimal repayments while I’m still a student and then review things once I’ve left and am working and have more money coming in. St 2: All of that and you can keep using your credit card? St 1: No way…. I had to agree to stop using the card. As far as I’m concerned it is a very small price to pay to stop the debt getting bigger and bigger and to actually start making inroads paying it off!