If you can’t pay your bills, you are not alone, but there are a number of actions you can take and help available. By rescheduling your debts, applying for grants/financial assistance and prioritising your bills, you can begin to take control of your finances again.
You need to speak to the company you owe money to if you can't pay your bills. Most companies will have procedures in place to help, including payment plans or short holidays that let you get back on your feet.
As the cost of living continues to rise and household incomes stagnate, more and more people are struggling to pay their bills. There are various tweaks/changes you can make and even grants available to help you get yourself back on your feet.
Facing up to your financial difficulties is the first major challenge, and then slowly but surely you will start to regain control of your life.
Continue reading to get ideas that can help you overcome your financial difficulties.
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The first thing to do is sit down, write a summary of your income, expenses and surplus/shortfall. You then need to prioritise your essential bills which will take in the likes of food, rent/mortgage and utility bills. These are expenses you need to live on day by day basis, and while you may be able to make some savings, these are the bills that need to come first.
There is a second layer below priority bills that are deemed “non-essential”, but that doesn’t mean you can simply ignore them - they won’t go away. We are talking about taxes, car repayments, insurance, credit card debt and any other debts that you have outstanding. Once you have looked at essential and non-essential bills, you will then have an idea of your shortfall.
Once you know your debts, your income and potential surplus/shortfall, the next step is to try and remove non-essential expenditure. This can be a little tricky because, for example, you may have a vehicle that you need for work. If you can’t get to work, then this will impact your income, so you need to retain a vehicle.
Whether you could downsize your vehicle is a different matter. You may need to consider eliminating/reducing so-called “luxury expenditure” such as socialising, expensive Sky TV packages and the like. Remember, when calculating your budget, this is not necessarily a long-term change but a short-term means of improving your immediate cash flow.
Contrary to popular belief, lenders are not the devil incarnate, and they will where possible try to assist you. The earlier you approach your lenders with details about your financial difficulties, the more chance of putting together a package that works for your situation. This may involve extending the term of current finance, taking a payment holiday, looking at alternatives or a worst-case scenario looking at more formal debt management arrangements.
It is only in the most extreme of cases that a utility company providing gas, electric or water would even consider cutting off your supply. As soon as you can see problems emerging and a lack of funds to pay your utility bills, you need to contact your providers as soon as possible.
There are various energy/water assistance schemes available, many of which are funded by utility companies. These charitable organisations are set up to assist those who are struggling to pay their utility bills.
The government also provides winter fuel payments, cold weather payments and grants to improve the energy efficiency of your home. It is extremely rare for any household to be cut off from their energy supply, but you do need to make your utility providers are aware of your difficulties.
There has certainly been a huge swing towards contract phones in recent times which can in some cases be relatively expensive - with the cost of new phones incorporated into monthly payments. So, if you are struggling to pay your monthly phone bill, it may be time to look towards a Sim-only arrangement.
These are available for as little as £10 a month, and even if your handset is tied to your current contract provider, you can request it to be unlocked.
Unfortunately, you may find it difficult to terminate your mobile phone contract early, although it is worth contacting your provider. Explain your situation, you are struggling with monthly payments, and you would like to terminate the contract as soon as possible. They may put you on a savings plan to pay off any arrears although whether they will terminate your contract is debatable.
There may also be the opportunity to reduce your monthly payments by switching to another contract – insist on a Sim arrangement where possible! You may need to be persuasive and persistent with your phone provider.
If you have any reasonable degree of equity in your property, then it may be sensible to consider a remortgage or some form of equity release. Whether this is possible via a traditional remortgage/equity release arrangement is uncertain because if your financial situation has already started to deteriorate, then you may fail a mortgage affordability test.
Alternatively, you may be able to secure a loan against your equity or indeed, if you are over 55, look towards a lifetime mortgage or a home reversion scheme.
If you are in a situation where you have minimal assets, significant debts and minimal income then bankruptcy is a possibility. However, there is a whole range of other debt management options available which are less severe and won’t impact your credit rating as much.
It may be more appropriate to look towards debt management plans, IVAs, debt relief orders, debt write-offs and administration orders to name but a few. You need to take advice.
Whether you are struggling to pay your bills in the short-term or this may be a medium/long-term issue, the first thing to do is address your overall financial situation. Summarise your debts, your expenses and your income and see where you stand.
Make tweaks where applicable and consider the sale of surplus assets to give you some “wiggle room” in the short term. It is then time to look at the longer-term situation and whether indeed you require professional help or your cash flow will improve as a result of immediate changes.
Here at Money Savings Advice, we have partnered with some of the UK’s debt release brokers. They have already helped thousands of people reduce and remove a high percentage of debt, and if you are struggling with debt, they can do the same for you.
Choosing an independent adviser means they won’t recommend a scheme unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.
If you would like to speak to one of these brokers, then click on the below and answer the very simple questions.
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