Consumer debt and arrears

Next on your list of priorities, after rent and food, should be making sure you’re up to date with your utility bills, for some tips on how to budget, particularly if you’re sharing a property, and what to do if you get into difficulty read on…

Utilities Arrears

Gas bill, electricity bill, phone bill… it’s important to budget for all these things, and work out whether you are going to pay a set amount monthly or hope to scrape the money together every quarter when the bill comes in. It might be useful to nominate one person to deal with each type of bill, so that you avoid “I thought you’d paid it”, “Well, I thought you did” – type conversations.

You might also want to consider ensuring every person who lives in the property is on each of the bills, that way people can’t disappear and deny responsibility for their share of the bill. But be aware utility companies won’t necessarily be keen for you to do this and may encourage you to nominate a “lead” tenant to have only their name on the account.

Make sure you are clear about the rules right from the start — if somebody is hardly ever in the flat are they still expected to contribute an equal share? Will you be going through the phone bill with a highlighter pen or just split it equally and hope no-one’s taking advantage?

If you are having trouble keeping up with bills, try talking to your suppliers — most of them will do their best to help you if you show that you are being responsible and dealing with the problem before things get out of control. You might be able to negotiate lower monthly repayments, or you might find out that you’ve been on too high a tariff all along…

Make sure that you read the meters at least at the beginning and end of your stay. If a bill or statement comes in based on an estimated reading, check it — you may be overpaying or you may be underpaying and will be landed with a bigger bill next time. It’s also worth calling your supplier up with a meter reading and asking them to recalculate your bill based on an actual reading, most will also let you do this online and it could help save you money.

Being charged for not paying by Direct Debit? Send a letter of protest to your utility company.

Consumer Debt

Bank loans, overdrafts, credit cards, store cards, catalogues, credit arrangements, hire purchase agreements. All of these are ‘consumer debt’ and you will probably have at least one of them at some point. If you are shopping around for credit make sure you check the APR figure which is designed so you can compare the cost of different sources of credit.

Usually store cards have a fairly high APR, credit cards a bit lower, bank loans lower still. Some catalogues and credit agreements are interest free, provided you pay within a certain period.

Whatever you do, have a realistic idea of your budget and how much you can really afford in repayments, before you sign up to anything. It’s worth shopping around online for a good deal, for example on the Money Saving Expert website.

Bank Charges

Your bank may charge you if you go over your overdraft limit, or if they have to decline any payments because you don’t have enough money in your account.  Sometimes you can have these charges waived or reduced if you speak to the bank staff – under the Lending Code, they have to deal sympathetically with customers in financial hardship, so it can help to explain your situation to them.  If the charges are excessive or unreasonable you may be able to a) make a formal complaint to the Bank, and b) challenge them through the Sheriff Court – seek advice if you are in this situation.

Payday Loans

If you have borrowed money from a high interest lender, such as a payday loan, and are not managing to pay back what you owe, please see this useful information from Citizens’ Advice.

Gambling Debt

While debt is commonly the result of having a low income and high bills, at times some people can get into financial difficulties due to problems with gambling. If you find yourself in this type of situation there is a lot of help and support out there. There are a number of resources on this NHS Scotland page.

Debt you don’t owe

In general, unless there is ‘joint and several liability’, you are not liable for anyone else’s debt, unless you signed an agreement jointly with the other person. If you are receiving letters about money you don’t think you owe, ask the credit company for a copy of the original credit agreement, so that you can check whether you’ve signed it. Don’t admit liability until you’ve checked this out and, preferably, sought advice.

You might want to check your credit rating to see if it has been affected by other people at your address. The Advice Centre has useful leaflets on this topic, and our advice workers can also give you information and guidance. For other web-based advice try adviceguide.

Debt you can’t pay

If credit companies are looking from repayments from you and you don’t have the money right now, it is tempting to borrow from elsewhere to cover the debt, but this can just mean that you are digging yourself in deeper and deeper.

If you have taken on too much, or if your circumstances have changed since you took out the credit in the first place, the best thing you can do is talk to your creditors. You may be able to negotiate reduced repayments for a period of time. Make sure if you are going to do this that any repayment offers are realistic — if you make promises you can’t keep, your creditors will be less helpful next time round. If your creditors are hassling you or if you don’t have the confidence to speak to them yourself, contact The Advice Centre for advice on specialist services which can help you deal with your debts.


Also see our section on rent arrears and tuition fee debt.