Options for Dealing with Debt
Finding yourself in debt can be a frightening and bewildering experience. That’s why it’s essential to get advice before choosing to follow any particular path.
Which Path?
Find all the information you need about working with Crosslight including:
Our terms of service
Details of what we can and can't help with
Important information you need to be aware of when receiving advice
A summary of some of the options that may be open to you on your journey out of debt
Not all of the options below will be appropriate for you, and it could be that a combination of options will be your best route. The best option will depend on:
Your personal and family circumstances
Any long-term health issues you may have
How much you owe and to whom
The nature and extent of any Priority Debts
How much you can afford to repay after paying your basic living expenses
Any assets you might have e.g. a property, vehicle, savings or investments
Your future prospects e.g. if you intend to start working or change jobs
Important things to consider
Contacting your creditors
If you give Crosslight authority to contact your creditors - for example to get more information about your debts, or to make a proposal - the creditor may decide to close or freeze any active accounts you have with them, for example an active credit card, overdraft or store account. You should speak to your adviser if you have any concerns about this.
Your Credit Rating
In almost all cases, the options above will affect your credit rating and may show on your credit record for up to 6 years. This could make running a business, getting a mortgage, renting somewhere to live, or getting credit, more difficult.
Priority Debts
Whenever we give advice about your debts, we will treat 'Priority Debts' differently to other types of debt and will always advise that these are repaid first, even if that means that other types of debts cannot be repaid as fast. Priority Debts are things like Rent/Mortgage, Council Tax, Utilities, Court Fines, Tax debts, Benefit Overpayments, and Fines.
Ongoing Payments for your essential bills
Even if you have arrears, you must continue to pay your current rent and/or mortgage, council tax, gas, and electricity in particular. These are priority bills and they should be paid on time and in full – paying different amounts every so often is not acceptable - especially your rent (to avoid eviction proceedings).
Stopping or Reducing Your Payments
The people you owe money to don't have to accept reduced payments or freeze interest. Stopping or reducing payments may result in the debt taking longer to repay or legal action being started. It will also likely result in any active credit facility being withdrawn and your account being closed or frozen.
Impact on our Employment
Some of the above options could effect your employment. Depending on
the terms of your employment, you may need to disclose your situation
to your employer, particularly if you enter into any form of insolvency (e.g. a DRO or Bankruptcy).
Secured Debts
None of the options will prevent someone you owe money to who has taken security over your
home or other property (for example a mortgage, secured loan, or
certain Hire Purchase agreements), from taking possession of your home or goods if you do not repay the debt.
Home Owners
Most credit card debts, loans and store cards etc. are unsecured,
meaning the creditor cannot automatically claim entitlement to your
home or property if you fail to make payments. However if you are a
home-owner, in some circumstances a creditor may be able to ask the
court to secure the debt on your home through what’s known as a
charging order.