Q. I am about to be made redundant and I don’t know what I should do about my debts.
A. If you are in a situation where you are at risk of being made redundant or have lost your job, money worries become a major factor.
Even if you are expecting a decent redundancy payout, it is hard to know how best to use this.
Plus there is the strain of keeping up with your payments despite having a big reduction in monthly income.
Start by listing all of your debts, outstanding balances and how much you pay each month.
Check to see if you currently have cover by way of insurances or payment protection policies and make a claim.
These could include:
*Mortgage payment protection insurance (MPPI) which would cover your mortgage repayments,
*Payment protection insurance (PPI) which covers some or all of your loan or credit card repayments,
*Short-term income protection insurance which replaces a proportion of your income.
If you are uncertain, you can approach you lender and ask whether your mortgage, loan or credit card is covered by insurance.
If you have insurance but your claim is refused, you may have been mis-sold the policy and could be eligible to claim compensation.
Prioritise your debts. A priority debt is one where the creditor’s ultimate sanction may result in the loss of: - your home; essential supplies, for example, gas or electricity; or in some circumstances, essential goods (eg vehicle).
The sanctions open to creditors for non-payment of non-priority debts are generally less serious.
Create a household budget detailing income and expenditure figures.
Start by listing your income, followed by priority bills, essential household items and everyday expenses.
This will make it clear what you’ve got coming in and what’s going out.
The amount that you have left after paying out for household bills, living expenses, and priority debts is what’s available to start paying off non priority debt.
On top of what’s left over at the end of each month, you could consider using some of your redundancy pay or savings to clear some of your debt. Starting with priority debts.
Or you could also consider using your redundancy pay to top up your income while you’re not working to make ends meet.
Now that your circumstances have changed there is the possibility of entitlement to benefits, for example, Jobseeker’s Allowance (JSA), Housing Benefit, Rates Rebate, free school meals for your children and help with NHS costs.
Benefits depend on your circumstances, and a free benefit check can be calculated by an adviser at your local Citizens Advice. You should claim benefits as soon as you can so that you do not miss out on what you are entitled to.
You can make a claim on your first day of unemployment.
If you are getting Working Tax Credit (WTC) and your job ends because of redundancy, you will no longer be entitled to WTC. Some people can carry on getting WTC for four more weeks after their job ends. If you lose your job, you might be entitled to more Child Tax Credit. You must inform HM Revenue and Customs about the change in your circumstances.
Get free, confidential and independent advice from your nearest Citizens Advice who have an in-house specialist debt adviser and have benefits advisers.
Contact can be made by phoning the central number 0800 028 1881, or emailing email@example.com or website www.citizensadvice.org.uk/nireland or by visiting your local Citizens Advice office.
Find contact details of your nearest Citizens Advice at www.citizens advice.co.uk