Dealing with debt
Advice for students who have debt concerns, including coping with debt, priority debts and negotiating with creditors.
Few students receive enough income to survive without occasionally running into difficulty. If you are not managing, don’t just borrow more money as this can make the problem worse.
Being in debt can affect you in a number of ways. It may cause you to be continually worried and experience stress, which can have a negative impact on your work. If this happens, consider getting in touch with the Wellbeing Service. You may need to make radical lifestyle changes (eg cutting down on social expenditure) which can also be stressful. You may find yourself ignoring official correspondence and denying the need to act.
Three golden rules for coping
- Don’t panic – things are rarely as bad as they seem and there are many support services who can help you negotiate with your creditors.
- Don’t hide from the truth – debt is best dealt with immediately as the situation can deteriorate quickly.
- Talk to the people to whom you owe money – your creditors will often accept far more modest repayments if they know your true financial circumstances.
If you find yourself with bills you can't pay, you need to be clear about the relative importance of what is due.
Debts are usually categorised in one of two ways:
Different types of debt
These are debts which threaten your liberty or wellbeing and must be addressed immediately. Non-payment of taxes (including Council Tax), fines or a TV licence can, in extreme circumstances, result in prison sentences. Similarly, if you cannot keep up with your rent or mortgage payments you may find yourself threatened with eviction or repossession.
Both these processes are slow ones, which take some months to complete, but you should seek advice immediately if this occurs.
The Students' Union at UWE Advice Centre may be able to help, or they will refer you to a specialist agency who can.
These are debts which are still important, but which are not an immediate threat to your wellbeing (eg utility bills, mail order debts, credit cards, unauthorised overdrafts).
You may find that your credit rating is affected if you do not keep up with the monthly minimum payments. You may be threatened with withdrawal of services or court action, but this is unlikely to occur if you begin negotiations with the creditor.
There are strict rules about cutting off essential services such as electricity, gas and water, and this will not occur unless you fail repeatedly to respond to correspondence.
Remember that unpaid debts to the University can cause problems, such as being subject to debt collection procedures, or if you fail to pay your tuition fees you may be excluded from the University.
The Money matters guide will help you understand your financial contract with UWE Bristol and our processes.
How to negotiate with creditors
Once you have sorted your debts (or potential debts) into categories, write out a clear statement of your financial circumstances. Include your income, expenditure, and all unpaid debts and payments due. Be realistic; it is important that you and everyone else concerned knows the true position.
Contact your creditors in writing, using the financial statement you have prepared. Make a repayment proposal based on your circumstances and a realistic estimate of what you can afford to repay. This can be a series of sums (eg when your student funding arrives) or a regular monthly amount (eg if you have a part-time job). Creditors may accept token payments of £1 to £5 per month from students. You can ask for interest to be suspended whilst negotiations take place.
Remember to keep copies of any correspondence you send. Never leave letters from creditors unopened – an offer of help or a payment suggestion may not be repeated if you do not respond quickly.
External organisations offering free help and advice
The National Debtline offers free, confidential and independent help over the phone for people in England, Scotland and Wales. Once online you can use an interactive and well-designed four-step debt solution tool. You can choose to get advice by using their friendly web chat.
Talking Money is a local advice charity based in Bristol. They are the major provider of money advice in Bristol and South Gloucestershire. They provide free face-to-face and telephone money advice for people in financial difficulty.