The Bank of England’s December figures showed that unsecured consumer credit is the highest it’s been since the financial crash of 2008. In response to this, Citizens Advice said that whilst borrowing is one factor that puts people’s finances under strain, household bills are the more pressing issue for many families.
Between January and December last year, Citizens Advice helped people with 435,000 household bill issues. So that’s things like rent, energy bills and Council Tax. In fact they helped 45% more people with these problems than with borrowing issues, indicating that for whatever reason, household bills are a key area of concern for many.
One explanation for why people are starting to struggle more with household bills, is because they are wrongly prioritising unsecured debt repayments instead.
You might feel under pressure to pay your unsecured debts, for instance, if you’ve missed payments already or creditors are contacting you. Of course ideally you should aim to pay all your bills and make all your repayments if you can. Having said that, there are some debts that should always be put first if you can’t afford everything. These are known as your priority bills.
Take Council Tax for example. It’s a very important bill to keep on top of and should always be put before unsecured debt repayments. This is because the consequences of not paying it can be very severe, including having the money deducted directly from your wages or benefits, or even (in the most extreme cases) a prison sentence.
So if you find you can’t afford your Council Tax and your credit card repayments, be sure to put your Council Tax first.
If you’re falling behind with your Council Tax payments, there are steps you can take to stop the situation from getting any worse. You should get in touch with your council immediately and explain why you’re struggling. Have a conversation with them about what you can afford to pay and how you intend to get back on track.
There’s also a scheme called Council Tax Reduction. If you’re on a low income or receive benefits, you might be eligible to have your Council Tax bill reduced, sometimes by up to 100%. How this works exactly depends on your local council’s policy, your personal circumstances and your household income.
If you know that your debt repayments are the cause of your financial problems, it might be best to speak to a trained debt advisor. They will be able to tell you how to solve the problem, whether that’s through tweaking your budget or by starting a debt solution.
Debt Advisory Centre: 0161 871 4881