Page last updated at 22:30 GMT, Thursday, 16 February 2006

Ask the expert: Paying off debts.

Malcolm Hurlston of the Consumer Credit Counselling Service
Malcolm Hurlston of the Consumer Credit Counselling Service
The Ask the Expert column gives readers a chance to have their financial questions answered.

This week, Malcolm Hurlston, director of the Consumer Credit Counselling Service (CCCS), helps Your Money reader Barry Matthews with a question about debts.

Barry is unemployed after losing his job two years ago. He is finding it hard to pay off his debts using just his income from state benefits.

He would like to know if he can get a loan from Job Centre Plus to make his debt repayments more manageable?

Malcolm Hurlston writes:

Although there is no direct government help for paying off consumer debt, government departments signpost consumers to sources of advice such as the CCCS.

The government provides help for people in financial hardship through benefits, tax credits, reductions in government dues such as council tax and through money grants and payments.

For example, someone struggling to meet the cost of essentials such as food, water, gas and electricity can be helped through the benefits system.

Someone working in a low paid job is likely to be entitled to a Working Tax Credit.

Likewise people with children can claim Child Tax Credits and those unable to work because of illness may be entitled to either Statutory Sick Pay or Incapacity Benefit.

In addition, people receiving either Jobseeker's Allowance or Income Support - which excludes anyone who is working 16 hours or more a week, or whose partner is doing so - may qualify for help with mortgage payments or rent.

Mortgage payments can cover the costs of the interest; the capital will not be repaid and the level of help varies according to the age of the mortgage.

Social Fund

The Social Fund is there to help the poorest people.

It provides loans to buy or fix essential equipment, for example to acquire a new fridge or to get a boiler repaired.

Money made available through the Fund is a loan, and has to be repaid but is interest free.

Anyone suffering financial hardship should check what help is on offer from the government. For the right advice, click on the Department for Work and Pensions link on the right hand side of this page to find out more about entitlements.

For problems with repayment of credit cards and loans, the best bet is to seek help from a debt advice service.

Tackling credit card and other consumer debt can be difficult.

It requires hard decisions to be made, but advisers can talk you through the various solutions, which may involve a debt management plan or, where there is a large debt with little hope of paying it off, bankruptcy.

Trained counsellors will talk you through all the options, explaining the pros and the cons as well as the likely consequences.

This most important thing about any debt problem is to seek help at the earliest opportunity.

Ignoring it will make the situation worse.

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.

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