Cash point
Opening a threatening financial letter, like a final demand, can feel genuinely terrifying, so follow our guide on what to do if you get one
Receiving a worrying money-related letter can bring about a real sense of dread. “Some organisations really know how to put the frighteners on you, but in many cases they just don’t have the powers they imply they have,” says Jasmine Birtles, TV finance expert and founder of MoneyMagpie.com. “You don’t have to deal with them alone, either. Whether it’s a nasty letter from the council, your landlord, the bailiffs or your mortgage company, free charities can help you negotiate with your creditors to make it easier to pay or to wipe off the debt altogether.”
To avoid these letters, get organised. “Set up direct debits or standing orders to pay bills every month,” says Jasmine. “Also budget and set aside money each month to cover sudden expenses. The Emma app helps you budget, or try the Hyperjar app, which has virtual ‘jars’ that you can put money in for different expenses.”
However, if you do get one of the most commonly received nasty letters, here is exactly how to deal with it…
NEGOTIATE WITH HMRC
“The first thing to bear in mind about correspondence from HMRC (AKA the taxman) is that it might not be genuine,” says Jasmine. “Fraudsters often pretend to be HMRC, demanding unpaid taxes, and even include a bogus phone number on the letter, text or email. So if you get one, first check that it is genuine by going to the HMRC website (hmrc. gov.uk) and use their contact form to check it out.
“If it is real, don’t be scared by words like ‘litigation’, ‘court’, ‘bailiffs’ and so on. These are not things that will happen tomorrow. They’re just telling you what might happen if you end up not paying. You can call them, or get someone from a debt advice charity [see the box to the right] to do it for you and negotiate with them. The people in the tax office do their best to make it easy for you to pay and you could even find that they have made a mistake and demanded too much from you, so it’s worth checking.”
CALL THE COUNCIL IF YOU MISSED YOUR BILL
“If you’ve missed a Council Tax payment, you’re in ‘arrears’.
This means you owe money to your council,” explains Jasmine. “If you get an arrears demand that you can’t pay, call them and explain your situation. Council Tax arrears is a ‘priority debt’, which means you need to pay it before debts like credit cards, as they could take you to court for non-payment. However, if you explain your situation, they should be able to help. It may be that you are entitled to help with your Council Tax payments, so ask about that, too.”
RESPOND TO BAILIFFS IMMEDIATELY
“If you get a letter from bailiffs or ‘enforcement agents’ saying they will visit your home to collect payment of a debt, you should reply to them ASAP,” says Jasmine. “If you ignore it, the bailiffs can visit your home after seven days and take away things to pay the debt. You should be able to get extra time to sort out the debt if you have special circumstances like you’re disabled or ill, have mental health problems, are under 18 or pregnant. You can also gain extra time if the letter of enforcement has the wrong information on it (like they got your name wrong or put in the wrong amount that you owe) so check that. If you are unsure or just feel too frightened, contact Citizens Advice or a debt charity to help you deal with them.”
MAKE A PLAN WITH THE CATALOGUE COMPANY
“Catalogue companies send you a default letter if you’ve missed a couple of payments. All it means is that you haven’t made the required payments on the required dates,” says Jasmine. “If you can’t pay – or can’t pay all of it – call them and explain the situation. Especially in the current climate, they are usually open to negotiating the debt repayment and making it as easy as possible for you to pay it back.”
DON’T BE INTIMIDATED BY YOUR LANDLORD
“This is the kind of letter we most commonly see at our centre,” says Fiona Donovan, who runs a Community Money Advice centre in Liverpool. “Tenants get a letter where the landlord gives notice to evict them. It’s called a ‘Section 21’ and it’s actually just the first step in evicting a tenant. You
might read it and think you have to be out in two months’ time, but you don’t. Read the letter carefully to see what it’s really saying,” says Jasmine. “A landlord can get an eviction order if they go to court, but it can take months for the actual eviction to happen, so you have much more time than you think. It’s best to speak to Shelter or a debt advice agency to help you deal with it as early as possible. Even your local council should be able to help you if there’s a chance you could be left homeless.”
CHECK CAR LOAN PAPERWORK
Car loan companies often threaten to take your car away, but in most cases they can’t. “Find your original agreement and read it carefully,” says Jasmine. “It’s all dependent on what kind of agreement you’ve got and what it says in the small print. There are usually stages in these agreements where they can’t take the car back, like if you’ve paid off a certain amount already, or if it has been in place for a certain amount of time. If you can’t find your original agreement, ask the company for a copy and get help from an advice charity to negotiate your position.”
REASSURE CREDIT CARD COMPANIES
“These companies are very good at sending frightening letters demanding money, but they’re not as scary as they seem. For a start, their loans are ‘unsecured’, which means they can’t take away your home or your car,” says Jasmine. “All they can really do is to increase your debt each month by adding on interest and, also, if you keep not paying, they can harm your credit rating so that it’s either expensive or impossible for you to get other loans or a mortgage for a while. The best thing to do is to get in touch with them as soon as you get a letter and reassure them that you want to pay. You may even be able to reduce your debt or have it frozen so that you don’t have to pay more interest. Get help from one of the debt charities if you don’t think you can negotiate this on your own.”
AVOID REPOSSESSION
“It’s particularly scary to get a nasty letter from your mortgage lender, as it raises the spectre of potentially losing the roof over your head,” says Jasmine. “Take a deep breath and get in touch with them straight away to put your situation to them. Mortgage companies generally don’t want to repossess homes, especially at the moment, so they’re often willing to negotiate. If things look like they could get really bad, contact the charity Shelter as early as possible as they can help with anything related to your home, whether you have a mortgage or you rent. Finally, don’t succumb to adverts from shady companies that say they will buy your house with quick cash. They might offer a decent price at first, but at the last minute they’ll drop it right down and force you to sell for next to nothing.”