Hands up if you get a sinking feeling every time you see a bill coming through your letter box. We do, so we reckon you probably do to, because no matter how well you plan your finances out, there’s always a bit of fear that something unexpected has happened. And if you’re struggling to make ends meet anyway, the worry that happens when it’s time for bills to arrive is even worse.
According to Citizens Advice, households in the UK have fallen behind on essential bills, such as utilities and council tax, by an estimated £18.9 billion. In fact, since 2011 Citizens Advice has seen a significant increase in the number of people coming to them with debt problems as a result of household bills, surpassing consumer credit as the most common cause of debt the charity sees.
What’s more, people with household debt are 37% more likely to be out of full-time employment and 34% have a mental health problem.
Because of these findings, Citizens Advice is now calling for the government to measure household debt levels in an annual report, as well as create an independent regulator for the bailiff industry.
When people get into debt, bailiffs may need to be involved to claim possessions up to the value of the money owed. Last year, every three minutes Citizens Advice helped someone with bailiff problems. This is despite the government introducing reforms in 2014 to protect those in debt from unfair bailiff practices and since then, the charity claims that there has been a 24% increase in people with bailiff problems.
Gillian Guy, Chief Executive of Citizens Advice, said: ” Families are living in fear of a visit from the bailiffs, and small missed bills can skyrocket through excessive enforcement fees.
“Our evidence shows aggressive tactics by bailiffs cause huge distress and can even push people further into debt. Families are going without essentials like food or electricity to meet their payments.”
Avoiding falling into debt over household bills
Set up direct debits – if you pay your bills monthly or quarterly, but don’t have a direct debit, you may fall into debt simply because you forget to pay them. Don’t take risk and automate your payments.
Make sure you’re on the best deals for utilities – there may be cheaper deals out there and they could save you hundreds of pounds annually. If you’re struggling to make ends meet, every little helps, so make sure you’re not paying more than you need to.
Work out a budget and stick to it – it might seem like obvious advice but the best way to avoid debt is make sure your outgoings aren’t higher than your incomings. This means working out how much you need to pay for your essentials and ringfencing that money so there’s no risk of leaving yourself short. We have a beginner’s guide to budgeting here.
Track your accounts – use your credit report to track your payments. When the lender updates us and your report is refreshed, you’ll be able to see your most up-to-date payment information on your account, so if you’re recorded as missing a payment, you’ll know about it.
Speak out if you’re struggling – if you know you’re going to miss a payment, speak to the relevant organisation – such as your lender, utility provider or council – as soon as possible. They may be able to come to some arrangement that will help you avoid falling into debt.
Prioritise your debts – The Money Advice Service recommends prioritising your debts to make sure you’re paying them off in the right order. Household bills should arguably be high up on your list because if you don’t pay, your services may be switched off.