Frequently asked questions

Tip: Always try to pay at least 10% of your balance every month, if not you will be paying your debt for years to come. For example, if you owe £5,000 on your credit card with a typical 16.9% APR, and only make the minimum payment, after five years you will have paid back over £5,200 and still owe nearly £3,000. After 25 years you would still owe nearly £300.

Tip: Never spend money on credit cards on the spur of the moment and don’t use them to borrow money over a long period.

Tip: If you can’t pay off the total balance on your store card, then use a cheaper alternative. Some store cards can have an APR of nearly 30%.

2. Unsecured personal loan debts

Tip: You can’t borrow your way out of debt. Be wary of borrowing more money to pay off existing debts. It may seem like a good idea and may help in the short term, but you could end up with serious debt problems.

3. Rent, Mortgage and secured loan arrears

Tip: Don't risk losing your home! Don’t pay off the person who is shouting the loudest, but pay the most important ones like mortgage or rent.

Tip: Know the difference between unsecured and secured lending and don’t borrow money against your home unnecessarily.

4. Bank and Building Society overdrafts

Tip: Don’t just run up an overdraft without talking to your bank – this is much more expensive than if you arrange it beforehand. If you are living on your overdraft each month, you could be well on the way to a debt problem.

5. Council tax arrears

Tip: Make sure you pay it, you could end up in court and possibly prison. Local authorities commonly use bailiffs to collect unpaid council tax, so you could well end up paying a much higher price and losing much more.

Tip: Bankruptcy is not an easy option and it’s not a cheap one either, it will cost you the best part of £500. Get advice, it may well not be the right option for you.

I own my home but have fallen behind with my mortgage payments. I’ve heard about companies that can clear your debts, buy your home and then rent it back to you but I want to know more. Can you help?

The schemes that you talk about are generally known as mortgage rescue, buy-back or sale-and-lease-back schemes. They are designed to allow you to stay in your home as a tenant or as a shared owner (paying part rent and part mortgage).

Private companies buy your property and rent it back to you. But you need to be careful, as not all of these companies are trustworthy. If you're thinking about signing up to a mortgage rescue scheme with a private company then it's important to check any terms and conditions very carefully.

Make sure you have thought about all the options before you make an agreement with a private company. Try talking to your mortgage lender first to see if you can come to an arrangement to clear your arrears. A CAB debt adviser can help you do this and give you advice about any other debts.

For more information and advice go to the Citizens Advice website: www.adviceguide.org.uk or contact Nottingham CAB.

I had an accident at work and have been thinking about contacting a claims management company. I’m a bit nervous in case I am not happy with the way they deal with my case - are these companies regulated and can I complain to anyone if something goes wrong?

Claims management companies are companies which act as intermediaries for people claiming compensation. They often approach people who may want to make a claim, sometimes offering ‘no win, no fee’ agreements. The Government has recognised that many people have not always had a fair deal when using the services of these companies, and so has passed the Compensation Act. The Act covers compensation claims for personal injury, criminal injuries compensation, employment matters, housing disrepair, financial products and industrial injury disablement benefits.

From April 2007 it will be an offence to provide claims management services without authorisation, or exemption. Claims management companies will be regulated and they must have a formal complaints procedure. The Department for Constitutional Affairs is acting as regulator to claims management companies. You can now search on the claims management website, www.claimsregulation.gov.uk to make sure a company who approaches you or who you are thinking of using are authorised, as well as finding further information. You can also access information at www.adviceguide.org.uk or us (see our opening times).

I’m about to buy a secondhand car. It looks like a real bargain, but I don’t know that much about cars so I’m having to put my trust in the dealer that he’s not going to rip me off or sell me a complete dud. Is there anything I can do to stop this happening?

These days, if you have access to the internet, you can do a lot of detailed research before buying on what you should expect to pay for particular makes and models, depending on their age, mileage, and the state they are in.

Before you go ahead with the purchase, it’s worth carrying out a check to discover whether the car is stolen, has been the subject of an insurance write-off, or whether there is outstanding finance from a previous sale. Mileage checks may also be available to make sure it hasn’t been ‘clocked’. Most of this can now be done quickly online.

For peace of mind, you may also want to get the vehicle inspected for mechanical faults by an expert. There is a charge for these services, but it could be money well spent if it prevents you making a costly mistake because of problems with the car you are buying.

For more information about what to look out for when you buy a secondhand car, go to www.consumerdirect.gov.uk and follow the link to Advice on goods and services.

Remember that if things do go wrong, the law gives you more protection if you have bought from a dealer than if you got your car through a private sale.

Anyone who is having problems with a secondhand car they have already bought will find lots of useful information and advice on the Citizens Advice website www.adviceguide.org.uk where there is also a downloadable fact sheet on secondhand cars.

I work full time but I am having to take on increasing responsibility for the care of my elderly mother who is now disabled. I’m worried about how I can fit this in with work.

From 6 April, all employees who are carers of adult dependents will have the right to ask for flexible working and to have that request considered seriously by their employer.

So if you think more flexible working would help, talk to your boss as soon as possible to explore what options may be available. Flexible working describes a wide variety of working patterns, including compressed hours, flexitime, homeworking, job-sharing, staggered hours and term-time working.

Under the new rules, a carer is defined as an employee who is, or expects to be, caring for an adult to whom they are married, or who is their partner or civil partner, or is a near relative (parent, parent-in-law, adult child, sibling, aunt, uncle or grandparent, or step-relative). It can also be someone unrelated but living at the same address.

There is a formal procedure to follow which starts with you providing your employer with a carefully thought-out application in advance of when you would like the new work pattern to take effect. Your boss then has to follow a set procedure to ensure that your request is considered seriously and a discussion takes place. He or she may only refuse your request where there is a recognised business reason for doing so.

For information and advice on employment issues go to the Citizens Advice website www.adviceguide.org.uk.

When I took out a loan I was sold insurance that promised to cover my repayments if I lost my job or was too ill to work. Recently I was made redundant but my claim has been turned down. Is there anything I can do?

The payment protection insurance (PPI) business is currently facing close scrutiny after concerns were raised by Citizens Advice and others about excessive profiteering and the high number of policies that fail to pay out. In recent months half a dozen companies have also been fined for mis-selling PPI.

Mis-selling occurs when a company gives false information about a policy, or recommends one that is unsuitable for you, and you are unable to make a claim – for example, if you are above or below the given age limit, are unemployed or work part-time.

If a company recommends a payment protection insurance policy, it must take reasonable steps to ensure it is suitable for you. If companies do not offer a choice of policy, they might still be mis-selling if they fail to provide appropriate information about the policy in good time for you to make an informed decision about it and it turns out to be unsuitable.

If you think you have been mis-sold, you should write to the company concerned requesting a refund of the policy premiums (if the policy is completely unsuitable) or compensation if you were misled regarding what you could claim. If the complaint is not resolved within eight weeks, you can ask the Financial Ombudsman Service (FOS) to intervene. For more information about PPI and making a complaint to the FOS talk to an adviser at Nottingham CAB (click on ‘opening times’ for contact details) or go to www.adviceguide.org.uk

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