When you can't make repayments

BORROWING ESSENTIALS

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Introduction 1. What is a debt emergency? 2. Contacting your lenders

Introduction to 'When you can't make repayments'

In this lesson, you'll explore what could happen if you have borrowed money but can't pay it all back. 

You'll meet someone who's also learning to borrow and repay money, and see what they do.

What you'll learn

  • What a debt emergency is and the bills that can lead to one.
  • Why you should contact your lenders and how to do this.

How long it takes

5 minutes

Chapter 1 - What is a debt emergency?

What is a debt emergency?

Chapter 1

How long it takes

2 minutes

An example

 

Meet Laura. She has been working at the local pub, while she finishes university. 

Recently her hours have been cut down, and she can't afford to make all of her repayments and pay all of her bills.

Laura wants to prioritise her money going out, so she needs to know which repayments or bills can lead to a 'debt emergency'. 

Debt emergencies

A debt emergency is when you're facing eviction from your home, bailiff action (when official officers remove your belongings and sell them to repay the money you borrowed), being taken to court, or having your gas or electricity cut off. 

There are many charities and helplines who can support and give advice about what to do next. No one should have to deal with a debt emergency alone.

Remember

If you're facing a debt emergency, you can get free and independent advice.

Visit MoneyHelper to find help that is local to you.

Go to MoneyHelper Opens in a new tab

What could cause a debt emergency?

There are bills and repayments that can lead to a debt emergency if they're not paid.

 

This includes payments like:

 
  • Child maintenance payments
  • Council Tax
  • Court fines
  • Hire purchase agreements (where you hire an item until you have paid for it in full)

 

 
  • Income tax
  • National insurance
  • Value added tax (VAT)
  • Payments to the Department of Work and Pensions (DWP)
  • Payments to His Majesty's Revenue and Customs (HMRC)

 

 
  • Mortgage or rent 
  • Loans secured against your home
  • Gas and electricity
  • TV licence

 

Essential payments to manage

There are also bills and repayments that won't lead to a debt emergency. You should still manage them to avoid increasing costs.

These include:
 
  • Overdrafts
  • Personal loans
  • Money owed to family or friends
  • Credit cards
  • Store cards or catalogue debt
  • Payday loans and 'buy now pay later' agreements
  • Water bills.

 

Be aware

Water bills aren't treated as debt emergency bills, but they are essential outgoings. If you don't pay the current water bill, the amount of money you owe the water company will go up. The water company might take action to recover the money you owe if you don't make repayments.

You can manage these bills by making the minimum repayments or contacting the lender or provider to discuss your options – we'll look at this in the next chapter.

Introduction - When you can't make repayments
Chapter 2 - Contacting your lenders

Contacting your lenders

Chapter 2

How long it takes

3 minutes

Why contact your lenders?

Laura decides to get in touch with the companies that she owes money to. These are also known as her lenders or creditors. 

Laura has prioritised her money going out to pay for the debts that could lead to an emergency. She still owes money on her credit cards and store card. 

She's going to contact the credit card and store card companies to tell them she needs help making repayments.

There are many reasons why this would help Laura.

Select each item to find out more.

Remember

Needing help to make repayments or to pay bills can happen to everyone and is nothing to be ashamed of. 

The first thing you should do if you are worried about money is to speak to your bank. Thy can help you and put you in touch with charities and helplines who will support you out of debt. 

These organisations can help you with advice and practical tips to manage your money, reduce your debts and prioritise repayments. They can also help you work out if you can get benefits or other financial help.

The MoneyHelper site has a useful local debt advice finder.

When you can't make repayments: completed!

You now know what to do if you can't make repayments and where to seek help if this happens to you or someone you know.

Chapter 1 - What is a debt emergency?

Want to learn more?

There are many more lessons to help you with borrowing.

Go to borrowing

 

Lloyds Bank Academy is committed to providing information in a way that is accessible and useful for our users. This information, however, is not in any way intended to amount to authority or advice on which reliance should be placed. You should seek professional advice as appropriate and required. Any sites, products or services named in this module are just examples of what's available. Lloyds Bank does not endorse the services they provide. The information in this module was last updated on 25th November 2024.

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