Benefits and financial help series

Transcription

1 Benefits and financial help series

2 About this booklet 1 About this booklet This booklet aims to help you understand how to deal with debt. A cancer diagnosis can bring unexpected expenses. These could include travel costs, buying certain foods for a special diet or bigger heating bills because you are at home more. Cancer may also mean you earn less if you are ill or caring for someone. Changes like these can increase your money worries and make debt more likely. The information in this booklet is for people with cancer and their partners, family, friends or carers. It could help if you are in debt now, or if you are worried that you may have debt in the future. How to use this booklet This booklet explains how to deal with your debts in five steps: 1. Increase your income 2. Reduce your spending 3. Create a financial statement 4. Deal with the most important debts 5. Deal with less urgent debts The best way to use the five steps is to work through them from start to finish. This will help you sort out the most important problems first.

3 2 Managing your debt This booklet also includes: a financial statement between pages that you can use to show your income and spending information about what happens to debts you leave behind when you die (see pages 73 75) sample letters you can send to the people you owe money to (see pages 77 85) a glossary to explain difficult words these words have been put in bold in this booklet (see pages 87 92) a page to write down any notes or questions you may have for the people you owe money to (see page 105). We ve used the symbols below to help certain information stand out: This symbol shows where there are important differences between England, Scotland, Wales and Northern Ireland. A section with this symbol has a summary of what you could do next, to make sure your finances are in order.

4 About this booklet 3 Financial help from Macmillan We have financial specialists who can help you deal with any money worries: Our financial guides can give you guidance about your personal finance options, such as insurance, pensions, mortgages and tax. Our welfare rights advisers can help you apply for benefits and other financial support. Our energy advisers can help you try to reduce your heating and electricity costs. We can also give you information about Macmillan Grants (see page 13 for more information). If you re worried about debt, we can refer you to our charity partner StepChange Debt Charity for advice. Call the Macmillan Support Line free on , Monday to Friday, 9am 8pm. Our financial guides are available from Monday to Thursday, 9am 5pm and Friday, 9am 4.30pm. If you re hard of hearing, you can use textphone , or Text Relay. If you prefer to speak to us in another language, interpreters are available.

5 4 Managing your debt Face-to-face support You may also be able to meet a Macmillan welfare rights adviser in person. Visit macmillan.org.uk/inyourarea to see where this service is available near you. Other organisations can also provide support in person, such as your local Citizens Advice office (see page 102). Online financial support tool You can also use our online financial support tool by visiting finance.macmillan.org.uk This includes a quick benefits checker and a benefits calculator. You can use these tools to get an estimate of the benefits you may be able to get. If you need more help Don t worry if your situation is very complicated, or if you need more help understanding what to do. There are many organisations that offer free expert advice and support for people with debts. See page 101 for contact details of these organisations. Some of these organisations, such as StepChange Debt Charity, also offer free debt management plans. Quotes Throughout this booklet we ve included quotes from people affected by cancer who have shared their experiences of managing their everyday finances. Some are from our online community (community.macmillan.org.uk). Some names have been changed. There are also quotes from Macmillan s financial guides. They are specialist guides who you can talk to about any money worries you may have (see page 3).

6 Contents 5 Contents Step 1: Increase your income 7 Step 2: Reduce your spending 21 Step 3: Create a financial statement 35 Step 4: Deal with the most important debts 43 Step 5: Deal with less urgent debts 53 Other options for dealing with your debts 63 Debts you leave behind 73 Sample letters to creditors (people you owe money to) 77 Glossary 87 Further information 95

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8 Step 1: Increase your income 7 Step 1: Increase your income Ways to increase your income 8 Work 9 Benefits 11 Grants 13 Insurance 15 Pensions 16 Savings and investments 18

9 8 Managing your debt Ways to increase your income The first step to dealing with debt is to make sure you have as much money coming in as possible. Thinking about these questions could help: Could you get more support to help you work? Could you claim benefits? Could you apply for a grant? Are you due money from an insurance policy? Could you get money from a pension? Do you have savings and investments you could use? The rest of this section explores these options in more detail. Some people find themselves unable to keep up with their regular payments. We can help them with any worries they have. We can go through their income, outgoings and budgeting, and make them aware of what they could reduce, to make sure they ve got more money available. David, Macmillan financial guide

10 Step 1: Increase your income 9 Work Work is the main source of income for many people. But if you are living with cancer, you may need to take time off work to: go to medical appointments have treatment recover after treatment cope with emotional stress or side effects. If you are caring for someone with cancer, you may also need time off work. Your income may drop if you take time off. But everyone has certain rights at work, so doing this doesn t have to mean your earnings will stop completely. Your rights at work If you have cancer and are in paid employment, your employer should help and support you to do your job. The law protects you from being treated unfairly at work because of cancer. Your employer should: support you during and after cancer treatment make reasonable adjustments so that you are not at a disadvantage to other employees this could include working from home or working flexible hours.

11 10 Managing your debt If you are a carer, you also have certain rights at work. A carer is someone who provides unpaid support to a person who would not be able to manage without this help. This person could be your partner, a close relative or someone you live with. The law gives carers protection from discrimination at work. Carers have the right to: a reasonable amount of unpaid time off work, to provide support in an emergency request flexible working hours. You can read more about this in our leaflet Your rights at work when you are affected by cancer. Tax rebates If you stop working or your earnings drop, you may end up paying too much tax. If this happens, you may be able to claim a refund. This is called a tax rebate. We have more information about work and cancer for employees, carers and employers: Visit macmillan.org.uk/work to read the information online. Visit be.macmillan.org.uk/work to order free booklets. Call us on to order the information you need.

12 Step 1: Increase your income 11 Benefits Benefits are payments that the government gives to people who need financial help. When you are affected by cancer, it may change your situation and mean that you can get extra help. There are many different benefits that may be available, depending on your situation. We ve listed some examples below and on the next page. If you are unable to work or have a low income Almost everyone who works for an employer can get sick pay to cover a certain amount of sickness. This can either be the legal minimum, which is called Statutory Sick Pay, or your employer may have their own scheme. Before your sick pay ends or if you do not qualify for it, check whether you can get Employment and Support Allowance (ESA). This benefit is for people who cannot work because they are ill or disabled. Depending on where you live and your situation, you may need to apply for Universal Credit instead. Universal Credit is a new benefit for people who are looking for work or on a low income. It is being introduced gradually and replacing some other benefits. Having my ESA approved feels as though I have been given a bit of a second chance to spend time with loved ones. Now I don t have to worry about losing my home. Charlotte

13 12 Managing your debt If you have care or mobility needs Personal Independence Payment (PIP) is a benefit for people aged 16 to 64 who have problems looking after themselves or moving around. Attendance Allowance is for people aged 65 or over who have difficulties looking after themselves. If you are looking after someone with cancer Carer s Allowance is a weekly benefit that helps people who look after someone with a lot of care needs. You need to be aged 16 or over and be caring for someone for at least 35 hours a week. Getting advice The benefits system can be complicated and you may be entitled to a combination of benefits. It is important to get expert advice from a free, independent advice service. You can call our welfare rights advisers on or contact Citizens Advice (see page 102). The benefits system is changing, so it is always important to speak to an experienced adviser for the most recent information. Our booklet Help with the cost of cancer has more information about benefits, including the current benefit rates in England, Scotland and Wales. The benefits system in Northern Ireland is slightly different. If you live in Northern Ireland, visit macmillan.org.uk/financialissues or call our welfare rights advisers for the most up-to-date benefits information and advice. The latest information on benefits in Northern Ireland can be found at nidirect.gov.uk

14 Step 1: Increase your income 13 Grants Macmillan Grants These are small, mostly one-off payments to help people with costs caused by or related to their cancer. Everyone s practical needs are different, so grants are available for a variety of things. Whether you need extra clothing, help paying heating bills or even a relaxing break, you may be entitled to a Macmillan Grant. How much you receive will vary depending on your circumstances and needs. A grant from Macmillan would not normally affect the benefits you are entitled to. It is an extra bit of help, not a replacement for other forms of support. You can apply for a Macmillan Grant if you have cancer, or are still seriously affected by your illness or treatment. You must also have below a certain amount of savings and income. You will need to apply through a health or social care professional. If you have any questions about Macmillan Grants or if you are having problems getting someone to fill in an application form with you, contact us on My boiler broke and I could not find the money to have it fixed. My Macmillan Breast Care Nurse spoke to me and said Macmillan actually provide grants. I sent off the form and they very kindly gave me a grant, which meant I could have the boiler repaired. Karen

15 14 Managing your debt Other loans and grants You may be able to get the following help: Grants and loans through your local council to cover certain expenses. Contact them to find out what they offer. Grants, discounts or better payment arrangements from your energy supplier. There are also energy-saving schemes and government grants that could help. Call our energy advisers on to find out more. Grants from other charities. Turn2us helps people find specific charities that may offer financial help. Visit turn2us.org.uk for more details. Grants from other organisations. Your local library may have books about organisations that provide grants. This might include The guide to grants for individuals in need, published by the Directory of Social Change.

16 Step 1: Increase your income 15 Insurance You, or your partner if you have one, may have insurance policies that will pay out because of your situation. Check what policies you have and their terms. Insurance policies you could check include: mortgage payment protection insurance credit card and loan insurance critical illness insurance income protection insurance life insurance (sometimes these policies will pay out early if you have cancer or a terminal illness). Our booklet Insurance may be helpful if you think you can make an insurance claim. It also has information about how having cancer can affect buying insurance. You can also call our financial guides on for more information. Remember that insurance payouts or money from investments could affect some of the state benefits you claim.

17 16 Managing your debt Pensions State Pension If you are of pension age, you will probably be getting the State Pension. If you have a low income, you may be able to get an additional benefit called Pension Credit. The State Pension age for men is currently 65. The State Pension age for women is gradually increasing from 63 to 65 by November After that, the age for both men and women will gradually increase. For more details and to find out the exact date when you can claim your State Pension and Pension Credit, speak to our financial guides or visit gov.uk/calculate-state-pension Private pensions You may have a pension that you arranged through your workplace or on your own. A new rule means that by 2018, all employers will have to arrange pensions for their employees. Employees can opt out of this scheme. There are different types of personal and workplace pensions. One type is called defined contribution schemes. These are where you (and often your employer) pay regularly into a fund, which is usually invested in stocks and shares over time. The rules about accessing savings from a defined contribution pension changed in April You can now take your savings in a variety of ways after the age of 55. This means you could access some of your pension before you retire.

18 Step 1: Increase your income 17 Other types of workplace pensions are called defined benefit (or final salary) schemes. These are pensions where your employer agrees to pay you a certain amount when you retire, based on your final or average salary. Speak to your employer to find out more about how you can access these savings. Ill-health retirement If you have or have had cancer, you may be able to take something known as ill-health early retirement. This is where you can start claiming your pension early. Your illness usually has to be permanent and stopping you from working, but it may depend on the rules of your pension scheme. If you qualify for ill-health early retirement, your pension scheme will tell you what your options are. If you are expected to live less than 12 months, you may be able to retire because of serious ill health. You will usually get the whole of your pension as a one-off lump sum. Make sure you get guidance or advice before making any decisions about early retirement, as it could affect your entitlement to benefits or other support. Pensions guidance and advice If you have questions about pensions or would like guidance, you can contact our financial guides on Visit your local Citizens Advice office for face-to-face advice (see page 102). Contact a new UK government service called Pension Wise on to arrange a free guidance appointment.

19 18 Managing your debt Savings and investments You may have savings set aside to cover the unexpected. If your income is affected by cancer, now may be a good time to use those savings. However you should check if you could get any extra income from your employer, benefits, insurance or other sources first. If you have a large amount of savings or investments, you may be able to set them up so they pay out regularly and provide you with a steady income. Our financial guides can give you information about accessing your savings and investments. You can call them for free on Read our guide to benefits and financial help called Help with the cost of cancer. Visit macmillan.org.uk/financialsupport to read our information on benefits and finances online. Call or visit macmillan.org.uk/ inyourarea to find out whether you have a Macmillan benefits service near you. Read our booklet Pensions to find out more about your options for accessing your pension. Our booklet Insurance may be helpful if you want to understand more about claiming on insurance. You can order or download any of our booklets from be.macmillan.org.uk

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22 Step 2: Reduce your spending 21 Step 2: Reduce your spending Think about your costs 22 Housing costs 23 Household bills 25 Prescriptions 27 Travel and parking 28 Childcare costs 30 Credit cards 32

23 22 Managing your debt Think about your costs You should divide your spending into essential items and non-essential items. Essential items can include the most important things like: food costs bills your rent or mortgage. Usually, non-essential spending can be the easiest to reduce. However you may also be able to reduce spending on some essential items. For example, you may be able to switch to cheaper energy suppliers and lenders. We have energy advisers who could help you do this. Call them on Regular credit repayments and unsecured loans can often be reduced or stopped while your income is reduced. Unsecured loans are loans that are not backed up by property, such as your home or car. This means there is not the same risk of your property being repossessed if you miss payments. Contact the lender to explain your circumstances. You can call our financial guides on to discuss your options.

24 Step 2: Reduce your spending 23 Housing costs Rent If you are renting and have a low income, you may be eligible for Housing Benefit. Depending on the area you live in and your situation, you may need to claim a new benefit called Universal Credit instead. For more information, call us on or visit macmillan.org.uk/financialissues Council tax, or rates (Northern Ireland) Check with your local council to find out whether they can give any discounts or help with council tax, or rates (Northern Ireland). Mortgage If you have a mortgage, you may have taken out various types of insurance when you first bought your home. For example, you may have insurance that will pay the monthly mortgage if you are off work. Or the insurance may pay off the loan if you are diagnosed with a life-threatening condition. If you are diagnosed with cancer or are off work for treatment, this may mean you can now claim on this insurance. Our booklet Insurance has more information on how to make a claim.

25 24 Managing your debt If you have a low income, you may qualify for help towards the interest payments and service charges. Call our welfare rights advisers on for more information about this. If you are worried you won t be able to keep up with your mortgage payments, contact your lender straight away. Lenders must look at ways to help you. You can also read our booklet Housing costs for more information about managing your rent, mortgage or other housing costs.

26 Step 2: Reduce your spending 25 Household bills Energy bills It may be worth changing fuel suppliers if you can get a better deal with a different company. In general, it is good to check fairly regularly (about once a year). You can check by using an energy price comparison website. In England, Scotland and Wales, some of these websites are approved by the Confidence Code scheme. You can find these websites by visiting ofgem.gov.uk/confidence-code For Northern Ireland, visit consumercouncil.org.uk/energy to compare energy suppliers. There are schemes that can provide free or cheaper insulation or draught protection. Visit energysavingtrust.org.uk for energy-saving tips. Some suppliers have a trust fund that may be able to help pay your fuel bill. Our leaflet Managing your energy costs has lots of suggestions to help you save on energy costs. You can also speak to one of our energy advisers on Water rates Water companies are not allowed to disconnect your water supply if you have not paid your bills. Some water companies have trust funds that may be able to help pay your water bill. There is a booklet called Help with water and energy bills that shows all the current schemes from utility suppliers. You can download this booklet at aurigaservices.co.uk

27 26 Managing your debt Phone calls Phone calls should be classed as essential when you are unable to go out due to your illness or if you are in hospital. This is because they can be a great way to stay in touch with family or work. Check that you have the best call package for your home phone and mobile phone, if you have them. Many phone companies offer cheaper or free calls at certain times of day, so the deal that works best for you will depend on when you use your phone most. If you have a contract mobile phone, you may save money by switching to a pay-as-you-go deal. This will only work if you set yourself a strict limit on the amount you will spend on top-ups each week or month. Before deciding whether to switch from a contract phone deal, check whether there is a minimum contract period and any penalty charge for cancelling it. You could also ask your mobile phone provider to find you a cheaper tariff, if you explain your situation to them. You may also save money by making phone calls online. For example, Skype TM is a service that lets you make free calls to other Skype users anywhere in the world. You can download the Skype app to use on a mobile phone or tablet from the Apple App Store or Google Play. You can also download the application onto your computer by visiting the Skype website. If your computer does not have a microphone and speakers, you will need to get a headset. Skype also allows you to call landlines and mobile phones very cheaply. For more information, visit skype.com The website saynoto0870.com can also help you save money on phone calls. It can help you find cheaper alternatives to phone numbers that can be more expensive to call these often begin with 0870, 0845 or 0844.

28 Step 2: Reduce your spending 27 Prescriptions Prescription costs are different across the UK. In Scotland, Wales and Northern Ireland, prescription costs are free for everyone. In England, people with cancer are eligible for free prescriptions. This includes any medication, not just medication related to cancer. You can apply for an exemption certificate by collecting the form FP92A from your GP surgery or cancer clinic. If your household income is low or if you are getting certain state benefits, you and your partner may qualify for free prescriptions anyway. If you live in England and are not sure whether you qualify for free prescriptions, call the NHS Help with Health Costs scheme on If you don t qualify for free prescriptions, for example because you are not the person living with cancer, you may want to buy a Prescription Prepayment Certificate for three months or a year. It could save you money if you need prescriptions regularly. Visit gov.uk/get-a-ppc or call to find out more.

29 28 Managing your debt Travel and parking Travel to and from hospital If your household income is low or you are getting certain state benefits, you may be able to get refunds on some or all of your travel costs to hospital. The scheme doesn t cover trips to a GP. If you need someone to travel with you to hospital for medical reasons, you may be able to get a refund of their travel costs too. Speak to your hospital for more information. Concessionary bus pass If you have difficulty walking or are aged above 60, you may qualify for a concessionary bus pass. The pass can also be used on other local public transport. You may also be able to get help towards the cost of taxis. Contact your local council to find out what is available and how to apply. Hospital car parking Hospital car parking rules are different across the UK. Many hospitals in England give people with cancer free or discounted hospital car parking. But these concessions are not always well known. You should ask your hospital for more information. Hospital car parking in Scotland is free for everyone, except at three privately-run hospital car parks. These are in Dundee, Edinburgh and Glasgow.

30 Step 2: Reduce your spending 29 In Wales, hospital parking is free, except for a few hospitals. And in Northern Ireland, parking is free for people having chemotherapy and radiotherapy treatment. Macmillan Grants can often be used to cover transport costs (see page 13). The Blue Badge scheme If you have a severe mobility problem, you may qualify for a permit under the Blue Badge scheme. A Blue Badge lets you park without any charges in restricted-parking zones, disabled public parking bays or areas restricted by any yellow lines. Time restrictions depend on the local area and where you are parking, but in many places you can park for longer with a Blue Badge. For more information and to apply, visit: in England, Scotland or Wales in Northern Ireland. My husband got a Blue Badge as his breathing difficulties made walking very hard. It has been a lifesaver on many occasions. We even had help to fill in parts of the form from the Macmillan welfare benefits officer at our local council. Karen

31 30 Managing your debt Childcare costs You may need to arrange childcare if you are: going to appointments having treatment dealing with any side effects you are experiencing. There are different ways to get help with these costs. Childcare vouchers If you work, your employer may allow you to pay for childcare using childcare vouchers. These let you pay for childcare through your salary, before tax and National Insurance have been taken off. This will save you money. Some employers may pay childcare costs directly or provide a workplace nursery. If you are off work temporarily and are getting sick pay, the vouchers or other help may continue. This might be part of your contract, or you may have a sympathetic employer. Talk to the HR department where you work about still getting help with childcare costs during periods of sick leave. Visit gov.uk/childcare-vouchers-better-off-calculator for more information about childcare vouchers.

32 Step 2: Reduce your spending 31 Other support You may also be able to get help looking after children from family and friends, or through: social services (contact your local council to find out more) tax credits or Universal Credit (see page 92), depending on where you live charities such as Home-Start (visit home-start.org.uk) your employer, who may be able to arrange flexible working for you.

33 32 Managing your debt Credit cards If you use credit cards and don t pay off your balance in full every month, you may be paying interest. You could transfer your balance to another card. Some cards offer 0% interest deals for a limited period. However there may be a charge for doing this, so you will need to weigh up the savings against any possible charges. To find the best credit card deals, you could use a price comparison website such as moneysavingexpert.com or uswitch.com Many newspapers also include comparison tables in their personal finance pages, in print or online. See whether you could reduce any non-essential spending. Don t reduce essential costs, such as food and heating, as this could affect your health. Make sure you are getting any help with health costs that you are entitled to, including prescriptions, travel and childcare. Call to speak to our welfare rights advisers.

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36 Step 3: Create a financial statement 35 Step 3: Create a financial statement What is a financial statement? 36 How to fill in your financial statement 37

37 36 Managing your debt What is a financial statement? A financial statement is a household budget. It shows: how much income you have how much you need for basic living expenses. A financial statement is an essential tool when dealing with debt problems. It gives a clear picture of your income. It clearly shows what you spend and any money left over. This will help you plan how to deal with your debts. You can use a financial statement to show your financial position to people or organisations you owe money to (your creditors). You can also show the financial statement to courts. It is important to make sure your financial statement is realistic. It should always: reflect what actually happens in practice leave you with enough money to pay your main expenses. There is a financial statement between pages that you can use to show your income and spending. You can pull out this statement and show it to your creditors. For example, you could write to them using one of the sample letters on pages and include your financial statement.

38 Step 3: Create a financial statement 37 How to fill in your financial statement Follow these instructions to fill in your income and spending as fully as you can. If you need help, call our financial guides on or contact one of the organisations on pages Choose weekly or monthly amounts You should choose to use either weekly or monthly amounts throughout your statement. If you are paid monthly, you may find it easier to use monthly amounts on your statement. If you are paid weekly, you may find it easier to use weekly amounts throughout. The important thing is not to mix the two, or the amounts won t work. To convert between weekly and monthly amounts, do the following calculations: Weekly amount x = monthly amount Monthly amount x = weekly amount Some income or costs may be quarterly (paid four times a year). To convert quarterly amounts to monthly or weekly ones, do the following calculations: Quarterly amount 3 = monthly amount Quarterly amount x 4 52 = weekly amount

39 38 Managing your debt Tips for recording income Below are some tips to help you fill out the income section of the financial statement. Your salary The salary you record should be based on the amount of money you actually get each month, after things like tax have been taken off. Only include extra salary for things like overtime if you receive it regularly. Benefits You may be claiming Personal Independence Payment (PIP), Attendance Allowance or the Disability Living Allowance (DLA). These benefits are meant to pay for health needs, so it is important that your financial statement shows how you are spending the money. If you need to, you can write down extra information to explain this in the notes section of the financial statement. Tips for recording spending Below and on the next page are some tips to help you fill out the spending section of the financial statement. Household bills If you pay gas and electricity quarterly, you will need to add your last four bills together and divide the total by 12 to give you a monthly amount. To get a weekly amount, divide the total by 52 instead (see page 37). If you pay on a pre-payment meter, think about what you use in the winter and the summer, and average this out to get a monthly amount. If you pay your TV licence annually, divide the cost by 52 for a weekly amount or by 12 for a monthly amount.

40 Step 3: Create a financial statement 39 Insurance This could include life, health, travel and home insurance. If you have car insurance or breakdown cover, you may want to record that spending separately under car costs. Make sure you don t accidentally record the same spending twice in different parts of the financial statement. If you have health insurance, remember to check whether you can get a payout because you have cancer. Our financial guides can help you understand insurance. You can call them on Food and drink Add an extra figure for any special dietary needs, but you need to state a reason for these on the financial statement. Lifestyle You need to account for an amount for clothing, even if you have not bought any recently. 5 per person, per week is considered reasonable. If you ve lost or gained weight, or if your body shape has changed, you could increase this amount. But make sure you explain the reason for the increased figure. Children s costs This could include after-school clubs or school trips. It is a good idea to add a note about this on your financial statement if these expenses are particularly high. Savings and investments Include contributions you make to a personal pension scheme (see pages 16 17). If pension contributions are taken off from your salary and paid into a workplace pension, do not include anything here. Remember, do not include any debt payments in the financial statement. You are still working out how much you can afford to pay your creditors.

41 40 Managing your debt Work out your disposable income Your disposable income is extra money that is left over after you ve paid all your expenses. To work out your disposable income, follow these steps: Add up all of your income. Add up all of your spending. Take away the total spending from the total income. Total income total spending = disposable income

42 What is a financial statement? A financial statement is a record of how much money you have coming in and going out. You can use this sample statement, or download a copy from macmillan.org.uk/financialstatement How to use a financial statement You can pull out this financial statement to show your financial position to people or organisations you owe money to (your creditors). For example, you could write to them using one of the sample letters on pages and include your financial statement. See pages for tips on completing this statement.

43 Step 1: Your income Weekly Monthly Income from work employment or self-employment Income from savings and investments Benefits Pension payouts Insurance payouts Any other income Your total income: Step 2: Your spending Weekly Monthly Mortgage/Rent Council Tax (rates in Northern Ireland) Household maintenance (furniture repairs, upkeep costs) Household bills Housekeeping (laundry, dry cleaning, cleaner, toiletries) Insurance Food and drink Children (clothes, school meals and activities) Pets (food, insurance) Car costs (road tax, insurance, maintenance, parking, fuel costs) Public transport costs (bus fares, train fares) Savings and investments Clothing and footwear Health (dental care, opticians, physical care) Education (school fees, university fees, evening classes) Other expenses Your total spending: Income spending = disposable income: Your notes

44 Step 3: Create a financial statement 41 If you need more help If you are worried that you are not good with numbers, you can get help filling out the financial statement. Call our support line on or contact one of the organisations listed on pages We have a budget calculator at finance.macmillan.org.uk that can help to calculate your monthly income and spending. This includes a tool to convert from weekly or yearly amounts. You can also visit moneyadviceservice.org.uk/en/tools/ budget-planner to work out a detailed spending breakdown.

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46 Step 4: Deal with the most important debts 43 Step 4: Deal with the most important debts List all your debts 44 Identify priority debts 45 Contact your priority creditors 48 What to tell priority creditors 50

47 44 Managing your debt List all your debts It is important to keep track of your debts and to prioritise them depending on whether they are priority debts or non-priority debts. Priority debts are ones where there will be the most serious consequences if you don t pay them back. Non-priority debts still need to be paid back, but the consequences of not paying them in time may be less serious. You should aim to pay your priority debts first. You could start by writing down all your debts, then putting them in order of importance. This can help you see which priority debts should be paid first. The following pages have more information to help you work out which debts are most important.

48 Step 4: Deal with the most important debts 45 Identify priority debts Priority debts are the most important debts you need to pay. You should deal with these debts as soon as possible. Some of the organisations listed on page 101 can help you discuss your priority debts with creditors. The following types of debt would be classed as priority debts. Mortgage (secured loan) payments If mortgage payments are not made for a few months, your mortgage provider may consider starting court action to take back (repossess) your home. It is important to talk to your lender if you are having difficulty with paying. There are schemes designed to help people pay the interest part of their mortgage. Visit gov.uk/support-for-mortgage-interest for more details. Unpaid rent (rent arrears) You could be made to leave your flat (evicted) if you fall behind on your rent. If you are having trouble paying your rent or have made an application for Housing Benefit, it is important to make sure your landlord is aware of this. Council tax in England and Wales If you don t pay your council tax, your local authority can look at sending bailiffs (enforcement agents) to your home. These agents can try to take (seize) your possessions. Your local authority could also take money from your income or benefits.

49 46 Managing your debt Council tax in Scotland If you don t pay your council tax, you could be taken to court. If you still don t pay, they could take further action, including: taking money from your income or benefits sending sheriff officers to your home these officers can try to take your possessions. Rates in Northern Ireland If you don t pay your rates, you could be taken to court by the Land and Property Services. If you still don t pay, they could take further action, including: taking money from your wages putting a charge against your property. Unpaid gas or electric bills Your gas or electricity, or both, may be disconnected if you don t pay these debts. Explaining your circumstances to your energy supplier may stop this from happening. If you are classed as vulnerable (for age, health, disability or severe financial insecurity reasons) and are unable to pay your bills, most of the major energy suppliers will not disconnect your supply. But you have to let them know that you are classed as vulnerable to be placed on the Priority Services Register (PSR). Fines, maintenance and compensation orders If these are unpaid, a bailiff may be sent to try and take your possessions. You could also be sent to prison. In Scotland, these are enforced through the sheriff court.

50 Step 4: Deal with the most important debts 47 TV licence You may face a magistrates court or sheriff court fine for failing to pay this. See Fines, maintenance and compensation orders information on page 46. Tax and VAT If you don t pay these, the government may recover the money you owe using commercial debt collectors or by taking your belongings (bailiff or sheriff officer action). They could also take you to court. Hire purchase or conditional sale agreements Hire purchase (or conditional sale agreement) is a type of borrowing that is often used to buy big items such as a car. Depending on how much you have paid back already, the company you are repaying may take back (repossess) these items. They may do this if you fall behind on payments. Parking penalties If you don t pay these, civil action could be taken and your vehicle may be taken away. These penalties may sometimes be treated as priority debts. You should take advice on how to deal with these. Other priority debts You may also have other priority debts that are specific to your needs. You should be able to prove why you consider each debt a priority.

51 48 Managing your debt Contact your priority creditors Once you have identified a priority debt, you should take immediate action: Contact your priority creditors by phone to explain why you are in debt and agree what to do. If you are still in the process of sorting out your finances, you could send a holding letter to your creditors. This is a letter to ask that no further action is taken until you have had a chance to sort out your finances (see pages for a sample holding letter). However, you should try to make the regular payment in the meantime. If you can t, pay as much as you can afford. Although it may feel like a difficult thing to do, it is best to tell your creditors that you or the person you care for has been diagnosed with cancer. This should help them understand why you are having financial difficulties. They may be more likely to give you more time to repay your debt or offer you other solutions. Many priority creditors will have a policy about giving people time if they contact them by phone. If you do contact any priority creditors, make sure you: make a note of all phone calls and meetings, including the name of the person you spoke to and what you agreed follow up the call with a letter, confirming what was said on the phone keep copies of all letters you send to them.

52 Step 4: Deal with the most important debts 49 If you can afford to make payments If you have some disposable income, try to agree on how much to pay and when. You can do this yourself, or contact one of the organisations on page 101 to help you. If you can t afford to make payments If you have no disposable income and cannot afford to pay anything back to your priority creditor, get advice from one of the organisations on page 101 straight away. A debt adviser can help you to work out what is the best thing to do in your situation. Ask the priority creditor to stop further action until you have been given advice. However, you should try to pay at least the regular instalment in the meantime. If you can t do this, pay as much as you can afford. After having an operation and chemotherapy, money became tight. I had to cancel a couple of my direct debits. I contacted the creditors and explained my situation to them. They agreed to put me on the minimum payment plans until I was ready to restart the direct debts. Adam

53 50 Managing your debt What to tell priority creditors Most creditors should consider your offer for repayment, as long as it is reasonable. To show this, you should tell them: how much disposable income you have (send a copy of the financial statement you created in step 3) how many priority debts you have whether your situation is likely to get better or not. Make a list of all your debts and see which debts you need to pay back first (priority debts). Phone the priority creditors to explain your situation and ask for more time if needed (see pages for an example of a holding letter). If you can, agree a payment arrangement with your priority creditor. If you can t afford to pay your priority debts, contact one of the organisations on page 101 straight away.

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56 Step 5: Deal with less urgent debts 53 Step 5: Deal with less urgent debts Identify non-priority debts 54 Talk with your non-priority creditors 56 If you can t afford to make an offer 59 If you have terminal cancer 60

57 54 Managing your debt Identify non-priority debts Non-priority debts are less important than priority debts. You should still try to pay them what you can afford, but only after you have paid any priority debts. The consequences of not paying non-priority debts are likely to be less serious. Non-priority debts could include: credit card bills unsecured loans an overdraft on a bank account. Debt collection agencies Creditors can employ debt collection agencies to collect debt on their behalf, or they may sell your debt to these agencies. This means debt collection agencies may contact you about money you originally owed elsewhere. Collection agencies can also sell your debts to one another, which can make it even more confusing for you. It can be difficult, but you need to keep track of who each debt is owed to. It is important to remember that debt collection agencies are not court officials and don t have the same power as bailiffs. Some of these agencies can make you feel threatened. They may even be connected to a firm of solicitors, which makes them sound very official. This doesn t give the agencies any extra authority or make their debts a higher priority. Whatever they tell you, these agencies have no greater powers than the original creditor. If you feel harassed by debt collectors, you can make a complaint. Call the Citizens Advice Consumer Helpline on for further information.

58 Step 5: Deal with less urgent debts 55 Be careful to treat all of your creditors the same. It is essential to pay them all a fair share from the money you have available. Don t make a big payment to just one or two creditors. If any creditor feels they are being treated unfairly, they may be more unlikely to make an agreement with you. You may find it useful to make a list of your debts. Remember to update it regularly. Amounts can go down if you make regular payments that are large enough. Likewise, your debt can actually go up if you make smaller payments. For example, this could happen if: the payment does not cover the increasing (accruing) interest the interest rate increases you are charged for late payments. County court judgments Many creditors may threaten county court action if you fall behind with payments and are unable to pay the suggested amounts. If the creditor takes you to the county court because of the debt, the financial statement will be very useful for you to identify your available income (see pages 35 41). In most cases, you won t have to attend a court hearing and it will be dealt with through the post. The court will write to you and order you to pay an amount. This will be based on the financial statement you have completed and any requests made by the creditors. If you can t afford the amount you have been ordered to pay, you must get advice from one of the organisations on page 101 straight away.

59 56 Managing your debt Talk with your non-priority creditors Keeping your creditors updated on your circumstances can help them discuss potential problems with you. However, if you have long-standing debt and have not heard from your creditors for a number of years, it may be worth seeking advice before contacting them. It is important to remember that you should only talk with non-priority creditors once you have dealt with priority debts (see pages 43 50). Once you have reached agreements with your priority creditors, you can start to work through the steps on the following pages. If you can t afford to make an offer to your non-priority creditors, see page 59. Send holding letters to any non-priority creditors A holding letter requests more time to sort out your debt plan. It explains your situation and asks creditors to temporarily stop any action against you. Always ask them to freeze the interest and stop any penalty fees so your debt doesn t get worse. It is a good idea to send these letters to your non-priority creditors while you are trying to reach an agreement with your priority creditors. We have a sample holding letter that you can use on pages

60 Step 5: Deal with less urgent debts 57 Complete your financial statement If you have agreed to make repayments to your priority creditors (see pages 48 50), you should complete your financial statement with these amounts. Work out how much to offer each non-priority creditor Work out how much to offer each non-priority creditor in a fair way. For example, if you owe 1,000 to one creditor, you offer to pay them twice the amount you offer to a creditor that is owed 500. This is known as making pro rata payments. This is how you would calculate a pro rata offer to your creditors: Individual debt x your total disposable income total debt = payment arrangement for each creditor This will give you either a weekly or monthly offer, depending on how you worked out your disposable income (see page 40). Some of the organisations listed on page 101 can help you talk with creditors. An example of how pro rata payments would work can be found on the next page.

61 58 Managing your debt Example of a pro rata payment In total, Linda s non-priority debts from credit cards and loans add up to 20,000. After she has paid her essential living expenses, her mortgage and outstanding taxes (priority debts), Linda has 100 a month left over. She wants to divide this up fairly to pay off at least some of the debt owed to her non-priority creditors. Here s how Linda worked out a fair payment offer for a loan for which she still owes 3,500: 3,500 owed to an individual creditor x 100 disposable income per month 20,000 total debt = per month payment offer. When she writes to the bank about her loan, Linda can include a copy of her financial statement and explain how she worked out the pro rata payment offer. 4 Send offer letters to non-priority creditors You can use the sample letter on page 81. Include a copy of your financial statement with each offer letter. This will show creditors how you reached the offer figure. Start making any payment you have suggested in your offer and don t wait until they reply. Charities like StepChange Debt Charity and National Debtline (see page 101) will help you do this for free. It may be that not all creditors will accept your offer. They may ask you for a greater payment. If this happens, write back to them. Explain that you are treating all non-priority creditors the same and can t offer one more than the other. Tell them about other creditors who have already accepted this arrangement.

62 Step 5: Deal with less urgent debts 59 If you can t afford to make an offer Once you have entered details of your priority debt repayments (see pages 48 50), your financial statement may show that you have no disposable income left to pay your non-priority debts. You should contact your creditors and make them aware that you have no disposable income, and ask that they stop any further action on your account for 3 to 6 months (see sample letter on pages 82 83). You will also need to request that your creditors don t add any further interest or charges to your account during this period. See pages for other possible options for dealing with your debts.

63 60 Managing your debt If you have terminal cancer If you have terminal cancer and treatment isn t an option, you may be able to discuss this with your creditors. It may be a good idea to suggest that they cancel (write off) the debt immediately, as the possibility of your future earnings may be limited (see sample letter on pages 84 85). Your creditors may never formally agree to write off a debt, but they may decide to take no further action. See pages for information on what happens to debts left behind after you die. Make a list of all your non-priority debts. Send a holding letter (see pages 79 80) to each creditor while you get advice. Work out how much you can afford to offer each non-priority creditor and send a letter to each one (see page 81).

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66 Other options for dealing with your debts 63 Other options for dealing with your debts Seek professional advice 64 Options for cancelling (writing off) debt 65 Equity release 68 Consolidation loan 69 Credit cards 70

67 64 Managing your debt Seek professional advice If you are unable to repay your non-priority debts in a reasonable amount of time, a repayment plan (see pages 57 58) may not be the best option for you. If this is the case, you should seek specialist advice from a free debt advice agency, such as: StepChange Debt Charity Citizens Advice PayPlan National Debtline (England, Scotland and Wales) Advice NI (Northern Ireland). All of the debt advice agencies mentioned above offer telephone advice services and online information (see pages for contact details of these organisations). Citizens Advice also offer face-to-face debt advice.

68 Other options for dealing with your debts 65 Options for cancelling (writing off) debt Options for cancelling debts are different across the UK. Bankruptcy (sequestration in Scotland) If you go bankrupt, your creditors will cancel (write off) your unsecured debts. This will give you a fresh start. Bankruptcy (sequestration in Scotland) is normally only suitable if you can t pay back your debts in a reasonable time. Any assets you own, such as your house or car, will usually be sold to pay off your debts. Bankruptcy is unlikely to be the best option for you if: your property and belongings are worth more than your debts all of your payments are up to date and you can afford to keep paying them. Debt Relief Order (DRO) A Debt Relief Order (DRO) is only available in England, Wales and Northern Ireland. A DRO can help you to write off debt that you are unable to repay in a reasonable amount of time. If your DRO is approved: your debts are put on hold for 12 months your creditors cannot pursue you for the outstanding debt during the 12 months. If your financial situation hasn t changed after the 12 months are over, all of your debts are written off.

69 66 Managing your debt To apply for a DRO, you must: owe less than 20,000 ( 15,000 in Northern Ireland) in unsecured debts not own your home have no more than 1,000 ( 300 in Northern Ireland) in assets have less than 50 a month left over after you have paid all of your living costs. DROs must be applied for by an approved DRO adviser such as StepChange Debt Charity or Citizens Advice (see pages for contact details). Minimal Asset Process (MAP) bankruptcy This is only available in Scotland. MAP bankruptcy can help you to write off debt that you are unable to repay in a reasonable amount of time. To apply, you must: be on a low income (either made up solely of income-related benefits or you have nothing left over after paying essential living costs) have debts of more than 1,500 but less than 17,000 have a car worth 3,000 or less have other assets worth less than 2,000 in total, with no single item worth more than 1,000 not own your home not have been bankrupt in the last five years.

70 Other options for dealing with your debts 67 Individual Voluntary Arrangement (IVA) A Individual Voluntary Arrangement (IVA) is only available in England, Wales and Northern Ireland. This is a legal arrangement where you make reduced payments over five or six years. At the end of this time, your debts are written off. These must be set up by an authorised debt specialist and there are costs involved. An IVA should be carefully considered as there may be restrictions made to your spending and to your employment. It will also affect your credit rating. You can get advice about IVAs from StepChange Debt Charity or your nearest Citizens Advice office (see pages ). Protected Trust Deed This is only available in Scotland. A trust deed is a legal arrangement where you make reduced payments over four years. At the end of this time, your unsecured debts are usually written off. These must be set up by an authorised debt specialist and there are costs involved. A Protected Trust Deed should be carefully considered as there may be restrictions made to your spending and to your employment. It will also affect your credit rating. You can get advice about Protected Trust Deeds from StepChange Debt Charity or Citizens Advice (see pages ).

71 68 Managing your debt Equity release If you are in or near retirement and own a property, you could consider equity release. This is a way of accessing some of the money that your home is worth. You may be able to release a tax-free cash lump sum or set up access to a flexible loan. It is important to remember that you will not need to move home if you do this. How much you can release varies between providers. It usually depends on: your age the value of your home your health, occasionally. There are different types of equity release. They normally involve you borrowing against the value of your home while you still live there. You may make some payments for this or you may choose to have the mortgage and interest paid off when your home is sold after your death. Equity release can affect your tax position and entitlement to means-tested benefits. It can also reduce the value of your estate. This means that there will be less to pass on to the people who inherit your money and possessions (your beneficiaries) after you die (see pages 73 75). It is very important to speak to an adviser before deciding to release equity from your home. See pages for useful organisations who can help you. You can search the Financial Services Register for companies and individuals authorised by the Financial Conduct Authority (FCA) to lend money. Visit register.fca.org.uk

72 Other options for dealing with your debts 69 Consolidation loan If you have a good credit rating, you may be able to take out a debt consolidation loan. This is a loan that you use to pay off your existing debts. You then end up with one monthly payment instead of lots of smaller ones. There are illegal moneylenders who often charge very high interest rates. They are called loan sharks. Call the following numbers to report loan sharks: England Scotland Wales Northern Ireland Advantages of a consolidation loan You make one monthly payment, meaning it is easier to budget each month. It can be easier to keep track of how much you owe with only one creditor. It can improve your credit rating, if you keep up with payments. Disadvantages of a consolidation loan It can be a risky option if you are unsure you can meet the payments. The lender may ask for it to be secured against your home you could lose your home if you can t keep up with payments. It could make your debt problem worse if you get into any further debt.

73 70 Managing your debt Credit cards If you don t pay off your credit card in full every month, you may be paying interest. Balance transfer You could transfer your balance to another card. Some cards offer 0% interest deals for a limited period. If you do this, you will need to weigh up the savings against any balance transfer fee. To find the best credit card deals, look at the tables published in the personal finance pages of newspapers, or use a price comparison website. A balance transfer may work in the short-term, but it isn t a long-term fix for an underlying debt or budgeting problem. Effect on credit rating If you pay less than your minimum monthly credit card payment, your creditors will add a note to your credit file. This can stay on your file and affect your credit rating for up to six years. This means you may find it much harder to get further credit. If you are struggling to make payments to your creditors, borrowing more money may make your situation worse. If you are unable to repay your non-priority debts in a reasonable amount of time, seek specialist advice from a free debt advice agency such as StepChange Debt Charity, Citizens Advice, PayPlan or National Debtline (see pages ).

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76 Debts you leave behind 73 Debts you leave behind Unsettled debts 74

77 74 Managing your debt Unsettled debts Everything you leave when you die is called your estate. This is made up of everything you own, minus everything you owe. This includes money, property and belongings. It also includes your share of anything you own jointly with someone else. Debts can reduce the size of your estate. This means that the people who inherit your money and possessions (your beneficiaries) receive less. If your debts amount to more than the value of everything you own, there will be nothing left for your beneficiaries. But these debts are cancelled and your beneficiaries won t have to pay them. There are some exceptions to the situation described above. Student loans These are automatically cancelled on death and do not reduce the size of your estate. Borrowing covered by life insurance If a loan is secured against your home, the home would normally be sold to raise the money to repay the loan. But if you had taken out life insurance along with the loan, the life policy will pay it off instead without any sale of the home. Similarly, if you had taken out life insurance with any other loan, the loan will be automatically repaid.

78 Debts you leave behind 75 Joint borrowing If you took out a loan jointly with someone else, you are both responsible for the whole loan. In the event of your death, your joint borrower must take over making the full repayments (unless life insurance has repaid the loan, see opposite page). Our booklet Sorting out your affairs has more information about sorting out an estate.

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80 Sample letters to creditors (people you owe money to) 77 Sample letters to creditors (people you owe money to) Writing letters to creditors 78 Holding letter 79 Offer letter to non-priority creditors 81 No offer letter 82 Write-off letter 84

81 78 Managing your debt Writing letters to creditors You will need to write to your creditors at each stage of managing your debt. In this section, you will find four sample letters you can use: holding letter offer letter to non-priority creditors no offer letter write-off letter. You can copy these and adjust them to fit your situation. At the top of each sample letter, you will see instructions about when and how to use it. Visit macmillan.org.uk/debtsamples to download copies of these letters.

82 Sample letters to creditors (people you owe money to) 79 Holding letter Use this type of letter if you are unable to make any offer of payment immediately and need to arrange your finances. Name and address of creditor Dear Sir/Madam, Re: Account No Name and address of account holder Date I regret that [I/we] [am/are] unable to maintain [my/our] current monthly payments because [explain your reasons]. Suggested reasons: I have been diagnosed with [type of cancer] and I am currently receiving [type of treatment]. The treatment is expected to last for a period of [add details] months, during which I will be unable to retain any form of employment. Therefore, I will be unable to maintain [my/our] current payment level. Or My surgery is scheduled for [date], which will then be followed by [add details] months of treatment. Throughout this period, I will be unable to work supplementary hours, which will affect my overall income. The [type of treatment] is expected to take [approximate length of time]. Therefore, I will be unable to maintain [my/our] current payment level.

83 80 Managing your debt Or I am currently caring for my [partner/child/parent/relative/friend] due to their diagnosis of [type of cancer] and have temporarily stopped work to care for them. Therefore, I am unable to maintain my current level of payment. I am expecting to be off work for a period of approximately [add details] months. I am writing to all [my/our] creditors requesting details of the balance outstanding on [my/our] accounts and would be grateful if you would let me know how much [I/we] owe you. Once [I/we] have obtained this information, I will contact you again with a pro rata offer for repaying the above debt. Or I have applied for [type of benefit] and will contact you again as soon as I start to receive it. Meanwhile, I would ask that during the above period you suspend all interest or other charges to prevent my debt from increasing. If you plan to return to work, you could use the following: I have been unemployed/sick since [date] because [explain reason for time off work]. I am due to start/return to work on [date] and will contact you again once I have [started/returned] to work. Or I have been actively caring for my [partner/child/parent/relative/ friend] because [explain reason why]. I have been caring for them since [date] and am due to [start/return to work] on [date] and will contact you again once I have [started/returned] to work. Meanwhile, I would ask that during the above period you suspend all interest or other charges to prevent my debt from increasing. I thank you in anticipation of your acceptance. I will contact you again in writing as soon as [I/we] have up-to-date information from all [my/our] creditors and [I/we] [am/are] aware of available income to make pro rata offers. Yours faithfully [Your name]

84 Sample letters to creditors (people you owe money to) 81 Offer letter to non-priority creditors Send this letter to non-priority creditors once you have written a financial statement (see pages 35 41) and are able to make an offer. We would suggest the holding letter is used initially, to prevent any further action being taken in the meantime. Name and address of creditor Dear Sir/Madam, Re: Account No Name and address of account holder Date Further to my letter dated [date], I am now able to make an offer to repay the above debt. Or I regret that I am unable to maintain my monthly payments at their current level because [repeat the reasons you used in your initial holding letter]. I ve worked out I can only afford to pay [suggested amount], which I will try to increase at the earliest opportunity should my circumstances change. I enclose a copy of my financial statement which shows I cannot afford to pay more than this. I look forward to hearing your decision regarding my offer. Yours faithfully [Your name]

85 82 Managing your debt No offer letter Use this letter if you don t have enough money to make any form of payment towards your non-priority debt. This is usually a temporary plan and so will be subject to a review, usually after 3 or 6 months. Name and address of creditor Dear Sir/Madam, Re: Account No Name and address of account holder Date I regret that [I/we] [am/are] unable to pay [my/our] current monthly payments because [repeat the reasons you used in your initial holding letter]. I am enclosing a copy of my financial statement, which gives details of [my/our] income and expenses. You will see from this information that [I/we] [am/are] unable to make you an offer of payment at this time as [I/we] [am/are] on a low income. [I/We] [am/are] dependent on [type of benefit], which is a subsistence benefit only intended to cover [my/my family s] basic needs. [I/we] request that you hold action on [my/our] account for [add details] months and suspend interest to prevent [my/our] debt from increasing.

86 Sample letters to creditors (people you owe money to) 83 I will contact you again as soon as [my/our] financial circumstances improve. I thank you for your cooperation. I look forward to hearing from you, in anticipation of your acceptance. Yours faithfully [Your name]

87 84 Managing your debt Write-off letter This letter should be used if there is no available income and your circumstances are unlikely to improve in the near future. You can also use this letter if you have a terminal illness and your life expectancy is limited. Creditors do not easily accept write-off requests and may never formally agree to write off a debt, especially if you own your own home. Name and address of creditor Dear Sir/Madam Re: Account No Name and address of account holder Date I regret that I am unable to maintain my current monthly/weekly payments because [explain your reasons]. Suggested reasons: I was diagnosed with [type of cancer] on [date]. I have had treatment, but unfortunately the cancer is still present and a terminal prognosis has now been given [enclose supporting medical evidence to back this up].

88 Sample letters to creditors (people you owe money to) 85 Or I was diagnosed with [type of cancer] on [date] and have had surgery to remove a tumour. Unfortunately, the surgery and subsequent treatment has left me with various health problems [outline the problems] and my future earning capacity is extremely bleak. It is very unlikely that I will ever return to work, and therefore my income will never increase above that of the [means-tested benefit/limited income] I receive. Given the above circumstances, I therefore request an immediate write off of my debt. I acknowledge this is an exceptional request, but if further recovery action is taken, the financial outcome would be the same, since I have no disposable income or assets. I look forward to hearing from you, in anticipation of your acceptance. Yours faithfully [Your name]

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90 Glossary 87 Glossary Useful words to know 88

91 88 Managing your debt Useful words to know When you are dealing with your finances, you may come across lots of new words and not know what they mean. In this section, we have explained some of the words that have appeared in bold in this booklet. Remember, you can call the Macmillan Support Line free on if you need more information or support. Attendance Allowance A benefit for people aged 65 and over who have difficulty looking after themselves. Carer s Allowance A weekly benefit that helps people who look after someone with a lot of care needs. You need to be aged 16 or over and be caring for someone for at least 35 hours a week. Creditor A person or organisation that you owe money to. Credit rating An estimate of how able you are to pay back any money lent to you. All lenders have access to your credit rating. If you have a poor credit rating, you may have trouble borrowing money.

92 Glossary 89 Disability Living Allowance This is a benefit some people still get, which is gradually being replaced by Personal Independence Payment (PIP) (see page 91) for adults. It is for people aged under 65 who have trouble looking after themselves or moving around. Adults making a new claim should now apply for Personal Independence Payment instead. If you are applying on behalf of a child under the age of 16, you should apply for Disability Living Allowance. Disposable income Money left over once you have paid all your essential living costs. Employment and Support Allowance (ESA) A benefit you may be able to get if you are unable to work because of illness or disability. Estate Everything you own when you die, minus everything you owe. This includes possessions, money and debts. Financial statement A record showing how much you would usually get and spend in an average week or month. You can use it to plan and show it to creditors, to help them understand how much you can afford to pay back. See pages for more information about completing the financial statement in this booklet.

93 90 Managing your debt Holding letter A letter you can send to creditors to ask for more time to pay back a debt. See pages for a template letter you can use. Housing Benefit A State Benefit that helps with your rent payments if you have a low income. This is gradually being replaced by Universal Credit (see page 92). Ill-health early retirement This is where you are allowed to retire and claim your pension early because of your health. If you have or have had cancer, this may apply to you. Income All the money you have coming in. Interest When you borrow money, this is the extra money you pay back to the lender on top of the money you have borrowed (the capital). Lump sum A single, one-off payment, for example from your pension or an insurance scheme. National Insurance A tax you pay while working. If you cannot work, you may be able to get National Insurance credits.

94 Glossary 91 Non-priority debts Debts where the consequences for not paying them back may be less serious. You should aim to pay these after paying back any priority debts. They can include credit cards and unsecured loans. Overdraft This is any money you take out of your bank account after your balance reaches zero. You might have an agreed overdraft amount with your bank. Interest or fees (or both) will apply to any overdraft money you take out. Personal Independence Payment (PIP) A benefit for people aged 16 to 64 who have difficulty looking after themselves or moving around. People aged over 65 can claim Attendance Allowance (see page 88). Priority debts Debts where there may be serious consequences if you do not pay them back. You should aim to pay back these debts first. They may include a mortgage, unpaid rent, council tax and household bills. State Pension A regular payment you can get from the government when you reach a certain age.

95 92 Managing your debt Statutory Sick Pay The legal minimum your employer must pay you when you are off work sick. It starts after four days of illness (including any non-working days). Your employer must pay it for up to 28 weeks of illness. Many employers have their own sick pay schemes, which may be more generous. Tax rebate When you have paid too much tax and get some back from HM Revenue and Customs (HMRC). Universal Credit A new benefit for people who are looking for work or have a low income. It includes money for basic living, children and housing. It replaces other means-tested benefits and is gradually being introduced in England, Scotland and Wales. It will be introduced in Northern Ireland during Unsecured loans Loans that are not backed by property, such as your home or car. This means there is not the same risk of your property being repossessed if you miss payments. Workplace pension A pension arranged through your employer.

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98 Further information 95 Further information About our information 96 Other ways we can help you 98 Other useful organisations 101 Your notes and questions 105

99 96 Managing your debt About our information We provide expert, up-to-date information about cancer. And all our information is free for everyone. Order what you need You may want to order more leaflets or booklets like this one. Visit be.macmillan.org.uk or call us on We have booklets on different cancer types, treatments and side effects. We also have information about work, financial issues, diet, life after cancer and information for carers, family and friends. All of our information is also available online at macmillan. org.uk/cancerinformation There you ll also find videos featuring real-life stories from people affected by cancer, and information from health and social care professionals. Other formats We also provide information in different languages and formats, including: audiobooks Braille British Sign Language Easy Read booklets ebooks large print translations. Find out more at macmillan. org.uk/otherformats If you d like us to produce information in a different format for you, us at cancerinformationteam@ macmillan.org.uk or call us on

100 Further information 97 Help us improve our information We know that the people who use our information are the real experts. That s why we always involve them in our work. If you ve been affected by cancer, you can help us improve our information. If you d like to hear more about becoming a reviewer, reviewing@macmillan. org.uk You can get involved from home whenever you like, and we don t ask for any special skills just an interest in our cancer information. We give you the chance to comment on a variety of information including booklets, leaflets and fact sheets.