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  3. Dealing with debt
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Dealing with debt

It is highly likely that at some stage while studying, you will be in some level of debt. Whether this is your student loan, a store card or credit card, it is important to understand the differences between types of debt and to know where you can go for help and advice should you feel that you are in trouble. If you are unsure about your debts, try the Financial Services Authority online debt test for a check-up.

What is debt?

Being in debt is different to simply owing money. Being in debt means that you may have missed payments on a loan or credit card, or are behind in your rent payments, for example. Sometimes it is useful to distinguish between whether the debt is considered a priority or not.

Priority debts

A priority debt is defined as one that could result in the loss of home, liberty or essential goods or services if the debt is unpaid. Priority debts include secured loans (against property such as a mortgage), rent arrears, Council Tax arrears, gas and electricity bills.

Non-priority debts

Non-priority debts will not result in the loss of essential goods and services or a debtor's home. Examples of these include credit card debts, overdraft facilities, store cards, and personal unsecured loans. Failure to repay non-priority debts could result in further action being taken such as the debt being taken to County Court.

Where can I get help?

If you find that the amount of debts seems to be overwhelming, you should seek advice from a licensed debt counsellor. Make a list of everything you owe and are paying each month and keep records of everything. There are many free, confidential debt counselling services available in the UK. The following sites are a good starting point:

Citizens Advice Bureau

The Citizens Advice Bureau has trained debt advisers and offers a free confidential service. Visit the website for more information or details of your nearest branch.

National Debtline

The National Debtline is a free confidential telephone service that can provide debt advice. They produce information and resource packs to help you work out the nature of your debt and what repayments you can afford. Phone them on 0808 808 4000.

StepChange Debt Charity

StepChange Debt Charity offers free, impartial debt advice and a range of fee-free solutions. They have produced a Student Debt and Money Advice Guide with information on managing your money while studying. Further help is available by using Debt Remedy, their free online counselling tool, or on free phone 0800 138 1111 Monday to Friday 8:00 to 20:00 and Saturday 8:00 to 16:00.