This page explains about different types of debts you may have and what you can do about them. A Welfare Adviser will be able to assess your individual circumstances and advise you on the best options for dealing with your debt issue, which might include referring you to a specialist debt advice agency.
Many people are in debt, which basically means that they owe money. This happens for many reasons, depending on people’s individual circumstances, but essentially because their income is less than the amount they spend. Sometimes this is because people spend money on non essential items, but often it is because their income is too low to pay for all of their essential costs, like rent, food and bills.
People can also get into debt because they forget to notify organisations such as Student Finance England or welfare benefit agencies of a relevant change in their circumstances, which means they might be paid more money than they should be. Once the organisation realises it has overpaid someone, it usually takes the money back, often without warning, which can lead to the person falling into debt.
Personal finances and mental health often have a strong impact on each other. If you are struggling to keep control of your money, you may find that your mental health is affected. Likewise, if you find that you cannot cope with your feelings or behaviour, you may find that you get into financial difficulties.
The mental health charity MIND has some useful web pages which can help you to understand more about how mental health issues can affect your finances, as well providing helpful tips for taking control of your money.
The Money Saving Expert website also has a free downloadable guide to dealing with debt for people with a mental health condition. This guide has been written to help people with mental health conditions understand how this can impact on their financial situation, and also how being in debt can lead to mental health issues. The guide explains some practical steps that you can take to improve your financial situation.
You are also advised to get advice and support from a Welfare Adviser at the Advice and Counselling Service (see section below 'How can a Welfare Adviser help me').
Student Finance and student specific loans
It is a reality that most students will need to borrow money to fund their studies. Some people think that all debt is “bad”, but in fact some types of debt are preferable to others.
As a student you can usually borrow money specifically to fund your studies at preferable interest rates. Government maintenance loans to fund undergraduate study only become repayable after you have completed your course and when you are earning a minimum amount of money so this is a debt which you won’t have to worry about too much while you are studying. There is also a government Masters Loans Scheme and a Doctoral Loans scheme where repayments start on completion of your course only when you are earning a minimum amount of money.
Tuition fee debts
If you owe money to Queen Mary University for your tuition fees and cannot pay what you owe by the required deadline, you will usually be de-registered from your course, unless there are other options available to you, such as interrupting your studies. If you are de-registered from your course, this means you will no longer be a Queen Mary University student, so you would not be able to progress your studies, eg. to the next year of study or graduate or receive your degree. For more advice about tuition fees, de-registration and interrupting your studies, see the Resitting, Interrupting, Leaving your course advice guides for home and international students.
Other debts to the University
If you can pay your tuition fees by the deadline, but you owe other money to the University such as Queen Mary University halls accommodation fees, you should still be able to progress your studies and graduate with your award. Contact a Welfare Adviser if you need advice about managing your debts to the University.
Short term loans
Payday loans are short term loans, usually lent for a period of a few days or weeks. They can be easy to obtain, which makes them risky, as you might take one out without properly considering the consequences. Payday loans tend to have a fixed fee attached to them, rather than an interest rate (as a loan or a credit card would have). Typically a £100 loan, taken out for one month, will attract a fee of £25. This means that payday loans are a very expensive form of borrowing, as the fee is very high compared to the amount you have actually borrowed.
Payday loans should be avoided if at all possible, and you certainly shouldn't take out a payday loan if you are not 100% sure that you will be able to repay it on the due date. If you cannot make the repayment, the fee you incur will increase substantially. Many people end up taking more payday loans to repay existing payday loans, and get into an unmanageable spiral of debt, which negatively affects their credit rating and their ability to obtain credit in the future. If you believe you were mis-sold a payday loan, you may be able to reclaim the amount you paid in interest, fees and charges - this is explained on the Money Saving Expert website.
Another form of short term borrowing is from Loan Sharks. These should be avoided as they are unlicensed lending companies, who often go door to door to try and persuade people to borrow money from them. They are known to use illegal methods to ensure that customers repay their debts, including violence. If you know of loan sharks, you can report them on 0300 555 2222, or text LOAN SHARK and the lender's details to 07860 022 116 or email email@example.com.
If you are running out of money, contact a Welfare Adviser in the Advice and Counselling Service. They will help you to explore all of the options available to you for increasing your income, rather than taking out short term loans which you may be unable to repay.
If you owe short term loans and you cannot manage the repayments, contact a Welfare Adviser for help understanding your options.
Longer term loans
This type of borrowing includes credit cards, store cards, and non student specific bank loans. These usually have high interest rates and are repayable on a monthly basis while you are still a student, therefore it is likely that you will struggle to afford repayments. If you already have debts on which you cannot afford the monthly repayments, you need to take action - see below.
If you are running out of money, contact a Welfare Adviser in the Advice and Counselling Service. They will help you to explore all of the options available to you for increasing your income, before you take out credit which you may be unable to repay.
If you have debts which you are unable to manage, for example credit card repayments which you cannot afford, or rent arrears or council tax arrears, contact us to make an appointment with a Welfare Adviser. If you ignore these debts they can very quickly get out of control. If you are in rent arrears you could lose your home. If you have council tax arrears, the local authority could send enforcement agents (previously known as bailiffs) to visit your home and remove your possessions. If you miss repayments on credit cards, or pay late, charges are often added to your debt, and this higher balance will increase the amount of interest you pay. Defaulting on repayment agreements can affect your credit rating, which would make it harder for you to get credit in the future, such as a mortgage.
Do not ignore unmanageable debts: the problem will not just go away.Contact a Welfare Adviser as early as possible, however it is never too late to seek advice and something can usually be done to improve your situation. If you prefer, you can choose to contact the organisation you owe money to yourself - see the guidance on creditor negotiation below. However, many creditors often take their customers more seriously when they have contacted a specialist for debt advice.
If you have a mental health condition, also see the section above on 'Debt and mental health'.
You can book a one to one confidential appointment to see a Welfare Adviser. Sometimes people feel embarrassed about being in debt, but your Welfare Adviser will be completely non judgemental. They will firstly check that you are getting all of the income you are eligible for, for example there may be funding you didn't know about. They will then advise you on the options available to you for dealing with your debt, however this will usually involve referring you to a not for profit, confidential specialist debt advice agency who will be best placed to support you. The Welfare Adviser can help you to make contact with the specialist debt advice agency if you would like them to, and to explain your situation to them. Specialist agencies can explain all of your options, depending on your individual circumstances.
A list of not for profit debt advice agencies is provided on the Money Saving Expert website.
You might feel that a creditor is treating you unfairly and using inappropriate methods to try and get you to repay the debt. While creditors or their agents are allowed to take ‘reasonable’ action to try and recover a debt, it is a criminal offence to harass people in debt.
The National Debtline websiteexplains what constitutes harrassment and how to deal with it.
You can also read more about what action creditors can take, and what they aren't allowed to do, on the Money Aware website.
An agreement between the Government and Credit Services Association, the body that represents debt collecting agents (see its Code of Practice), gives new powers that guarantee debt collectors won't contact you for at least 30 days, provided you've sought debt help or can show you are trying to repay your debts using a self-help tool. So contacting a specialist debt advice agency is helpful as they can notify the debt collectors and give you 30 days of no contact during which time you can take action to resolve your debts.
There is information about this on the National Debtline website.
There is also information about bailiffs and what to do if you are visited by them on the Citizens Advice Bureau website.
If you would prefer to get debt advice externally, you should look for an independent not for profit organisation. You can find a list of agencies on the Money Saving Expert website. However, it is still very worthwhile contacting a Welfare Adviser, as they will be able to advise you on other aspects of your situation, such as maximising your income.