Wiser Money Project

Let’s talk money

Would you like to be able to manage your money better? Do you think you might benefit from some information on budgeting, saving money, how to switch your energy supplier or get cheaper tariffs? Want to make sure you can pay your bills on time so that you don’t fail to meet your priority debts and face a financial crisis?

1 Rent payments

If you’re renting your accommodation you have to make regular payments for it to your landlord or their agent.

Falling behind with rent payments is known as being in rent arrears. Rent payments are a priority obligation, which means that the consequences of non-payment are more severe than for non-priority payments. Anyone repeatedly not paying their rent may be evicted from their home.

Things can happen fast so it’s best to take action soonest. Start by explaining to your landlord the reasons for any delay or shortfall. If rent remains unpaid, a landlord may ask a court for a possession order, which sets a date for when a tenant has to leave their home. If a tenant does not leave their home by the date on the possession order, a landlord may ask a court to set a date for eviction. When you move out in such circumstances a landlord may subtract unpaid rent from your deposit and could give you a poor reference, making it harder to rent a home next time.

If you have a private landlord, and

Contact Citizens Advice Westminster immediately (details below).

If your landlord is a housing association or local council, and you miss a payment, a housing officer will usually write to you. If you don’t reply, they may phone or visit you. It’s best to engage with them and tell them why you haven’t been able to pay rent. You will have to pay any rent that you’ve missedand they will try to help you pay what you owe. You can ask to pay small sums. You’ll normally only be evicted for missing rent payments by your social housing landlord if you don’t try to arrange to pay back what you owe.

Covid update: In England, no evictions are permitted before 31 May 2021. Until this date, a landlord has to give six months’ notice of the intention to evict a tenant, except for the most serious cases, such as missing rent payments exceeding six months’ rent.

If you have missed payments on more than one priority debt, and want help deciding which one to deal with first, contact Citizens Advice Westminster (details below). For more information, see Dealing with rent arrears  or Dealing with rent arrears in social housing on the Citizens Advice website.

If you have housing worries, call us on our freephone 0808 278 7834

Or help is available online (Our adviser will respond within 5 working days). Make an online enquiry

2 Council tax payments

If you’re over 18 and own or rent a home, you’ll almost certainly have to pay council tax. There are exceptions for some people in full time education or training, including student nurses, live-in carers and people with a severe mental impairment. Two adults living in a home pay a standard rate. A discount of 25% is available if you live on your own or there are not any other adults in the home. A discount of 50% is available if nobody who counts as an adult is present. If everybody is a full-time student, no council tax is payable. If you receive a discount in error, inform your council. You may be asked to repay it. If you do not inform the council, you could be fined. For more details, see the Gov.uk website: https://www.gov.uk/council-tax/who-has-to-pay

Falling behind with council tax payments is known as being in council tax arrears. Council tax payments are a priority obligation, which means that the consequences of non-payment are more severe than for non-priority payments.

If you miss or underpay a council tax payment, after about two weeks a council will send a reminder. If you pay within seven days, the bill is paid. However, if you don’t pay within seven days, or it’s the third time you’ve been sent a reminder in a year, the council will send you a final notice demanding that you pay the balance of the year’s council tax.

If you don’t pay what’s due within seven days, the council is likely to start legal proceedings against you to recover the unpaid tax and may add its legal expenses. These proceedings include asking a court for permission to collect the debt from you, by means of bailiffs or subtracting sums from your wages or certain benefits. If bailiffs (enforcement agents) have contacted you, speak to Citizens Advice Westminster (contact details below) or see Citizens Advice, Stopping Bailiffs at Your Door.

As the process can move fast, if you’re at all concerned about your ability to pay a council tax bill, it’s prudent to talk to someone straightaway in the City of Westminster council tax office to discuss options. These may include spreading ten monthly payments over 12 months. If you’re on a low income or benefits, council tax support may be available. It may be possible to arrange smaller regular payments. Speak to an adviser at Citizens Advice Westminster to understand how much you may be able to pay – contact details below.

Covid update: City of Westminster Council has received special funding until 31 March 2021 which means the council can increase by a maximum of £150 the sum offered as hardship support to those people already receiving council tax support.

For more information, see Dealing with Council Tax Arrears on the Citizens Advice website.If you have missed payments on more than one priority debt, and want help deciding which one to deal with first, contact Citizens Advice Westminster (details below).

If you have council tax worries, call us on our freephone 0808 278 7834

Or help is available online (Our adviser will respond within 5 working days). Make an online enquiry

3, Priority debts or why it’s important to pay some debts before others

A debt is a legal obligation to repay a sum of money. Borrowing money results in a debt. Failure to pay a legal obligation, such as a tax or court order, also results in a debt.

Debts with more severe consequences for non-payment are called priority debts. It is always advisable therefore to pay priority debts first from available resources.

How to identify priority debts

Priority debts include

Possible ultimate sanctions include

Non-priority debts include

Possible ultimate sanctions include

Non-payment is also likely to make it harder and more expensive to borrow money. For more detailed information, see Citizens Advice national website.

If you have debt worries, call us on our freephone 0808 278 7834 

4 Types of borrowing and credit scores

 Borrowing is an agreement to receive money and to repay it in full, on time and paying interest according to an agreed schedule. Debt is another word for borrowing. Credit describes how much money you have, or are believed to have, access to. The most common types of borrowing are shown in the table below:

The table above was compiled from lending organisations. Details are liable to change not just over time, but also with the size of sums borrowed, the length of time they are borrowed for (the “term”), the provider, repayment method and the credit standing of a borrower. A good way to compare interest rates is to check an APR, or annual percentage rate, which standardises the calculation of interest rates and takes account of any fees.

Bank overdrafts and payday loans are for short-term borrowing. The expense of payday and doorstep loans reflects poor repayment experience. All types of borrowing with the word loan in them and hire purchase agreements reflect a legal contract to repay in scheduled instalments. Overdrafts and credit cards are more flexible but, because there is no regular obligation to reduce meaningfully the sum borrowed, they can work out very expensive. With hire purchase you only own the item being acquired after the final payment. In this example, the car manufacturer set an attractive interest rate.

Interest rates tend to reflect how a lender sees risk. In general, the longer a loan lasts, the riskier it is, because over a longer period events may occur which make it hard for a borrower to complete repayment. In the near term, it is more likely that a recently approved borrower can make the planned repayments. However, if a borrower is willing to pay a high rate of interest, they may be a risky client, desperate for money, and could struggle to repay a debt.

Lenders may use credit scores to help assess borrowers. Each company performing credit scores makes its own assessment, so different companies do not always reach identical conclusions. Refusal or a poor score by one company does not automatically mean refusal or an equally poor score by another. There are ways of improving credit scores. They may include being on an electoral roll, getting a landline, updating or cancelling old accounts, never missing payments or reducing your debts. You can ask to see and, if necessary, correct the details contributing to your score. A statutory credit report is available free from the three main credit scorers, CallCredit, Equifax and Experian.

For more information, see Citizens Advice national website on types of borrowing

If you have debt worries, call us on our freephone 0808 278 7834
Or help is available online (Our adviser will respond within 5 working days). Make an online enquiry

Top Tips Financial Advice

Video advice you’ll need to make the right financial choices. Click here for more information

Specialist Debt and Money Advice Unit

Debt Free London funds Citizens Advice Westminster to run our Wiser Money Project, delivering debt and money management advice and casework to local residents of Westminster.  

Clients will receive advice and support on the full range of debt problems including:

• Utility arrears (gas, electricity, water)
• Housing arrears (rent/mortgage)
• Consumer credit debt (credit cards, loans, hire purchase)
• County court orders (CCJ’s)
• Debt Relief Orders (DRO’s)
• Bankruptcy
• Other non-priority debts

We can help clients to reduce their expenditure and look at ways of increasing their income!

We can take referrals for Westminster residents from:

• local statutory services
• voluntary organisations
• local or London-wide advice agencies

To book an appointment with our Debt and Money Management Advice Unit, please email: debtteam@westminstercab.org.uk  or complete an on-line referral form.  

You can also find out more via the Debt Free London website

Are you struggling to pay your energy bills?

Our tips below will help you find a solution.

1. Managing your energy bills

These are worrying times and many people are concerned about paying bills. Energy bills are a “priority debt” and must be paid ahead of credit cards as persistent non-payment may lead to the risk of being cut off.

Since the outbreak of Covid the Government has agreed emergency measures with energy suppliers so at the moment your energy supplier won’t disconnect your gas or electricity if you miss a payment. It is always advisable to continue paying these bills where possible. Otherwise, among other things, the sum owed will continue to grow and non-payment will impact your credit scoring. It is also true that the temporary respite won’t last forever.

But if you’re facing difficulties in making the payments you should contact your energy supplier in the first instance and they will consider various options that match your situation. This is especially important where you have a prepayment meter. They’ll try to help you find other ways to keep your energy supply connected.

This may include:

• let someone else top up for you
• add funds to your account
• send you a pre-loaded top-up card

You’ll need to pay back any credit your supplier gives you – ask them when and how you’ll need to do this.

In case of need, please also contact Westminster CA through the contact details available on this website and your queries will be directed to an appropriate adviser who will contact you.

Other support to reduce the cost of energy bills is available through existing government schemes that are widely available.

2. Winter Fuel Payment

This is available to all on a state pension and certain other benefits and is worth between £100 and £300 per year. It is not paid automatically so eligible applicants need to make a specific claim here:

https://www.gov.uk/winter-fuel-payment/how-to-claim

3. Warm Home Discount Scheme

This is worth £140 per year and is credited to your gas or electricity account. To check if you qualify you should contact your utility supplier. Their details can be found here:

https://www.gov.uk/the-warm-home-discount-scheme/energy-suppliers

4. Cold Weather Payment

This is payable if the average temperature in your area is recorded as, or forecast to be, zero degrees celsius or below over 7 consecutive days. It is available if you are receiving certain benefits and is paid automatically so there is no need to apply and the amount is £25 for each 7 day period of very cold weather between 1 November and 31 March. Check your eligibility here:

https://www.gov.uk/cold-weather-payment/eligibility