Introduction
Most of us will have debts of one sort or another. However, some people can experience problems in repaying the money that they owe. There are lots of reasons why this may be the case. You may have had an unexpected change in your circumstances or an unplanned increase in your weekly outgoings. Recent research carried out by Contact a Family and the Family Fund showed that families looking after a child with a disability are particularly likely to face debt problems. Nine out of ten families reported some form of financial difficulty, ranging from having little money for treats to serious financial difficulties. It is estimated that on average, bringing up a child with a disability costs three times what it costs to bring up another child. Given this fact it is no surprise that many families can struggle financially.
'My son spent many months on and off in hospital having various operations. My husband was self employed at the time and had to take many months off to care for the two children at home. We received no financial help in any way, shape or form for anything. The upshot was inevitable and the business went down the pan and we were practically penniless. I never wish to open the cupboard doors and be faced with emptiness again.'
Some parents may only have one debt that they have problems in repaying; others may owe money to a number of different people. No matter what your particular situation, it is important that you do not ignore your debt problems. The longer you wait before tackling your debt, the worse the problem is likely to become. Taking action at the earliest point can mean fewer problems to deal with in the future. We know from our research that parents of disabled children are not always informed about how to access debt advice. Try not to panic about your debts - free, confidential and independent advice is available.
If you are in debt it is very important that you keep in touch with the people or companies that you owe money to - known as your 'creditors'. The person who owes money is known as the debtor. It can be tempting to try and avoid contact with your creditors, particularly if you are unable to repay the money that you owe and are preoccupied with caring. If you do this it is likely that they will assume that you simply don't want to pay them. As a result they are likely to take further action against you. For this reason it is very important that you contact your creditors to explain the fact that you are in financial difficulties.
This is a short guide to help with debts and cannot provide full details of the law. We strongly advise that you get the help of a money adviser in negotiating with creditors. An adviser will help you to look at your whole situation and help you assess whether you are able to make any payments to your creditors and if so how much. They will also be able to help you identify which creditors may have to be paid first. A money adviser may also be able to help you see if there are any ways in which your income can be increased. For instance they may be able to help you claim additional state benefits or assist you to apply for a grant from a charitable trust. See section on Getting Help to negotiate with your creditors for further details of how to access free and confidential advice from a money adviser.
Are you liable for the debt?
Before you enter into any arrangements to pay off a debt, you should always check to make sure that the law says you have to pay it. This is called being liable for the debt. Sometimes people are asked to make payments that they are not legally liable to repay.
Generally speaking, you are not liable for anyone else's debt unless you have jointly signed an agreement or acted as a guarantor. Just because you live with someone, are married to them or have the same address does not mean that you are necessarily liable for their debts.
You will be liable if you have signed an agreement in order to get money, goods or services on credit.
- If you signed an agreement alone, you have sole liability. This means that you (and nobody else) are liable to repay the debt.
- If you signed an agreement along with someone else you have joint and several liability. This means that you and that other person will each be regarded as owing the full sum.
- If you have signed an agreement as a guarantor for someone, this means that you have accepted liability for a debt if that other person does not pay. Take advice if you are in this situation. Check if there is any way of challenging your liability, for example, if you were misled or pressurised into signing the agreement.
Joint and several liability can also occur when specific legislation imposes it. For example, council tax legislation imposes joint and several liability on heterosexual couples living together and joint tenants or owners. This was extended to same sex couples in December 2005 through the implementation of the Civil Partnership Act 2004.
Death of the person owing money
Generally speaking you are not liable for the debts of someone who has died, regardless of how close your relationship was. There can be exceptions to this in limited circumstances e.g. where you were jointly and severally liable for a debt with the deceased person or where you inherit a property with an outstanding mortgage from the deceased (although this will often be paid off by a life insurance policy).
The law says that some people need to be protected with regard to the contracts they enter:
- Children's Debt A creditor cannot usually take action against a debt that is owed by a minor (someone aged under eighteen). An exception to this is if the contract is for 'necessities'. There is no standard definition of 'necessities', but examples include food and clothes. Seek advice from an advice agency if a creditor is trying to recover a debt from a minor.
- Incapacity If someone was not able to understand what they were doing when they entered into an agreement, it may not be enforceable due to their incapacity. Incapacity can be caused by mental illness, learning difficulties, drink or drugs. Seek further advice from an advice agency if you, or someone you are caring for, is in this situation.
- Undue influence If you have been forced to sign an agreement against your will (e.g. by a partner) or have been misled you should seek urgent legal advice. Similarly you also should seek legal advice if you think that someone has signed an agreement in your name without your knowledge.
- Consumer Credit Act 1974 The Consumer Credit Act 1974 regulates most credit agreements and provides some protection for people in debt. Credit agreements are usually arrangements where goods, loans or services are paid for by instalments. They will usually be regulated under the Consumer Credit Act 1974 if the amount of the credit or loan was less than £25,000. If the agreement is regulated it must contain certain terms and formalities. If an agreement is not set up in accordance with the Act it may not be enforceable. For example, as a carer you may find it easier to shop by mail order catalogue. You should be sent a copy of a credit agreement to sign. If you have not signed an agreement the debt may not enforceable. Seek further advice from an advice agency.
Has the debt lapsed because of time?
If a debt has been unpaid for many years take advice before contacting the creditor or any debt collector. The debt may no longer be legally enforceable. The law says that most creditors have 6 years to start proceedings against you. However, this is a complex area and you should seek advice if you think it applies to you.
Is the amount owed correct?
It is always worth checking the amount that the creditor says that you owe. Sometimes they may miscalculate the outstanding debt and ask you to pay back too much. Examples of where this may happen include:
- Miscalculating the amount due
- Charging interest on an interest free loan
- Overestimating fuel bills
- Overlooking payments that you have made - try to remember to keep receipts of payments
Some loans may be covered by insurance against sickness or unemployment, paying all or some of the debt so long as the terms of the policy are met. This is often known as 'payment protection insurance'. You should always check to see if any of your debts are covered by such an insurance agreement. Seek further advice if you believe you should be covered by such a scheme but the insurance company are refusing to pay out.
Starting to manage your debts
Make three lists
You may feel overwhelmed by your debts and your lack of money to meet them. The process of dealing with your debts will include looking at your income and seeing if it can be increased in any way. The section on 'Maximising income' explains more about the type of help that may be available. So the first lists you need are one for income and one for expenditure - see below.
It is also vital that you have a complete picture of all your debts in order to decide how to manage them. You may owe money to a number of different people and so you will also need to draw up a list of everyone that you owe money to and how much is owed to each creditor. This might include credit or store cards, catalogues, rent arrears, mortgage arrears, council tax arrears, bank or other personal loans. Drawing up a list like this may sound demoralising but it is essential to deal with your debts efficiently and fairly.
Lists one and two - work out your income and expenditure
It is also really important that you have a clear idea of how much money, if any, you have available to try and pay off some of your debts. This involves preparing a very detailed list of your income and a very detailed list of your expenditure to establish how much you can offer to creditors. These lists are then summarised in a 'financial statement' which can be sent to creditors to give them a picture of your financial circumstances. We have included an income/expenditure sheet in this factsheet to help you with this process.
When you draw up lists of this sort it is important that you decide whether to use weekly or monthly amounts. The figures used in your income/expenditure sheet must conform to the same time period.
Making lists of your income and expenditure may feel daunting but it is necessary to establish how much money you have available to try and pay off your debts. Listing your expenditure may also help you to identify if there are any potential savings that you might be able to make in your regular spending. When you make your list of expenditure do not include the payments you make towards the debts, because you need to see how much you need each week or month for your regular living needs.
While it is important to look to see whether some of your expenditure could be cut down, it is also crucial that you do not put down unrealistically low amounts. You need to have an affordable and sustainable budget in order to ensure that your debt problems do not continue. It is very important that you are realistic about the amounts that you have going out. Even though you may not spend money on clothes and shoes every week, these will be costs now and again so remember to budget for these items. Other important issues to consider are car and home insurance. You are obliged to pay car insurance by law. Insuring your home is also very important because of the consequences of fire or theft.
You should also try and make sure you fully list all the additional costs you face as a result of your child's disability. Remember that benefits such as Disability Living Allowance are intended to cover the care and mobility needs of your disabled child. While they need to be listed as income so that your creditors are aware of your family situation, you should ensure that an amount at least equal to your DLA is included as disability related expenditure. This should help ensure that your child's DLA is not regarded by your creditors as income available to repay your debts.
A money adviser will be able to help you complete an income/expenditure form and will check to make sure that there are no important outgoings that you have forgotten to mention.
List three - the debts
Once you have a clear idea of all of the money you owe, it will be important to identify which of these are 'priority debts'. In deciding which debts to prioritise the important factor is the possible consequences if the creditor decides to take formal action against you, not the amount that you owe.
Priority debts include:
- Mortgage arrears or any loan that is secured against your property - you could lose your home;
- Rent arrears - you could be evicted;
- Council Tax arrears - your goods could be seized, deductions could be made from your wages or certain benefits, you could even be imprisoned in some rare circumstances;
- Gas and electricity arrears - your fuel supply might be disconnected;
- Court fines - your goods could be seized, deductions could be made from your wages or certain benefits, you could be imprisoned;
- Maintenance arrears - your goods could be seized, deductions could be made from your wages or certain benefits, you could be imprisoned;
- Income tax or VAT arrears - seizure of your goods, bankruptcy.
Non-priority debts include most forms of credit agreement so long as they are not secured on your home. This includes:
- Credit card debt;
- Bank overdrafts;
- Catalogue debts;
- Store cards;
- Unsecured loans.
Hire Purchase - Hire Purchase is a special type of credit which means you are only 'hiring' (renting) the goods until you 'purchase' them at the end of the agreement. This means you do not own the goods until the end of the agreement - until then the creditor continues to own them. If you have paid off less than 1/3 of the amount owed under a hire purchase agreement, your creditor will be able to repossess the goods without having to take court action. Whether a hire purchase debt is considered as high priority will therefore depend on how much you have paid and whether the item in question is essential to you, for example, a cooker or a vehicle that is used for caring.
Generally speaking priority debts should be dealt with first before you try and pay off any non-priority debts, as the consequences of not paying priority debts are more serious.
Some people may find that they get in difficulties because they pay the wrong creditors off first as non-priority creditors often put more pressure on people in debt.
Getting help to negotiate with your creditors
The thought of negotiating with creditors can be a worrying one for most people. However you should not have to do this on your own. You should be able to access free, impartial and confidential advice from a money adviser.
Many organisations have trained money advisers who are able to provide comprehensive advice. You should be able to get details of services in your area from Advice UK Web: http://www.adviceuk.org.uk or Tel: 020 7407 4070 or your local Citizens Advice Bureau (CAB). For details of your local CAB you should call Citizens Advice, Tel: 020 7833 2181, or Web: http://www.citizensadvice.org.uk, or check in your local telephone directory. In some agencies staff may also be trained to undertake debt counselling work themselves. Details of local projects providing money advice are also available from the Contact a Family Helpline.
If you prefer it is also possible to get advice over the telephone. If you phone the National Debtline, Tel: 0808 808 4000 or Web: http://www.nationaldebthelpline.co.uk, you should be able to speak to a trained money adviser who will talk you through your debt problems. The National Debtline has a wide-ranging series of factsheets including, for example, 'How to avoid debt at Christmas.'
Once a money adviser has a clear idea of your whole situation, they will initially focus on helping you to develop a plan to reach agreement on repaying your priority debts. If you have any spare income left after this process they will then try to negotiate an agreement with your non-priority creditors. This is normally done by offering each non-priority creditor a percentage of your 'spare income'. This is normally calculated on a fair basis whereby creditors owed the most money get offered the most. Creditors are familiar with this system.
No creditor likes to be offered less towards a debt than what was originally agreed. However many are willing to negotiate smaller repayments over a longer period so long as you are genuinely unable to pay more.
A money adviser will also try and get your creditors to agree to freeze the interest charges on your debt. Sometimes a creditor may also agree to write off all, or part of a debt. A creditor may be more willing to consider this if there are mitigating circumstances which have contributed to your financial problems and your circumstances are unlikely to improve in the near future. For instance you may have had to give up work or reduce your hours as a result of caring responsibilities or fallen into debt as a result of major expenditure on an item required to meet your child's care needs.
Some creditors may be willing to consider a temporary period where you are allowed to make no repayments. This may be particularly useful if there is a realistic prospect of your financial circumstances improving in the near future.
Rent, council tax, water charges and fuel arrears and parents on Income Support (IS), income based Jobseeker's allowance (ibJSA) or Pension Credit (PC)
If you are on IS or ibJSA it may be possible to set up an arrangement whereby a fixed amount (currently £2.85 per week) is deducted from your benefit and paid to your landlord towards rent arrears. It may also be possible to arrange for a set payment of £2.85 per week to be deducted from your weekly benefit and paid towards council tax arrears. Please note that these arrangements only cover arrears and you will have to ensure that you meet any ongoing rent or council tax charges.
Claimants on IS or ibJSA may also be able to enter into an arrangement whereby money is deducted from benefit in order to pay for your current fuel usage - this is often known as 'Fuel Direct'. The fuel supplier will work out an estimate of your current weekly fuel costs and add on a small fixed amount (currently £2.85 per week towards your arrears). The total weekly figure will then be deducted directly from your benefit and paid to the fuel supplier(s).
If you have arrears of water charges you can also ask that deductions are made from your IS, ibJSA or PC to cover current water charges plus an amount towards the arrears.
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What steps can creditors take to recover debts?
One of the most stressful things about being in debt is dealing with demands for payment from your creditors. If you owe money you may find you are receiving letters asking for payment, being threatened with court proceedings or approached by debt collectors. Creditors are entitled to make reasonable demands for repayment. However, the Office of Fair Trading has produced a document, 'Debt Collection Guidance', which describes practices that the OFT considers unfair.
Some creditors will appoint debt collectors to recover money owing to them. Debt collectors have no legal powers to enter your home or take your goods and should be negotiated with in exactly the same way as other creditors.
Harassment by creditors
Harassment of debtors is a criminal offence under Section 40 of the Administration of Justice Act 1970. In some instances creditors' letters, telephone calls or visits can become overly intrusive. Examples of this can include:
- Using scare tactics such as wrongly claiming that criminal proceedings can be brought against you or threatening to involve the police;
- Nuisance visits or phone calls, especially at unusual hours;
- Waiting outside your workplace on pay day;
- Calling on neighbours, pretending to believe that you live at their address.
If you are being harassed in this way, approach a money adviser immediately and ask them to write to the creditor to let them know that they are monitoring the action that the creditor is taking. A money adviser will also be able to advise you on reporting the creditor to the local Trading Standards Department or Office of Fair Trading.
You cannot normally be sent to prison for non-payment of debts unless, for example, you deliberately refuse to pay maintenance or council tax. Nevertheless your creditors can take you to court and may be granted the right to take certain action against you. This may include, for example, eviction or repossession of your home, seizure of possessions or attachment of earnings (an arrangement whereby deductions are made from your earnings).
Some letters from creditors will state that they are 'pre-legal'. These are not court documents. They are simply letters threatening you with legal action. What your creditor must do before taking court action will depend on the nature of the debt. For example, before private landlords can take possession proceedings in court to try to evict tenants, they must have sent a 'notice to quit'. Seek advice if you have arrears relating to your home. Many creditors cannot take court action until they have issued you with a 'default notice'.
What is a default notice?
If an agreement is regulated under the Consumer Credit Act 1974, creditors must usually issue a default notice before court action is started. The default notice will ask you to bring your payments up to date. If you are unable to do this then you should seek the help of a money adviser. So long as the debt is for less than £25,000 you will be able to apply to the Court for a Time Order. This is an application asking for more time to pay your debt. You should discuss this with an advice worker.
Fuel debts
Gas and electricity companies can disconnect the fuel supply of a customer who is in arrears without going to court for permission. However, a supplier should go through certain procedures before disconnecting a supply. For example, accepting fuel direct if you are eligible and offering a prepayment meter, if it is safe and practicable to do so. There is also some protection from disconnection for households with vulnerable members. For example, an electricity company must avoid disconnecting the supply of someone who is a pensioner, disabled or chronically sick during the winter months. Check your supplier's code of practice on disconnection. Some fuel suppliers also have trust funds that can offer help to people experiencing difficulty paying their bills. See the section on 'Maximising income'.
If you are having difficulties concerning your fuel supply you can contact Energywatch. Energywatch is the independent gas and electricity consumer watchdog. Its contact details are: Tel: 0845 906 0708 Fax: 020 7799 8341 RNID Typetalk service for people who are deaf or have speech and hearing impairment: 18001 08459 06 07 08 e-mail: enquiries@energywatch.org.uk Web: http://www.energywatch.org.uk
Water charges
Your water company cannot cut off your supply if you are in arrears. However, the water company can still make a claim in the county court to recover arrears. Water companies must have a code of practice on dealing with customers in arrears and some water companies have trust funds that can offer help with water bills. See the section on 'Maximising income' for more information. Also, direct payments can be taken from certain benefits to help manage arrears.
Some people with meters may be able to get some help with the cost of their water because they need to use large amounts for essential purposes.
Certain customers with meters in England can be protected from paying large water bills under government regulations for vulnerable groups. If your household is eligible then you will pay only the average household water bill for your water company. Phone the Helpline for more information about whether you can benefit from these regulations. Although the regulations apply to companies operating in England, companies operating in Wales have introduced equivalent provisions on a voluntary basis. Contact the companies in Wales for further information.
Being taken to court
If you are not able to resolve a debt problem with your creditor they may decide to take you to the court. A creditor may need to use different courts for different types of debt. This section looks at some of the court actions relating to debts in the county court and magistrates' court.
If you are being taken to court it is very important that you get specialist advice. See section on Getting Help for details of how to get free, confidential advice from a money adviser.
Rent and mortgage payment arrears and loans secured on your home:
- If you owe arrears of rent or mortgage, your landlord or mortgage lender can apply to the county court to try to gain possession of the property. You will receive details of a county court claim and the date and time for a hearing which you should attend.
- Even if the court grants a possession order, it can still be possible for the order to be 'suspended' as long as you make agreed payments.
- Take urgent specialist advice if your landlord or mortgage lender is seeking possession of your home.
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County courts
You will know that your creditor has started proceedings in the county court if you receive a claim form from the court. On the claim form you will be referred to as the defendant and your creditor as the claimant. The claim form will tell you who is taking you to court, the amount that they say you owe them and the action that they are asking the court to take.
The country court does not judge whether anyone is innocent or guilty but can settle disputes about debts. County courts deal with a large number of debt cases, including the following types of debts:
- Money only claims e.g., for repayment of an overdraft;
- Claims regarding land e.g., for possession of a home by a landlord, for example, because of rent arrears;
- Claims regarding agreements regulated by the Consumer Credit Act 1974 e.g. repossession of an item on hire purchase;
Money only claims in the county court
Most of these disputes are dealt with on paper by court staff and will not involve a hearing.
When you receive the claim form you should also receive an admission form, a defence form and an acknowledgment of service. You are expected to respond to the claim form indicating whether you want to dispute (defend) or admit the claim. There will also be details of the time limits within which you should reply.
If you ignore the claim form the creditor can ask for judgment to be entered in default. This means the court will order payment at the rate chosen by the creditor.
Admit the claim - this means that you agree that you owe the money. If you admit the debt but cannot afford to pay it, you can ask for time to pay. The admission form asks for details of your income and expenditure and your offer of payment.
If the creditor refuses your offer a court official will usually make a decision about how much you should pay. This is called a determination. If you are unhappy with the determination you have a limited time in which to ask for a re-determination.
Defend the claim - this means that you disagree that you owe the amount stated by the creditor. This may be, for example, because you do not think you are liable for the debt.
If you wish to defend the claim you may either complete a defence form or complete an acknowledgment of service. Filing the acknowledgement of service allows you slightly more time in which to seek advice and return your defence.
What if you can't afford to pay a county court judgment?
The judgment is the decision of the court. If at any point after the judgment, you cannot afford the payments, you can ask the court to vary the judgment. For example, a variation can cover changes to the frequency of instalments.
Enforcement of county court judgments
If you do not keep to your county court payments your creditor can start enforcement action through the courts to make you pay. The enforcement procedures in the county court are:
- Warrant of execution - using bailiffs to seize goods;
- Attachment of earnings - to instruct your employer to make deductions from your earnings;
- Charging order - to secure the debt on your home;
- Third party debt order - enabling money to be taken directly from your bank or building society account
Magistrates' courts
Magistrates' courts are responsible for enforcing payments of certain arrears such as arrears of council tax and maintenance.
Council tax arrears
If you have failed to pay your council tax, the Local Authority can ask the magistrates' court to make a liability order. A liability order states that an individual is liable to pay an amount of council tax and has not paid it. If there are still outstanding arrears after a liability order, the Local Authority can:
- Instruct bailiffs to collect the debt;
- Take payments from your earnings or certain benefits;
- Obtain a charge on your home i.e. the creditor asks the court to secure the debt to your home;
- Apply to make you bankrupt;
- Go back to the magistrates' court to request a 'means enquiry'. A means enquiry is a detailed examination of your finances and could ultimately result in imprisonment in very limited circumstances, for example, if you have the money to pay your council tax but refuse to do so.
Bailiffs and seizure of goods
The rules on bailiffs are complex and what the bailiffs can do legally depends on what the debt is for. Seek advice urgently if you are threatened with action by bailiffs.
Bailiffs almost always need a court order to remove your goods. In many cases bailiffs do not have the right to force their way into your home and have a right of peaceful entry only. If your doors and windows are closed, bailiffs will not be able to gain peaceful entry to your house to remove goods unless you choose to let them in.
Dealing with multiple debts
Bankruptcy
Either the debtor, or any creditor who is owed £750 or more, can petition the court for the debtor to be made bankrupt. For some people bankruptcy is a way of removing pressure from creditors but it can also have very serious consequences and should not be undertaken lightly. If you are being made bankrupt or are considering becoming bankrupt, seek specialist advice about the implications.
Administration orders
An administration order is a county court order which stops creditors listed on it taking enforcement action without the court's permission. You can apply to the county court for an administration order if you have:
- total debts of under £5000 and;
- a county court (or High Court) judgement against you.
An administration order enables you to pay your debts by regular instalments to the court. The court distributes the payments to creditors.
Individual Voluntary Arrangement
This may be an alternative to bankruptcy for some debtors and involves entering into an agreement with your creditors which is overseen by an insolvency practitioner.
To find out more about these procedures seek specialist money advice.
Feeling it's too late to get help?
Even if things have already got to the stage where your creditor has been granted the power to take steps against you, it is not too late to seek the help of a money adviser. Sometimes a money adviser may be able to convince the creditor not to go ahead with the action they have been authorised to take. For example, a money adviser may be able to help to suspend a county court warrant of execution or have a county court judgement set aside.
One way of trying to manage your debt problems is by seeing if there are any ways in which you can increase the amount of money that is available to your household. You may have certain assets that it is possible to cash in or sell. These may provide you with a lump sum with which to pay off some of your debts. Some creditors may be willing to accept a lump sum payment as 'full and final settlement' on a debt, writing off the balance owed.
Depending on your caring responsibilities, it may be possible to raise your income by working increased hours or doing more overtime. However you should also bear in mind that higher earnings may lead to a loss in certain means tested benefits or tax credits. This is a very complex area - seek detailed advice by calling our free Helpline.
If your property is big enough you may also wish to consider the option of taking in a lodger. However you will need to bear in mind the impact on any means tested benefits you receive. You may also need permission from the landlord or mortgage lender under your tenancy or loan agreement. You will also need to consider the likely impact on your family. Living with debts is already extremely stressful and you may not cope with the additional stress of having a lodger.
Claiming additional benefits and tax credits
You should always seek a benefits check in order to see if there are any additional benefits or tax credits you should be getting. Some parents miss out on benefits because they wrongly assume that they cannot claim anything when they are working. However some benefits (e.g. DLA) are not means tested while many others can still be paid if you are working, so long as your earnings are not too high. If you are able to claim any extra benefits this will lead to an increase in your weekly income. If the benefit can be backdated it will also give you a small lump sum with which to try and clear off some of your debt.
We outline below the benefits that are most commonly claimed by families with disabled children. More detailed information about all of the main state benefits is available in our free factsheet 'Benefits, Tax Credits and other financial help' available free from the Helpline. You can also call our Helpline for a full benefits check to make sure you are not missing out on anything.
If you are not sure if you are entitled to a benefit, complete a claim form anyway, as it is difficult to get most benefits backdated. If you care for an adult, then a claim for Carer's Allowance may affect that person's benefits. Seek further advice before making a claim in such circumstances.
Disability Living Allowance (DLA)
The main benefit for disabled children is DLA. This is made up of two parts:
- The care component for children who need extra attention or supervision. This is paid at three different rates depending on how much help or supervision the child needs;
- The mobility component for children who need help with getting around. This is payable at two different rates depending on the nature of the mobility problem.
Your child may qualify for either or both of these components. If your child gets the care component at the middle or highest rate you may also be entitled to Carer's Allowance. An award of DLA can also lead to increased payments of Child Tax Credit - so make sure you let the Tax Credits Office know if you are making a claim for DLA. DLA is not means tested so you can claim regardless of your family income or capital.
Carer's Allowance (CA)
If your child gets the care component of DLA at the middle or highest rate you may be eligible to claim CA. If you work, then your wages (after deductions for certain childcare costs and other expenses) must not exceed an earnings threshold. This earnings threshold is currently £82 a week (April 2005-06). If you are a student your course must involve less than 21 hours supervised study a week. You should claim Carer's Allowance and DLA at the same time to ensure that any awards of both benefits are fully backdated.
Child Tax Credit (CTC)
CTC can be claimed by anyone with a dependant child regardless of whether you work or not. You may receive increased CTC if you have a child with a disability. This is because an extra amount is added to your calculation for each child who is on DLA or who is registered blind. If your child gets the highest rate of DLA care component a further amount is also added.
Working Tax Credit (WTC)
You can claim WTC if you have a dependant child and you (or your partner if you have one) are working at least 16 hours a week. As well as parents certain other groups of workers can also apply. WTC can sometimes include help with eligible childcare costs.
The amount of Tax Credits that you will get is usually based on your gross annual income for the previous tax year. Although Tax Credits are means tested you are guaranteed some Child Tax Credit so long as your income is less than £58,000 (£66,000 if you have a baby under 1). Unlike most other means tested benefits there is no capital limit. Tax Credits can be backdated for a maximum of 3 months.
Income Support and income based JSA
Income support is a means-tested benefit to help individuals or families on a low income and with savings below £8,000 (£16,000 from April 2006). To qualify you must be someone who is not required to be available for work, for example, a carer or a lone parent. Income based Jobseeker's Allowance is a very similar benefit but is for people on a low income who are required to sign on as available for work.
Housing Benefit (HB) & Council Tax Benefit (CTB)
These benefits are designed to help people on low incomes pay their rent and Council Tax. If you are already getting IS, income-based JSA or Pension Credit (Guarantee Credit) you will usually qualify for full HB and CTB. However, even if your income is too high to be paid any of the above qualifying benefits (e.g. because you are working) you may still qualify for some HB and CTB. The amount of help you get depends on how much your income is above Income Support levels. You will automatically be refused HB and CTB if you have savings of £16,000 or above - unless you get the Pension Credit (Guarantee Credit).
HB and CTB are Local Authority benefits which means you will need to contact your local council for claim forms. A claim for HB or CTB can be backdated for up to 52 weeks so long as you have good cause for a late claim. Dealing with a child's health problems will often be accepted as good cause. There are also more generous rules about backdating for certain people over 60.
Council Tax disability reduction scheme
This scheme helps to reduce your Council Tax bill if someone in your household is disabled and you have a second bathroom or kitchen needed by that person. You can also qualify for a reduction if you have a room in your house (other than a bathroom, kitchen or toilet) needed by a disabled person, or someone uses a wheelchair indoors. A disability reduction can be backdated to the date you first met the qualifying conditions. The local authority will usually require you to put in a separate application for each year.
Council Tax Discount Scheme
Where there is only 1 adult in a household you should receive a discount of 25% on your bill. In assessing a discount certain adults, including some carers can be treated as if they were 'invisible'. Seek further advice from our Helpline.
Help with NHS costs
These include free prescriptions, free dental treatment, free NHS eye tests, and vouchers to help with the cost of glasses. Various groups can qualify for this help, including those on Income Support and income-based JSA. Also, if you get Working Tax Credit (including a disability element) or Child Tax Credit, and your gross annual income is below a certain amount (£15,050 for 2005/06), you may qualify for NHS benefits.
Community Care Grants
If you are on IS, income-based JSA or Pension Credit you may be able to apply to the Social Fund for a discretionary grant. This does not have to be repaid. These payments are made to ease exceptional pressures on families or to help people either at risk of going into care or needing help to settle in the community after a stay in residential care or prison. Usually a grant is given for specific items. This might include clothing, bedding and other essential household items. Community Care Grants are often awarded to families with disabled children or children with serious health problems.
Other Financial Assistance
Education Maintenance Allowance (EMA)
If you have a 16 or 17 year old who has stayed on at school or college they may be eligible for an EMA. The amount of an EMA depends on parental income. EMAs do not affect any of the benefits that you or your child receives. Contact your child's school, college or our Helpline for more details.
Housing Grants
Some parents may get into debt as a result of paying for expensive adaptations to their home required by a child with disabilities. However, Disabled Facilities Grants can help with the cost of works such as building safe play areas, installing a stair-lift, adapting a lighting or heating system, or building a new bathroom facility. To be eligible for a Disabled Facilities Grant (DFG) you must be an owner occupier, tenant (private, local authority or housing association) or landlord with a disabled tenant. Regulations covering abolishing the means test on Disabled Facilities Grants for the parents of disabled children in Wales came into force on 30 September 2005. The Government has announced its intention to abolish the means test on Disabled Facilities Grants for the parents of disabled children in England from December 2005. For more information, contact our Helpline. Local authorities also have discretionary powers to provide financial and other assistance for improvements or repairs to the home. This can be in the form of a grant, loan, labour, materials or advice. Contact your local authority housing department or phone our Helpline for more information.
The Family Fund
The Family Fund can give lump sums for specific items that arise from the care of a child who is under 16 with severe disabilities or seriously ill. Your social and financial circumstances will be taken into account. The Fund will consider any request so you can ask for whatever you need most: for example, laundry equipment, transport expenses, clothing, holidays and so on. Getting help with these sorts of disability related costs may help free up some of your income to help pay off your debts. To apply, request an application form from the Fund or apply online: The Family Fund, Unit 4 Alpha Court, Monks Cross Drive, York, YO32 9WN Tel: 0845 1304542 e-mail: info@familyfund.org.uk Web: http://www.familyfund.org.uk. Alternatively phone our Helpline for an application form.
Grants from charities and benevolent funds
It is worth considering applying to a charity for financial help. Some charities will consider giving a lump sum to help with particular issues that are causing financial hardship e.g. to help towards paying off a gas or electricity bill where someone in the household has a disability. Others may only be willing to offer financial help towards specific costs linked to your child's ill-health or disability. However, securing a grant towards such costs may free up more of your weekly income which can go towards meeting your debts.
Also, some utility and water companies have charitable trusts. Contact your supplier to see if they operate such a charitable trust or contact the organisation CHARIS which can provide details of trusts. CHARIS's contact details are 01733 421050 (http://www.charisgrants.com).
The Directory of Social Change publishes 'A Guide to Grants for Individuals in Need.' This is a practical guide to sources of money available from over 2,500 trusts and charities. Your local library or CAB may have a copy of this guide.
Our Helpline also has a list of charities that give grants to families caring for a child with a disability. Contact the Helpline for a copy.
It may also be worth contacting any organisation concerned with your child's particular condition. Some of these charities provide small grants. An adviser on our Helpline can help you to find a suitable charity.
Financial help from Social Services
Social Services have the power to provide financial assistance to a family where they believe that this is necessary to help a child. They will only normally consider making such payments in exceptional circumstances. However it may be worth making such a request if you are in an emergency situation such as facing disconnection for fuel arrears or eviction due to rent arrears.
Minimum Wage
If you are working, check whether you are being paid the National Minimum Wage. The National Minimum Wage Helpline number is tel: 08456 000 678.
Reducing fuel costs
The home energy efficiency scheme offers grants which help to cover the costs of home insulation and of improving energy efficiency. It is available to owner occupiers and to people renting accommodation who meet the qualifying conditions. The scheme is called Warm Front in England and HEES in Wales. There is also a more generous scheme in Wales, HEES Plus, for certain applicants. The scheme is administered by a company called Eaga Partnership Ltd, known as the scheme manager. Information about the scheme is available from Eaga by calling freephone 0800 316 6011 in England or 0800 316 2815 in Wales.
If you would like further details regarding any of the information in this factsheet or would like to discuss your own case in more detail please call the Contact a Family Helpline on freephone Tel: 0808 808 3555 (Monday to Friday, 10am-4pm) e-mail: helpline@cafamily.org.uk. This factsheet is one of a range produced by Contact a Family which includes "Benefits, Tax Credits and other financial help", "The Tax Credits Guide" and "Working." Copies are available free from our Helpline.
INCOME / EXPENDITURE SHEET
(remember to be consistent in using either weekly amounts or only monthly amounts)
| INCOME |
£ |
|
EXPENDITURE |
£ |
| Wages |
|
|
Mortgage/Rent |
|
| Partner's Wages |
|
|
Endowment Policy |
|
| Income Support |
|
|
2nd mortgage/secured loan |
|
| Job Seekers Allowance |
|
|
Service charges |
|
| Tax Credits |
|
|
Buildings/contents insurance |
|
| Child Benefit |
|
|
Life Insurance |
|
| Disability Living Allowance / Attendance Allowance |
|
|
Council tax |
|
| Carers Allowance |
|
|
Water charges |
|
| Other state benefits |
|
|
Gas |
|
| State Retirement Pension |
|
|
Electricity |
|
| Other pensions |
|
|
Any other fuel costs |
|
| Maintenance (that you receive) |
|
|
Disability related costs |
|
| Income from Boarders/Lodgers |
|
|
Childcare costs |
|
| Other Income |
|
|
Prescriptions and other health costs |
|
| TOTAL INCOME |
|
|
Travel (including any car costs) |
|
|
|
|
Court fines |
|
|
|
|
School meals/meals at work |
|
|
|
|
Maintenance (that you pay) |
|
|
|
|
Telephone (including any mobiles) |
|
|
|
|
TV license/rental |
|
|
|
|
Hire Purchase |
|
|
|
|
Rentals |
|
|
|
|
Food and Housekeeping |
|
|
|
|
Clothing and shoes |
|
|
|
|
Laundry |
|
|
|
|
Newspapers/magazines |
|
|
|
|
Children's pocket money |
|
|
|
|
Sport and Leisure |
|
|
|
|
Other costs |
|
|
|
|
TOTAL EXPENDITURE |
|
|
.
.
.
.
.
.