Last updated March 2007

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Introduction

Many families can struggle financially and families looking after a child with a disability can be particularly vulnerable to debt problems. This factsheet has information on what you can do if you are in debt. It looks at the steps that can be taken against you by someone you owe money to and explains how to prioritise which debts to deal with first. It also provides information about how to get free expert help in negotiating with creditors. Remember, if you are experiencing debt problems, it's never too late to seek help.

Overview

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. It is estimated that, on average, bringing up a child with a disability costs three times as much as it costs to bring up another child. Given this fact, it is no surprise that many families can struggle financially.

Some parents may only have one debt that they have problems 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. 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'. It can be tempting to try and avoid contact with your creditors, particularly if you are unable to repay the money that you owe. However 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.

We strongly advise that you get the help of a money adviser to negotiate 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 be able to help you identify which creditors may have to be paid first.

Also, a money adviser can help you see if there are any ways to increase your income. For example, they could help you claim extra state benefits or help you apply for a grant from a charitable trust. See the section on 'Getting help to negotiate with your creditors' to find out how to access free and confidential advice from a money adviser.

At the time of writing, the Bankruptcy and Diligence (Scotland) Act 2007 has not yet come into force. This is expected to happen at some point in late 2007/early 2008. This Act will mean important changes to the steps some creditors are able to take to recover a debt. Because of this you should seek up to date advice from a specialist money adviser (see later section on 'Getting help to negotiate with your creditors').

Are you liable for the debt?

Before you enter into any agreements to pay a debt, you should always check to make sure that you are the person who is liable. Sometimes people are asked to make payments that they are not legally liable to repay.

Generally, 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. The main exception to this rule is council tax.

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 and must 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.

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, for example where you were jointly and severally liable for a debt with the deceased person, or where you inherit a property from the deceased with an outstanding mortgage (although this will often be paid off by a life insurance policy).

Children's debts

A creditor cannot usually take action against a debt that is owed by a minor. Seek legal advice if your child has fraudulently got credit.

Incapacity

If someone was not able to understand what they were doing when they entered into an agreement, it may not be enforceable because of their incapacity. Incapacity can be caused by mental illness, learning difficulties, drink or drugs.

Undue influence and duress

If you have been forced to sign an agreement against your will (for example by a partner) or have been misled, you should seek urgent legal advice. You should also seek legal advice if you think that someone has signed an agreement in your name without your knowledge.

Debt is lapsed because of time

There are time limits on recovering unsecured debts through the courts. If there has been no contact between you and your creditor for a period of five years, the debt may be written off. Where a debt is secured on a property, the timescales are much longer.

Is the amount owed correct?

It is always worth checking the amount that the creditor says that you owe. Sometimes they can miscalculate the debt and ask you to pay back too much. Examples of when this might happen include:

• overlooking payments that you have made;
• miscalculating the amount due;
• charging interest on an interest free loan;
• overestimating fuel bills.

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 an insurance agreement. Seek further advice if you believe you should be covered by a scheme but the insurance company are refusing to pay out.

Making a list of all of your debts

You might owe money to a number of different people. If so, try and draw up a list of everyone you owe money to, and how much is owed to each one. This might include credit or store cards, catalogues, rent arrears, mortgage arrears, council tax arrears, bank or other personal loans.

It is very important that you have a complete picture of all the people you owe money to before you decide how you are going to try and deal with your debts.

Work out what your income and expenditure is

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. We have included an income/expenditure sheet at the end of this factsheet to help you with this process.

Drawing up a list like this can sound frightening, but it will make it clearer how much money you have available to clear your debts. Listing your expenditure (money you have going out) can also help you to identify any savings you might be able to make in your regular spending.

When you draw up a list 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.

While it is important 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 to make sure that your debt problems don't 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.

Try and make sure you take into account all of the additional costs you face as a result of your child's disability. Remember that benefits like Disability Living Allowance (DLA) are meant 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 make sure an amount equal to your DLA is included as disability-related expenditure. This should help ensure your child's DLA is not regarded by your creditors as money 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.

Identifying your priority debts

Once you have a clear idea of all of the money you owe, it is important to identify which of these are 'priority debts'. Some people find that they get into difficulties because they pay the wrong creditors first. When you decide which debts to prioritise, the important factor is the possible consequences if the creditor decides to take formal action against you, not the amount 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;
• gas and electricity arrears - your fuel supply might be disconnected;
• fines, such as court fines - you could be imprisoned;
• maintenance or child support arrears - you could have your wages/bank account arrested or goods possessed. Possible imprisonment if you refuse to pay;
• income tax or VAT arrears - you could have your wages/bank account arrested or goods possessed;
• council tax arrears - you could have your wages/bank account arrested or goods possessed;
• car and home insurance - car insurance must be paid by law. Insuring your home is also very important; if you are uninsured you could lose everything through fire or theft.

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.

However, see section on 'Forthcoming changes to the law' expected due to the Bankruptcy and Diligence (Scotland) Act. In particular the potential use of a 'land attachment' to force the sale of a property to recover a debt of £3,000 or more.

Hire purchase - If you have paid off less than one third 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 depend on how much you have paid and whether the item is essential to you.

Generally, priority debts should be dealt with first before you try and pay off any non-priority debts.

Getting help to negotiate with your creditors

The thought of negotiating with creditors can be a worrying one for most people. But 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 areas have trained money advisers who are able to provide comprehensive advice. You should be able to get details of the nearest service to you by contacting Money Advice Scotland Tel: 0141 572 0237 Web: http://www.moneyadvicescotland.org.uk

You can also get details from your local citizens advice bureau (CAB). In some bureaux staff may also be trained to undertake debt counselling work themselves. For details of your local CAB you should use the Citizens Advice Scotland website at Web: http://www.cas.org.uk or use your local telephone directory. Details of local projects providing money advice are also available from the Contact a Family helpline.

If you can't go to see a local adviser or if there are none operating in your area, it is also possible to get advice over the telephone. If you phone the National Debtline Tel: 0808 808 4000 you should be able to speak to a trained money adviser who will talk you through your debt problems. Detailed factsheets about debt recovery in Scotland and negotiating with creditors are available from Web: http://www.nationaldebtline.co.uk

The Consumer Credit Counselling Service also provides specialist debt advice over the telephone on Tel: 0800 138 3328 Web: http://www.scottishdebtline.co.uk

Once a money adviser has a clear picture of your whole situation, they will start by helping you develop a plan to reach an agreement to repay your priority debts.

If you have any spare income left after this, they will try to help you negotiate an agreement with your non-priority creditors. This is normally done by offering each non-priority creditor a percentage of your 'spare income'. The percentage offered to each creditor is based on the proportion of the total non-priority debt that is owed to them. For example, if you have non-priority debts of £6,000 and owe Anycompany Credit £600, then Anycompany Credit would be offered 10 per cent of your 'spare income'.

No creditor likes to be offered less towards a debt than what was originally agreed. But 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 might agree to write off all, or part of a debt. A creditor may be more willing to consider this if there are mitigating circumstances that have contributed to your financial problems. For instance you may have had to give up work or reduce your hours as a result of caring responsibilities. Or you may have 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 can be useful if there is a realistic prospect of your financial circumstances improving in the near future.

In some circumstances a money adviser might suggest that you enter into a Debt Payment Programme (DPP). This is a relatively new legal procedure which offers help and protection to debtors who owe money to more than one person, and who can afford to make payments on a regular basis.

Under a DPP a single regular payment is made which is then distributed among your creditors. So long as you keep to the arranged payments, your creditors can't take any further action against you to recover the debt.

In some very specific circumstances you may also wish to discuss the option of sequestration (bankruptcy) or a trust deed. These are very serious steps that will have long lasting consequences for yourself, your family and any property you own. They should only ever be considered after full and detailed discussions with a specialist money adviser.

Rent, council tax and fuel arrears and parents on Income Support (IS), income-based Jobseeker's Allowance (ibJSA) or Pension Credit (PC) If you are on IS, ibJSA or PC you might be able to set up an arrangement to have a fixed amount (£3 per week for 07/08) deducted from your benefit and paid to your landlord towards rent arrears. If you are a local authority tenant you might also be able to arrange for a fixed amount of £3 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 make sure you pay any current rent or council tax charges. If you claim IS, ibJSA or PC and have fuel arrears you might be able to arrange to have money deducted from your benefit to pay for your fuel bills - this is often known as 'Fuel Direct'. The fuel supplier will work out an estimate of your weekly fuel costs and add on a small fixed amount (£3 per week for 07/08) towards your arrears. The total weekly figure will be deducted directly from your benefit and paid to the fuel supplier(s).

What steps can your creditors take against you?

One of the most stressful things about being in debt is dealing with demands for payment from your creditors. Creditors are entitled to make reasonable demands for repayment. However there are a number of steps that they are obliged to take before they can attempt to take action against you to recover that money.

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

In some cases creditor's letters, telephone calls or visits can become too intrusive. Examples of this include:

• using scare tactics, like 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 and ask them to write to the creditor to let them know that they are monitoring the action that the creditor is taking. Where harassment continues a referral can be made to the Office of Fair Trading (OFT).

You cannot normally be sent to prison for non-payment of debts (unless you deliberately refuse to pay maintenance or child support arrears). But your creditors can take you to court and may be granted the right to take certain action against you. This can include eviction or repossession of your home, arrestment of wages or bank accounts, or attachment of possessions. See page 13 where we explain in detail what each of these mean.

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. Most creditors cannot actually take court action until they have issued you with a 'default notice'.

What is a default notice?

Before your creditors can try and take you to court they must write to formally let you know that you have not paid your debt. The default notice will ask you to bring your payments up to date. If you're unable to do this seek help from a money adviser.

If the debt is for less than £25,000 you have the option of applying to the court for a Time to Pay Direction. This is an application asking for more time to pay your debt. Please note that some debts to government departments, for example council tax arrears are treated differently.

Being taken to court

If you can't resolve a debt problem with your creditor they may decide to take you to court. You can tell that this is happening if you receive a court summons or an initial writ. This will tell you who are taking you to court, the amount that they say you owe them and the action that they are asking the court to take.

If you are being taken to court it is very important that you get specialist advice. See section on 'Getting help' for information on how to get free, confidential advice from a money adviser.

As soon as a creditor takes action in the courts they can apply to the court for a warrant to arrest money you hold in a bank or building society. This process is known as 'arrestment on the dependence' and freezes the money in your account pending the court decision.

However, an arrestment on the dependence is not automatically granted by the court, and a sheriff or judge will decide whether to grant your creditor's application or not.

There are three different types of court procedure for trying to recover a debt. They vary depending on the size of the debt:

• Small Claims procedure - where you owe a creditor £750 or less;
• Summary Cause procedure - for debts between £750 - £1,500;
• Ordinary Cause procedure - for debts over £1,500.

In most cases the creditor will be going to court to ask the Sheriff to order you to pay the money that you owe. If the money you owe is rent or mortgage arrears the Sheriff may be asked to order you to leave your home. If the money that you owe is for a car or something else that you have bought on hire purchase, they might also ask the Sheriff to order you to give the goods back.

The papers that you will get with the summons or initial writ will ask you to reply to the court. They will set a date you must do this by. When you respond to a summons or writ, you will usually be able to do one of three things:

• Defend the claim - this means you disagree with the amount the creditor says you owe. This could be because you don't think you are liable for the debt or because you think the amount has been wrongly calculated. If you do this then there will be a hearing to allow the Sheriff to find out more.
• Admit the claim - this means that you agree that you owe the money to the creditor. The Sheriff will normally grant an order requiring you to pay the whole amount, which is usually owed with interest, or to leave your home or to return goods. You will usually also have to pay the creditors' expenses.
• Admit the claim but ask for time to pay - this allows you to say how much you are able to pay towards the debt and how often this will be paid (for example, weekly or monthly). You should get a form with the summons or initial writ allowing you to do this. Your creditor can choose to accept or to reject your offer. If it is accepted the Sheriff will order you to make the payments you have offered. If it is rejected there will be a court hearing so you can go and explain why you need time to pay. Remember, it is up to you to contact the court to find out if your offer to the creditor has been accepted or rejected.

If you ignore the summons then it is likely that the court will grant your creditor permission to take action against you.

Common steps in a court action

Step one - you will be served with a summons/initial writ.

Step two - court hearing. The court may grant a 'decree' against you. This is a statement that you definitely owe the money and that you must repay it. At this stage your creditor can also ask the court to freeze your bank account;

Step three - if you do not pay the money owed, your creditor is likely to apply to the court for an 'extract decree'. This is permission to take action against you to recover the debt.

Step four - the creditor must now send you a 'charge for payment'. This is a warning that if you do not pay what you owe within 14 days they will take action to get the money that you owe them.

Council tax debt and other local government debts - summary warrant Special rules apply if you are in arrears to a government department, for example council tax, VAT or income tax arrears. In these cases you are not given the chance to go to court and the Sheriff will instead grant a 'summary warrant'. This allows the creditor to take enforcement action against you immediately. In most other cases your creditor can only take action against you once they have been to court and sought permission to take action. Once a summary warrant has been granted against you, the government department can seek to arrest your wages and bank account or to 'attach' your goods (see below for what this means). Unlike other types of debt you can't go back to the court to ask for time to pay your debt, but you can try to negotiate an agreement with your creditor to repay the debt - a money adviser should be able to help you in this process.

What action can a creditor take if they have been to court and been given permission to recover the debt?

Once a court order or decree has been obtained from the court there are a number of ways a creditor can try to recover the money loaned or the goods you were given.

Earnings arrestment

If you are working, money you owe can be taken from your wages or your salary with a wages arrestment. In most cases they will need to send you a charge for payment (see step four above). After 14 days have passed they can then use a wages arrestment.

There is a limit on how much money can be taken from your wages. This limit depends on how much you earn and how often it is paid. You and your employer should be sent a schedule of arrestment outlining the amount to be taken.

Bank account arrestment

If you have money in a bank or building society account or money with a credit union, the money that you owe can be taken from your account. Where a bank arrestment takes place the money in your account will be frozen, so you can't withdraw it or make any direct debit or standing order payments. This means bank charges or late charges could build up in your account.

If you don't agree to pay your creditor the amount owed from your account, they can go to court to order the bank to pay them this money. The court may also order you to pay the costs of taking this court action.

Some funds held in a bank account are supposed to be exempt from arrestment. This includes any social security benefits or tax credits payments. But if these payments are mixed up with other money in your account it can be difficult to identify the amount that should be exempt. If this happens to you it may be simpler to have your benefits and tax credits paid into a separate account.

Attachment

If your creditor has not been able to get back the money you owe them, they may be able to 'attach' your property. These 'attached' assets can be sold to help pay your debts. Usually only assets that are outside of the home can be 'attached', for example assets held at a place of business or in a garage or outbuilding.

Before your goods can be attached your creditor will normally send you a 'charge for payment'. If you have not repaid your debt within 14 days a sheriff officer can enter any premises (other than your home) and attach and value your goods. Your creditor can then arrange for these goods to be auctioned to help repay your debt.

It is also possible for a creditor to apply for an 'Exceptional Attachment Order' (EAO). This allows sheriff officers to enter your home to carry out an attachment on 'non-essential' goods. An EAO should only be granted as a last resort and the creditor must make a specific application to the court. This applies even where the creditor is a government department.

Rent or mortgage arrears or any other debt secured on your home

If you have fallen behind with your rent or mortgage payments or with another loan secured on your home, you should seek urgent advice as soon as possible!

Debts of this nature can ultimately lead to your home being repossessed or you being evicted by your landlord. Action you can take in this situation will depend on a number of factors, including the type of mortgage and lease you have. There are some laws which help protect homeowners and tenants who have arrears, so it is important that you seek advice.

Bankruptcy

In certain circumstances a creditor may attempt to make a client bankrupt. This is unlikely to be used against you unless you have considerable assets.

Forthcoming changes to the law

At some point in late 2007/early 2008 the new Bankruptcy and Diligence Act 2007 is expected to come into force in Scotland. This will make a number of important changes to the ways creditors can seek to recover a debt.

Most controversially the Act introduces a new type of action that can be taken to recover a debt called a 'Land Attachment'. Where a creditor is owed at least £3,000, they will be able to apply to the court to force the sale of a property owned by the debtor (including their home). This means that in certain circumstances creditors will be able to use the court to force the sale of a property in order to recover a debt, even though that debt was not originally secured against the property.

The Act includes other changes to the system for recovering debt including allowing debtors to hold onto a minimum amount in their bank account which cannot be arrested.

It's never too late to seek 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. Or, if you did not go to the original court hearing and had no representation, they might be able to go back to court and ask them to reconsider your case. This is known as an application to 'recall the decree'.

There are strict time limits for applying for recall of decree so get advice as soon as you can. It might also be possible to apply to the court for a reasonable amount of time to pay the debt off - known as a 'Time To Pay Order'.

Maximising your income

One way of trying to manage your debt problems is by seeing if there are any ways you can increase the amount of money available to your household. You might have certain assets you can cash in or sell. These could provide you with a lump sum 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 might be possible to raise your income by working more hours or doing more overtime. But please bear in mind that higher earnings may mean you lose 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 could consider the option of taking in a lodger. You will need to bear in mind the impact on any means-tested benefits you receive. You might also need permission from your 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 to see if there are any extra 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. But some benefits (for example DLA) are not means-tested, while others can still be paid if you are working, so long as your earnings are not too high.

If you can claim any extra benefits this will increase your weekly income. If the benefit can be backdated it will also give you a small lump sum you can use to try and clear 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 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 could affect that person's benefits. Seek further advice before making a claim in these 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 extra help or supervision your child needs;
• The mobility component for children who need help with getting around. This is paid 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 high rate you could 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 high 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 be over an 'earnings threshold'. This earnings threshold is currently £87 net a week (April 2007-08). If you are a student your course must involve less than 21 hours supervised study.

Tax Credits

Child Tax Credit (CTC) - CTC can be claimed by anyone with a dependant child, 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 high 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. Certain groups of workers other than parents can also apply. WTC can sometimes include help towards certain 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 one). Unlike most other means-tested benefits there is no capital limit. Tax credits can be backdated for a maximum of three months.

Income Support and income-based Jobseeker's Allowance

Income Support is a means-tested benefit to help individuals or families on a low income with savings below £16,000. 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 Income Support, income-based Jobseeker's Allowance 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 (for example because you are working) you could 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.

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 have enough space in your home for a wheelchair user who lives there. A disability reduction can be backdated to the date you first met the qualifying conditions.

Council tax discount scheme

Where there is only one adult in a household you should receive a discount of 25 per cent on your bill. When they assess a discount certain adults 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 people on Income Support and income-based Jobseeker's Allowance. 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 at the time of writing), you could qualify for NHS benefits.

Community Care Grants

If you are on Income Support, incomebased Jobseeker's Allowance 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. They are also to help people at risk of going into care, or who need help to settle in the community after a stay in residential care or prison.

Usually a grant is given for specific items. These 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 16-19 year old who has stayed on at school or college they might 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, needed by a child with disabilities.

If you are a private tenant or an owner-occupier you can apply for a discretionary Home Improvement Grant. If a grant is awarded, the actual amount that you receive depends on a means test. But for certain types of work (including adaptations needed for a disabled child) a minimum grant of 50 per cent of the costs is available regardless of your finances.

If you are entitled to more than 50 per cent under the means test then you will get the higher figure. You must not start work on an adaptation before your application has been approved in writing.

If you are a local authority or housing association tenant then you should approach both your landlord and the social work department for help with adaptations.

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. In the last year grants in Scotland have also been made for children aged 16. It is hoped that this will continue in 2007/08. Your social and economic 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, write giving the full name and date of birth of your child, brief details of his/her disability, the type of help you need and whether you have been in touch with the fund before, to: 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

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, for example to help towards paying off a gas or electricity bill if 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. Securing a grant towards these costs could free up more of your weekly income, which can go towards paying your debts.

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 should have a copy of this guide.

It is also worth getting help to contact the Family Welfare Association. This organisation administers a wide variety of trust funds. Applications must be made by a social worker on your behalf. For further information contact: The Grants Officer, Family Welfare Association, 501-505 Kingsland Road, London E8 4AU Tel: 020 7254 6251 e-mail: fwa.headoffice@fwa.org.uk Web: http://www.fwa.org.uk

It may also be worth contacting any organisation concerned with your child's disability or condition. Some of these charities provide small grants. The Contact a Family helpline can help you to find a suitable charity.

Financial help from the social work department

The social work department has the power to provide financial assistance necessary to help a child. They will only normally consider making payments in exceptional circumstances. But it might be worth making a request if you are in an emergency situation, for example facing disconnection for fuel arrears or eviction due to rent arrears.

If you would like further details about 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 (Mon-Fri, 10am-4pm; Mon, 5.30-7.30pm) e-mail: helpline@cafamily.org.uk

This factsheet is one of a series 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.

Contact a Family Scotland provides support and information to families across Scotland caring for a child with a disability. To find out more about the help we can give please call us on Tel: 0131 475 2608 or e-mail: scotland.office@cafamily.org.uk

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

INCOME / EXPENDITURE SHEET

(remember to be consistent in using either weekly or monthly amounts)

INCOME	£		EXPENDITURE	£
Wages			Mortgage/rent
Partner's wages			Endowment policy
Income Support			Second mortgage/secured loan
Jobseekers Allowance			Service charges
Tax Credits			Buildings/contents insurance
Child Benefit			Life Insurance
Disability Living Allowance / Attendance Allowance			Council tax
Carers Allowance			Gas
Other state benefits			Electricity
State Retirement Pension			Any other fuel costs
Other pensions			Disability related costs
Maintenance (that you receive)			Childcare costs
Income from Boarders/Lodgers			Prescriptions and other health costs
Other Income			Travel (including any car costs)
TOTAL INCOME			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
			Newspapers/magazines
			Children's pocket money
			Sport and leisure
			Other costs
			TOTAL EXPENDITURE