How to Manage Debt as a Student

Debt is a struggle and you certainly aren’t alone in this situation as a student. This article explains how to manage debt as a student and how to repay your debt.

What should I do if I have no income to repay my debts?

If you have no income then you won’t be able to pay anything to your debts and you should write to your creditors explaining that. Free debt charities such as the Debt Advice Foundation can help you with this. Other than this there is very little your creditors can do other than accept your situation.

We would also suggest you open a new bank account with someone you don’t owe any money to. You should then be able to budget more effectively when you get a job. Obviously, if you have an income problem, then you will need a job as a priority.

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As a student, am I liable for council tax?

As a student, you are exempt from paying council tax. If bailiffs are trying to get your council tax money, you should take all your documents including another copy of your certificate of student status to the council tax office in person. This is a simple mistake for them to rectify. Ask them to cease bailiff action and issue a new council tax bill that shows you are exempt from payment. If after this the council still does not make the amendments, you can make a complaint to the Local Council Ombudsman.

Will a CCJ affect my ability to receive student finance?

A County Court Judgment (CCJ) should not affect your ability to receive student finance. Student Finance could mean a variety of things if we assume that you mean the type of student loan that you only start repaying when your future earnings go over £21,000. Loans of this type have no requirement for a credit check as they are “income contingent” loans and are recovered at source, in the same way as taxes.

Can I get student finance if I have a Debt Management Plan?

A Debt Management Plan (DMP) should not prevent you from applying for a student loan. It may, however, be advisable for you to contact your student loan company to confirm this.

Applications for student loans are not credit scored, so this will not affect your application. However, your DMP provider may not be happy for you to be taking out further borrowing. Speak to your DMP provider if your income will go down when you become a student.

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Can I get Student Finance if I am already on an IVA?

You will not be declined a student loan, as eligibility is not based on credit scoring. However, you may find it difficult to open a student bank account or credit card due to a poor credit rating. Funds you receive from the loan do not count towards income and cannot be used to calculate your monthly payment into the Individual Voluntary Agreement (IVA).

If circumstances change, you have a duty to advise your Insolvency Practitioner whether that’s for the better or for the worse. Failure to declare an increase in your disposable income will result in you breaching the terms and conditions of your IVA.

You may also want to read our article on choosing between an IVa and a DMP.

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