Talk Money Week: Handling Financial Pressure and Debt

Talk Money Week runs from 2 to 6 November 2026, encouraging people across the UK to talk more openly about their finances. That includes the harder conversations, such as handling financial pressure and debt when it starts to escalate. 

Financial pressure can build gradually. A missed payment can become an arrears letter, which can then become a formal Letter of Claim or the commencement of legal proceedings in the County Court. When that happens, it is easy to feel overwhelmed or to put the paperwork to one side; however, acting early can make a significant difference. 

If you receive a demand for payment, don’t ignore it 

Receiving a Letter Before Action or a Court claim does not necessarily mean that the amount claimed is correct, or that you have no options. The important thing is to understand what is being claimed and what you need to do next. 

Before taking court action, creditors are generally expected to send a letter before action. Where the pre-action protocol for debts applies, which covers businesses claiming money from individuals and sole traders, you should usually have 30 days to respond. The protocol forms part of the Civil Procedure Rules, which govern how civil claims are run in England and Wales. If the creditor does not receive a reply, they may go on to issue a claim. 

Start by checking the basics: who is claiming the money, what agreement, if any, the claim relates to, the amount of money being claimed, and whether you recognise the debt. It is important to gather the relevant documents, including contracts, invoices, statements, correspondence, and records of payments. 

Don’t let financial pressure stop you from opening the post 

Avoiding correspondence may feel like the easiest option in the short term, but it can make the position considerably more difficult in the long term. It is important to understand that court documents contain important deadlines, and missing a deadline can result in judgment being entered against you.  

If you do not respond to a County Court claim form in time, the creditor can ask the court to enter judgment against you. A County Court Judgment (CCJ) is recorded on the Register of Judgments, Orders and Fines for England and Wales, which credit reference agencies use, and it can make it harder to obtain credit or a mortgage. Court judgments stay on the register for six years, but if you pay the debt in full within one month of the judgment, you can apply to have it removed from the register.  

A CCJ can also be enforced. The creditor can ask the court for an attachment of earnings order, which takes payments directly from your wages, or a charging order, which secures the debt against your property. They may also instruct County Court Bailiffs or High Court Enforcement Officers. 

Depending on the circumstances and the service used, there may be options to request more time, admit the claim, make a part admission, or defend the claim. 

Work out whether you agree with the claim 

There is an important distinction between being unable to pay a debt and disputing whether the debt is actually owed. If you agree that you owe the money but cannot afford to pay it in full right away, the appropriate response may be different from a situation where you believe the claim is incorrect. 

If you dispute the claim, consider why. You may believe the goods or services were not provided as agreed, that the amount claimed is wrong, that you have already paid, that the claimant has not complied with the relevant agreement, or that there is another legal or factual issue that needs to be considered. 

Do not assume that a claim is correct because it has been issued. Equally, do not assume that a defence is appropriate just because you are struggling financially. It is important that the position is assessed at an early stage so that you can understand your options. 

Not every disagreement needs to end in a court hearing. The pre-action protocol expects both parties to consider dispute resolution options such as negotiation or mediation before a claim is issued, and many disputes are settled in this way. 

If you agree that money is owed but cannot afford to pay 

Financial difficulty is not something to be embarrassed about. If the underlying debt is not disputed, it may be sensible to consider whether an affordable repayment arrangement can be reached. 

Before proposing payments, work out what you can realistically afford after taking account of essential household or business expenditure and priority commitments. An arrangement that looks affordable on paper but cannot actually be maintained may only postpone the problem. 

It is also worth seeking independent debt advice. There is a plethora of free debt advisers; however, specialist debt advice may be particularly helpful where there are multiple creditors, or your debts are becoming unmanageable. 

If a court claim has already been issued 

A court claim should be treated as urgent, and the claim form and accompanying information should be read carefully and make sure you identify the deadline to respond. It is vital not to wait until the deadline is approaching before deciding what to do. 

Depending on the circumstances, you may be able to pay the claim, admit all or part of it, offer a payment proposal, or defend the claim. If you do not respond in time, the claimant may be able to obtain a CCJ. 

If you are unsure about how to respond, or believe that the Claim against you is disputed, consider taking legal advice promptly. Our Debt Recovery Team can help you understand the allegations being made, assess the evidence, and identify the most appropriate response. This can be particularly important where the claim is disputed, financially significant, or involves a counterclaim. 

Get organised and keep a paper trail 

When money is tight, it can be tempting to deal with problems one at a time without keeping records. Try to create a simple file, digital or paper, for each significant debt or dispute and keep copies of letters, emails, invoices, and court documents. It is helpful to record payments and keep proof of payment. 

It is also helpful to make a note of important deadlines to ensure that these are met and to avoid negative consequences such as your defence being struck out or judgment entered.  

Remember, if you speak to a creditor or their representatives by telephone, make a brief note of what was discussed and, where possible, correspond via email, so there is a written record of what was discussed or agreed. 

Small actions really can count 

The key message is that manageable actions can make a difference. That might mean opening a letter you have been avoiding, checking your bank statements, speaking to a creditor, reviewing your budget, asking someone you trust for support, or getting professional advice about a court claim. 

You do not have to solve every financial problem in one day. The first step is often simply understanding what is happening and deciding what needs to be done next. 

Winding-Up and Bankruptcy Petitions

Act quickly if your company is at risk or you are at risk of bankruptcy 

If you receive a Statutory Demand, Bankruptcy Petition or Winding-Up Petition, seek legal and debt advice promptly. The consequences can be serious, and the relevant deadlines are short. Getting advice early can help you understand your position and make an informed decision about what to do next. 

Even where the debt is genuinely owed, there may be options to explore before the hearing. The right approach will depend on your circumstances, the amount involved and the wider position with your creditors or your business’s creditors. 

If you receive a Statutory Demand, Bankruptcy Petition or Winding-Up Petition, check the amount claimed and the basis of the debt carefully. If you dispute the debt, believe the amount is incorrect, or have another reason why the petition should not proceed, you may be able to oppose it. 

For individuals, a Bankruptcy Petition is a court application by a creditor seeking to make someone bankrupt. In England and Wales, a creditor can generally apply where the individual owes £5,000 or more, subject to the applicable requirements. Bankruptcy can have significant consequences for your assets, finances, and future arrangements, so receiving a Bankruptcy Petition should never be ignored. 

Our Debt Recovery Team is here to help if you are facing a Statutory Demand, Bankruptcy Petition or Winding-Up Petition and can be contacted by telephone on 0113 246 7878 or by email on DebtRecovery@Prosperitylaw.com. 

How legal advice can help if you are facing a claim 

If you or your business has received a claim for payment, obtaining advice from a solicitor in our Debt Recovery Team can help you understand the legal position and avoid missing important procedural steps. 

We can assist you if you or your business has received a letter before action or has received a claim form, including by reviewing the claim and supporting documents, advising on the merits of the position, preparing an appropriate response or defence where appropriate, and helping to navigate the matter through to resolution. 

If you have received a claim against you, early advice can be particularly valuable. The earlier the position is understood, the more opportunity there may be to consider the available options, whether that is resolving the matter commercially, negotiating payment, or defending a claim where there is a genuine dispute.  

Talk Money Week is run by the Money and Pensions Service. This article is for general information only and does not constitute legal advice. 

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