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Selling assets to pay your debts

In certain circumstances it makes financial sense to release any money locked away as an asset to help you during times of financial difficulty, to reduce or clear debts.

If you have assets that you’re willing to sell, such as a car, watch or other valuable items, you could consider selling them to release the money and use it to help you while you’re struggling.

What assets can be sold easily?

An asset is anything you own that has a value.

The most obvious asset is money held in a savings account, but this isn’t always quick to access. Some accounts require a 90-day notice period.

Typical items that may have value and can be easily sold include jewellery, watches and antiques. You can also consider larger items, like cars, caravans, bikes and property or land, but these will usually take longer to sell.

Considerations before selling assets

Here are some tips when looking at selling your assets:

  • Always ask permission of joint owners
  • Get a few valuations before you sell to make sure you’re getting the market value
  • Research online, if possible, to help you find out the current market value
  • Make sure you’re aware of any fees, penalties or costs in selling the item before you do

If you’re considering selling assets to pay off debts, you must be the owner of the item or items. If you have a car, bike or caravan bought on a hire purchase or conditional sale, or you’ve used a car to get a logbook loan, the vehicle belongs to the finance company until you’ve made the last payment. It’s against the law to sell it until you’ve paid off the finance in full.

Downsizing your house to pay off debt

You could consider downsizing or selling your home and putting the money from the sale towards your debts. However this may involve family members, if you own the house with someone else, and careful consideration must be given to the benefit of doing this.

Before making any decision to sell your house, you should consider the following:

  • Will downsizing clear all the debt?
  • Will you still be able to afford essential housing costs when you’ve downsized?
  • Do you know how much the fees and selling costs are?

Selling your home is a big step and you should get advice before deciding to do it. If you're considering selling your home to pay off debts give our free Helpline a call for some further help if you haven’t already.

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What should I do with the money when I have it?

This depends on how you’re going to use the money you can raise.

You can use the money in a number of ways depending on whether you’re managing your essential household costs and how much you’ll be able to get from the sale of assets.

If you have more money going out than you have coming in then you’ll need to keep the money raised to top up your income to make sure you have enough to live.

If you can meet your essential needs and have money left over to pay your creditors then you should share the money fairly among the creditors.

Depending on the amount you’ve raised, compared with the amount of debt you have, you could do one of the following:

  • Clear your debt in full
  • Offer a lump sum to each creditor as a full and final settlement. We have a specialist team who can help you make full and final settlement offers to your creditors
  • Offer a lump sum as part payment towards the debt and continue to pay a reduced amount

You may decide to use your lump sum to clear just one debt, for example if the creditor has offered a large discount if you pay them a full and final settlement offer, or if a creditor is charging a high interest rate and you want to stop the debt growing. It’s OK to do this but other creditors may see this as unfair if they find out.

What should I tell my creditors while I’m trying to raise money?

If you’re going to use the money you raise to pay something towards your debt rather than top up your income, and you have an estimated value of the money you can raise, contact your creditors tell them your plans.

Make an offer to pay what you can afford while you're in the process of raising the money.

To support your offer, send each creditor a copy of your budget and a list of your other debts. This helps the creditor see that you’re only spending money on essential living costs and that the offer made is a fair one, based on what you owe other people. 

It helps to tell your creditors the reason you’re struggling to pay, for example loss of a job, increased living costs, or that you’ve not managed your money well. Also let your creditors know if you have an illness or mental health issue such as stress or depression.

Don’t be pressured into agreeing to a payment you cannot afford.