What are assets and how can they help with debt?

An asset is something you own which you could sell to raise money. Things like cars, jewellery, and your home are usually seen as assets.

It is important to look at all the options for dealing with your debts to see which option is best for you. You do not have to sell your assets, but it could be an option to clear debt.

When can I sell an asset?

• Before selling an asset, check that you have the right to sell it.
• You will not be the owner of a car or other item that you are making payments for under a lease, rental, hire-purchase or bill of sale agreement. In some cases, a lender may agree to give you permission for a sale. You also wouldn’t receive the full value of the item.
• If a creditor takes action against you by using enforcement agents, you may not be able to sell your goods.
• If you legally own something jointly with another person, you usually need their permission to be able to sell it.

Selling your home

If you own your home it is probably your most important asset. Think carefully before selling your home. You will need to buy or rent another home. Also, there are usually costs involved like solicitor and estate agent fees. If you have a mortgage you will have to pay off the balance.

Selling your home may be a good option if you can pay off what you owe and pay for somewhere cheaper to live.

How to sell your assets

It is important to sell your assets for what they are worth. Before you sell your things:

• Look into different ways to sell. Find the best way to sell the item you have.
• Look at the amount similar items to yours are being sold for. Depending on what the item is you may be able to get a free valuation.
• Consider the length of time it takes to sell. Knowing how long it might take to sell your items can also help if negotiating with a creditor. You can then tell them how much time you need to sell your items.

What are the advantages of selling assets to clear debt?

• It can stop creditors who are chasing you for payment or threatening legal action.
• It can stop priority creditors removing an essential service or item.
• You may be able to pay off creditors who charge interest at a higher rate so that other debts are easier to manage.
• Clearing debt can help reduce stress and it can give you a fresh start.

What are the disadvantages of selling assets to clear debt?

• You are likely to have less money for your future and retirement.
• If you have financial emergencies in the future, you may not have enough money or assets to deal with them.
• You may leave a smaller inheritance when you die.
• The money from selling assets may affect your benefits and tax.