What help can you get if you can’t pay your important bills and debts?
Millions are behind with rent, council tax and other essential bills. Universal Credit was cut last year, energy bills are soaring, petrol has gone up a lot and food prices keep rising…
If you don’t think you can manage to pay everything, this article looks at: your options for priority and non priority debts and how to get help, with debts and with benefits.
Contents
Get a budget & know what is top priority
When there isn’t enough money to pay for everything, you have to make choices.
It’s important to know what must be paid first and in full, even though this leaves not enough to pay other debts. See What debts and bills are top priority? for a list of priorities and non-priorities.
Paying your rent/mortgage, car finance, food, clothes and heating may leave little or nothing for unsecured loans, credit cards or catalogues. This may sound alarming, but non-priority creditors know that they are bottom of the list and that priority bills have to be paid in full.
Try this online budgeting tool from National Debtline. Even if your income or expenses are changing, this will still help:
- it lists expenses so you don’t forget something;
- it converts everything to monthly amounts;
- it works out what the “priority” and “non-priority” debts and bills are;
- it shows how to divide up the money you have;
- you can download it to show creditors or a debt adviser. This can save you from having to explain your budget on the phone to lots of different people.
Priority bills and debts
Energy bills – set to go up another 70% in October
Energy bills rose by an average of 54% in April 2022 unless you were still on a fixed rate, in which case your bills will rise when the fix ends. These energy prices will be going up again in October 2022, probably by about another 70%. And bills are expected to go up more in January and stay very high all through 2023.
In May 2022, additional help was announced by the government:
- a discount of £400 will be applied to your electricity bill over 6 months from October 2022.
- people getting means-tested benefits (Universal Credit, Child Tax Credit, Pension Credit etc) will get £650. This will be split into 2 payments in July and October, except for tax credits where it won’t be paid until the autumn.
- pensioners getting the Winter Fuel Payment will this year get an extra £300.
- anyone on a disability benefit (eg PIP, DLA, AA) will get an extra £150.
- the Warm Home Discount is changing. If you are a pensioner, on some benefits or a low income you may be able to get £150 off your electricity bill in Winter 2022/23. There will be more details about this later in 2022.
If you have a combi gas boiler – one with no hot water tank – then read Save up to 8% on your gas bills, by turning down the ‘flow’ temperature. By changing settings on your boiler to be more energy efficient, you can have a house that is just as warm for less cost.
If you think your supplier has increased your direct debit too high, read Ofgem names energy firms who must improve their Direct Debit setting.
Ofgem has brought in new rules that should help people who can’t afford to repay energy arrears. It says:
Contact your supplier as soon as you can if you are worried about paying your energy bills. Suppliers must work with you to agree on a payment plan you can afford under Ofgem rules. This includes reviewing a plan you have agreed before.
Talk to your supplier and ask if you can pay arrears over a longer period. It’s important to say if people in your household have health problems. If you are having deductions through a prepayment meter for existing debts, ask if the deductions can be reduced or halted for the next few months.
The British Gas Energy Trust supports all energy customers, no matter who your supplier is. They can make grants.
The following energy companies offer help to their customers in difficulty:
- E.ON Energy Fund
- EDF Energy Customer Support Fund
- Scottish Power Hardship Fund
- Ovo Debt and energy assistance
- Bulb
- Octopus.
If your supplier wants you to pay more than you can afford to arrears, talk to your local Citizens Advice about how to complain and what your options are.
Citizens Advice may also be able to give you a Fuel Voucher if you have a prepayment meter.
If you are thinking of cancelling your direct debit, make this an informed decision. Read these two articles:
- Should you cancel your direct debit if you can’t pay your energy bill?
- Ofgem says don’t cancel direct debits – but has no good alternatives.
Rent and Mortgage
Universal Credit can get you some help with the cost of renting.
There is some help with mortgage costs through UC but it doesn’t start until you have been on UC for 39 weeks. See What help is there when you can’t pay the mortgage? for the support lenders should give you if you are struggling and what you should ask for.
Get help as soon as possible. If you are worried about your mortgage or your rent, you have an eviction notice from your landlord or threatening letters from your mortgage lender, talk to your local Citizens Advice.
Council Tax
Council tax may feel less important than some other priority debts. If you have to choose between paying the rent and paying the council tax, the rent comes first! As does feeding the children and heating the house.
But councils are very fast to take action if you ignore council tax debt. They get through the legal processes much faster than other creditors and use bailiffs more often.
What to do if you have problems paying Council Tax looks at all your options here.
If those options will still you in arrears, talk to your local Citizens Advice. They can also help you with a Section 13A application for council tax reduction if your finances are so difficult you have a “negative budget”, that is when you don’t have enough money to pay your priority bills and essential expenses even if you pay nothing to your debts.
If you are in council tax band A-D, you will get a £150 payment. This is meant to help with the increased cost of energy bills.
Water bills
Water companies can offer payment breaks, extended payment plans and schemes that can reduce the amount you have to pay if you are on a low income. Contact your water company and see what help there is.
A water meter may save you money. More details on this and cheaper tariffs you may be able to get if you are on a low income in How to cut your water bills. If your surface water doesn’t go into the sewers, you may be able to get a discount – ask your water supplier.
Car finance
You can ask the lender for a payment arrangement on car finance. But this is a priority debt and your car is at risk if you can’t pay it in full.
See Can you afford your car finance? for details of your options. Even if you want to keep your car you need to know about your right to end a car finance contract early. And you may be able to make an affordability complaint.
If you aren’t sure about what the best option for you is, talk to National Debtline.
Millions can get broadband costs reduced
If you are on Universal Credit, Pension Credit, ESA or some other benefits, you may be able to get cheaper phone or broadband. See the range of Social Tariffs that you may be able to switch to.
Ofcom says 4.2 million households could halve their broadband bills by taking up these special discounted packages. But so far only 55,000 have signed up.
Deductions from Universal Credit
Deductions from Universal Credit for other debts can be very high leaving you with not enough to live on. Sometimes you can ask for this to be reduced. Your local Citizens Advice can help with this.
Cards, catalogues, unsecured loans, overdrafts – the non-priority debts
FCA’s rules say customers who can’t make payments should be treated “with forbearance and due consideration” by lenders and debt collectors.
For unsecured debts like loans, credit cards, catalogues and overdrafts, this means lenders must consider taking lower payments and freezing interest.
“Consider” may sound vague – you may be worried your lender won’t be helpful.
But most banks, credit cards and other lenders do stop adding interest when asked. Especially if you explain that you have priority bills and debts to pay – your rent/mortgage, council tax, utilities.
Lenders know you don’t have much money and that paying the rent and feeding the kids has to come first. And if they don’t freeze interest you can complain you aren’t being treated fairly and go to the Financial Ombudsman.
So how can you get this help?
1) ask the lenders yourself
For unsecured debts such as credit cards, catalogues, loans, payday loans and overdrafts you can ask the lenders and debt collectors for a payment arrangement. Also ask for the interest and charges to be stopped, so your debts don’t get worse.
The online budgeting tool linked to above can tell you how much to offer to each lender.
Payment arrangements do affect your credit record, so you should only ask for one if you need it. If you aren’t sure, talk to a debt adviser so you can find out all your options and the pros and cons. of each.
2) look at a Debt Management Plan
StepChange operates debt management plans (DMPs) for hundreds of thousands of people. You make one affordable payment to StepChange each month and they divide it between your non-priority debts. There are no fees charged. And interest and charges are almost always stopped.
DMPs are good options if your situation may change because they are flexible. If you get a good job then you can repay the debts much faster. If things get worse, you can pay less or look at insolvency.
Don’t go to any firm that charges for a debt management plan. Even if you think they are nice and friendly, you can get exactly the same plan with no fees from StepChange. Why pay money in fees for no benefit?
3) other debt options – token payments, insolvency
If a DMP isn’t right for you, a good debt adviser can advise on your better options, such as token payments, a debt relief order or bankruptcy.
As a rule of thumb, when your situation may improve a lot in the next year it is usually better to avoid insolvency as you may not need it:
- you can’t go back from bankruptcy, a DRO or an IVA to just paying off your debts as normal;
- in an IVA you can end up paying more than your debts if your situation improves.
And if your situation may get worse, you should avoid an IVA:
- more than 30% of IVAs fail – a failed IVA leaves you back with all your debts after a lot of stress;
- bankruptcy never fails and a DROs fail less than 1% of the time.
Debt advisers can explain your options and their pros and cons.
Already have a debt solution in place but now can’t afford it?
Payment arrangements and Debt Management Plans (DMPs)
DMPs are informal, flexible arrangements – they can be changed. So talk to the company running it and ask to make lower payments or have a payment break.
But if your problem is going to last a while, it’s a good idea to talk to a debt adviser about your insolvency options.
The same applies if you have made a payment arrangement with a creditor yourself. Ask for it to be reduced, to zero if necessary, and tell the creditor if you have priority debts. If the creditor doesn’t agree, talk to a debt adviser about your options.
Insolvency – IVAs, bankruptcy, DAS and trust deeds
If you are bankrupt and paying an IPA, tell the Trustee in Bankruptcy that is handling your IPA that you are in difficulty and the IPA will be reduced, to zero if necessary. It won’t extend the length of the IPA – that can’t be more than 3 years.
If you can’t afford your IVA now because prices have gone up, ask your IVA firm to reduce your monthly payments or even complete your IVA.
But if you are renting, another option may be to fail your IVA and have a DRO instead. The DRO rules were changed in summer 2021 so you may now qualify for one even if you didn’t at the start of your IVA.
For DAS & Protected Trust Deeds (Scotland), see Can’t Pay Trust Deed or DAS? by a Scottish adviser.
Where to get help with debts
If this is confusing or you can’t decide what to do or you are too worried to talk to your creditors, debt advice can help.
You only need to talk to one debt adviser. Here is how to choose who to contact:
- if you have priority debts and bills which are a problem, talk to your local Citizens Advice or another local advice agency.
- if your problem is urgent and you can’t get an appointment with Citizens Advice quickly, phone National Debtline on 0808 808 4000 or use the National Debtline webchat.
- if your have some money to pay to debts talk to StepChange on 0800 138 1111.
- if you have little or no money for debts, talk to National Debtline about your options.
- if you are self-employed or have a small limited company, talk to Business Debtline.
Be careful. Some commercial firms trying to sell you an IVA use names that sound a lot like these good debt advisers. Make sure you are talking to the real thing!
Help from benefits
Websites such as Turn2Us can show you what you might be able to claim. Use this calculator even if you think you are already claiming everything you can, it is worth making sure.
If a benefit calculator suggests you would be better off claiming Universal Credit (UC) and you currently get tax credits or housing benefit, be careful. These benefits end when you claim UC and you can’t go back to claiming them.
I suggest you talk to your local Citizens Advice. They can do a “what if” calculation to double-check that switching to UC is the best option for you.
There may be other help you can get that doesn’t show up through a benefits calculator as it is “discretionary” – not everyone who applies will get it. Most of this comes from your local council, so looking on their website is a good start.
Some examples:
- You may be able to get a Discretionary Housing Payment (DHP) from your council if your Universal Credit or Housing Benefit doesn’t cover your full rent or you are being hit by the benefit cap or bedroom tax.
- Some councils have extra help with Council Tax, in addition to Council Tax Support. This may be called something like Discretionary Council Tax Support Hardship Payment.
- Councils have been given more money for a Household Support Scheme from April 2022. They may also have an Emergency Support Scheme that often gives out vouchers for food or fuel rather than cash.
Your local Citizens Advice can say if you may be able to get one of these payments and help you apply.
Can you really offer just £1 to a debt?
Could a Debt Relief Order help you?
Should you support DontPayUK?
Suzzyjen says
I just wanted to note that my council advised me to pay the council tax first.It only takes them 3 weeks to move to court action and scary letters.I was able to pay rent and bit of arrears until I caught up.Always better to speak to the council or your landlord in the early, the problem does not go away.
They were very helpful and I got a discretionary amount to help with council tax so I only pay 43 a month.I am back on track and more importantly I sleep easy.I am applying for new jobs to help me as my income is just too low.
michael says
Hi,
Can I contact you direct about my problem please?
Sara (Debt Camel) says
No, sorry. I have removed your surname so you are anonymous here.
Anon says
Can I ask about Motability cars? The terms and conditions of the agreement state the car can be recalled if made bankrupt or enter in to some sort of debt repayments ( wording vague as no access to document right now).
Presume this must be because leasehold and do credit checks but you’d think given this can’t be taken by creditors, and by definition it’s an essential item , Motability would be more generous than the wording? Its a straightforward direct deduction from PIP or DLA benefit so bypassing the individual.
Have you come across this as a barrier to debt advice ? When I spoke with the contact cte for one of the debt charities they just said it wouldn’t happen. Be interested in anyone else’s experience of going bankrupt or DRO and if it affected their Motability or their clients.
Sara (Debt Camel) says
Motability cars are not uncommon with Debt Relief Orders and bankruptcy.
I have never heard of anyone having a Motability car repossessed if you are up to date with payments – which you are if it is being paid by direct deduction.
Julia says
I work for a lender and agree 100%. My experience is that creditors will do their best to help, but we can only do that if we know your situation. If you just don’t pay a non-priority debt, we start chasing – we don’t want to do that if you’re having problems. Creditors will likely ask you for full details on your situation. We’re not trying to catch you out or embarrass you, we need it so we know how best to help. A budget sheet is very useful here, particularly if you have a few creditors, but making contact is the most important (and often the hardest) thing.
As Sara said, speak to CAB or a debt charity if you’re finding it difficult to do this yourself. Some councils now have special teams to support residents with their money issues, which might be another good option.
As Sara rightly points out, payment arrangements and other debt solutions will have a negative effect on your credit file, but don’t let this put you off seeking help if you need it – it’s always worth at least speaking to a proper debt advisor, then you have all the options, even if you don’t want to use them, it’ll help you to feel more in control.
If you think you may have borrowed money from an unlicensed lender (‘loan shark’) you can get help. The Illegal Money Lending Team are on 0300 555 2222 or they have more info and webchat on https://www.stoploansharks.co.uk/. You don’t have to give them your name.
jay says
Hello , not sure if this is the correct place to leave a comment but I have received an email from 247moneybox to update my bank details as a refund is due. Do we know if there has been any update on this?
Thanks for your help
Jay
Sara (Debt Camel) says
The best place for chat about 247 Moneybox is the payday loan page here https://debtcamel.co.uk/payday-loan-refunds/. A couple of people have mentioned there about getting this email.
Margaret says
Problem with loan sharks is the stoploansharks reporting scheme will try gather lots of intelligence for prosecution and are supportive on the phone. However there is rarely a local authority safeguarding policy and safety plan needed to support individuals who do step forward. We have long standing loan sharks around here and when universal credit came in many of us borrowed because had to pay the rent whilst waiting for the benefit to come in. They also step in when doorstep lenders like Provident go under. You cant declare it as a debt I dont think and if you did then what? Not sure they will ever go away in some places.
Sara (Debt Camel) says
The Stop Loan Sharks campaign needs more funding. Much more funding. And the delay to UC needs to be scrapped – even though you can get an advance on the first UC payment which is interest-free (better than Provident’s 400% APR!), repaying that causes hardship.
Margaret says
Hi I don’t know if anyone saw rip off Britain this morning they spoke about someone had a problem with Amigo. I thought I would die laughing when they said Amigo said the would never go after a gaurentor for payment . They constantly contacted me for payments when my son couldn’t pay.
James says
Long story, but 2.5 years ago I moved back back into my (84 years old at the time) Mums house as I was getting into debt privately renting. As soon as I moved in, my Mum contacted the council to say I’d moved in. As a result, we were issued a new council tax bill.
Unknown to me, my Mum was receiving housing benefit (approx £25 a week) prior to me moving in. And with my Mum being unfamiliar with benefits, she says she thought that by telling the council about me moving in, everything would be covered.
We are now looking at the governments right to buy scheme.
So yesterday my Mum received a letter from the council to say she owes £3150 in overpaid housing benefit. They will be in touch soon to sort out repayment. Do you think this will affect the right to buy? Would the council possibly block this if we argued / didn’t pay it all off in one go?
Many thanks for any assistance, even if it is going to be bad news
Kind regards
James
Sara (Debt Camel) says
So your mum has been getting her full rent paid for the last 2.5 years? Does she get pension credit?
Are you in work?
Do you have this much money saved up?
James says
Hi Sara, sorry, I had to edit first post, as it was too long. So had to leave some info out. So my Mum’s rent is pence over £100 a week, and she got £25 off with benefit. No, no pension credit. Yep I work, pay ‘rent’ to my Mum. We do have the money so can pay it. I guess we’re both just a bit annoyed that my Mum told the council 2.5 years ago that I’d moved in, we always filled in council forms correctly, yet it appears to us that through their poor inter department communication we’ve suddenly got a £3000 bill. We want to buy the place. Ideally we wouldn’t have to pay £3000, in one go, next week. We just don’t know if the council will stop us buying this place if we owe overpaid housing benefit. We both feel the council have made an error here. If we have to pay, we have to pay.
Thanks so much for your help
James
Sara (Debt Camel) says
ok. I think your mum needs to talk to her local Citizens Advice about her situation. They should start with a benefit check – should she be getting pension credit? Should she have received any Housing Benefit if she had told the benefits department that you had moved in?
You don’t want to pay a bill without being sure it is correct…
I haven’t heard of anyone being barred from RTB because they owe a Housing Benefit debt. But Citizens Advice can check on that as well.
Your mum should have informed the benefits department that you had moved in. It is VERY likely that she does owe some money.
James says
Thanks Sara…….. appreciated……. with hindsight (and I didn’t know), no, she shouldn’t have received any housing benefit once I moved in…….. bearing in mind she’s now 86, in her mind, she thought that by telling the council I’d moved in, she’d sorted it………. I didn’t even know that housing benefit was sorted through the council these days………. I don’t think think she’s entitled to any pension credit as she gets a (small) private pension each month.
We both get that she’s been given a discount she’s not entitled to each month now (though again, she thought that by telling the council, it was all in the open)….. and I didn’t know she was getting it…….
Thanks so much for your replies on a Sunday evening, you’re a star
James
Sara (Debt Camel) says
Put her income into https://benefits-calculator-2.turn2us.org.uk/. there are a LOT of people who are eligible for pension credit that don’t claim it.
James says
Thank you….. especially on a Sunday evening…….. you are a star
James
Peter says
I have fixed with Britush Gas till March 2024. As I have fixed the price cap rise will not increase this rate. Am I correct?
Sara (Debt Camel) says
yes that is corect.
Peter says
Great…I was suprised to be able to fix at the rate and at a daily rate down from 26p to 14!
Sara (Debt Camel) says
when did you fix this?
Peter says
Jan 15th rate is 3.983 kwh and daily is 14.667p. Fix March 24 v2. I did it using chat on British Gas online.
S says
Hello
I had gov grants sisse. I have debt from mobile contract credit cards with high interest. I can bearly live I am on uc and CAnt afford basic. Like food, gas.
Can the grants be included in a dro? And it’s up to £30,000?
Dose it only effect my credit file for just a year?
Sara (Debt Camel) says
You need some personal help fast. With SEISS grants, talk to Business Debtline on 0800 197 6026. They cover the self employed and people with small limited companies. Business and personal debts.
A DRO ends after a year and the debts in it are wiped out but it affects your credit record for 6 years (like bankruptcy or an IVA). If you can’t pay your debts, there are no options that will only harm your credit record for a year.
Stephen Harrison says
Could someone clarify about the £200 energy loan please, My understanding is that a married couple or anyone who lives in a multi-occupancy home will receive 1 x 200 but have to pay back 2 x 200 or however many are in the house, Student accommodation may have five students and one bill so that would mean 1 x 200 but 5 x 200 to pay back? This is the biggest con ever if true.
Sara (Debt Camel) says
This is NOT a loan. Both the £200 deduction and future £40 increases will be per bill. So the married couple will get one reduction now and one increase later.
It isn’t really a con, for as many that lose in the student example you give, there will be people that gain… 2 single people now get two £200 discounts, they move into together and only repay 1.
I don’t like the proposal, not because the repayments are unfair – to do anything else would be extremely expensive to administer – but because it fails to target the most help at the people that need it most.
francis says
Am on benefits and cant pay my credit cards, have missed last few payments and soon the will be sold to a debt collection agency. Should I just ignore the debt collection agency’s? What would happen if I do? Will they take it to court even though I’m on benefits? What would court do?
Sara (Debt Camel) says
can you give some more details? You may have several options and it helps to rule some in or out…
– how much do the credit cards (and catalogues? and overdraft? and loans?) add up to?
– are you hoping to be off benefits soon, or is that unrealistic?
– and you renting or buying?
– are you behind with any priority bills – rent/mortgage, council tax, energy?
– do you have a car that you own? on finance?
Francis says
The debts would be about 8 thousand, am carer for my wife so cant see myself being off benefits soon. Am renting, no car no priority debts.
Sara (Debt Camel) says
I think you should talk to National Debtline about your options.
It’s important you don’t get behind with priority bills and this means paying little or nothing to your loans and cards etc. But that won’t clear them, so as thi si going to go on for wiote a while , it may be better to get them written off through a Debt Relief Order, see https://debtcamel.co.uk/debt-options/dro/. National Debtline can talk you through all the options and theri pros and cons so you can make a choice.
Ian Mac says
My daughter gets universal credit and qualifies for council tax rebate of 100%, meaning the council effectively pay hers. Will she still get the rebate?
Sara (Debt Camel) says
Yes she should, tell her to ask her council how it will be paid and if she needs to do anything.
Alice says
I defaulted on my Paypal Credit account (UK) during Covid unfortunately and was told the default would be on my credit report for 7 years. I questioned this and said are they sure it is not 6 years and they said that some companies have an agreement where they stay on longer (ie. for 7 years). Is this true? The call centre is in Ireland so maybe the rules are different there? Thanks for your help.
Sara (Debt Camel) says
it is 6 years in the UK.
Tim says
Hi
I’m considering applying for an IVA as my debts are spiralling out of control. I have approximately 30k of credit cards, loans, store cards and car finance.
Are IVA’s a good solution to debt problems? I know my credit file will be affected for 6 years but my credit file is bad anyway!
What income do IVA’s take into account?
I earn a half decent wage, but pay well over £1000 per month in debt repayments.
We are in receipt of universal credit and DLA for our autistic daughter.
I just feel I’m constantly working to pay off debt I should never have took out and I’m now in a trap of using debt to pay debt and can’t ever see the end of the tunnel!
I feel our quality of life is suffering as we can never do anything with the kids, haven’t had a holiday in years as all our income goes on our cost of living.
Has anyone had experience of IVA’s? Have they been of help or something you wish you didn’t do?
Thank you in advance
Sara (Debt Camel) says
IVAs are a good option for a small number of people but are being mis-sold to many who have better options. And a third or more of IVAs fail, leaving you back with the debts after a year or two of stress.
Some of these questions may sound odd. Some will turn out to be irrelevant but I can’t tell without asking…
The car finance – when does this end? At the end of it will you own the car? How much is that a month?
Are all the debts in your name, or some in your partners?
Your bad credit record – do you have high cost loans? have you had credit cards or catalogues where the limit has been increased when you are only paying the minimum amounts? do you have a large overdraft?
Tim says
Hi
The car finance has approximately 3 years left to pay at £312 per month.
Yes I will own the car after.
All the debt is mine apart from one which is amigo, of which I am the guarantor for the loan which my partner took out. Her only income was personal independence payment which had since been stopped, hence why I am now paying the repayments.
I have high interest loans, high interest credit cards and store credit with next, ao, jd Williams to name a few.
I don’t have an overdraft.
Kind regards
Tim
Sara (Debt Camel) says
So the problem with an IVA is that after the car finance ends, they will expect you to start paying the extra £312 a month to the IVA. (Also there is a chance that the car may be repossessed if there is an insolvency clause in the car finance agreement – this sometimes happens, not all the time.)
Can you list the lenders & balances owed to high interest loans, cards, catalogues etc?
One option may be for you to have a debt management plan for all the debts except the car finance which is a priority and has to be paid in full. And look at making affordability complaints to all the lenders – any you win will reduce the balance owed. That includes Amigo – the payment can go into your DMP now and you and your partner can both make affordability complaints about it.
Then in 3 years when the car finance ends, you will have some more money and at that point you can use it to make partial settlement offers to the remaining debts in your DMP.
Tim says
Hi
Yes the car is the only issue in all this.
My lenders are:
Better borrow- £11000
Updraft credit- £6000
Amigo- £4000
Savvy loans- £1200
Lending stream- £1000
Vanquis- £3500
Marbles- £3500
118- £1000
Next- £3000
Ao- £1000
Jd Williams- £1000
There’s a few other smaller ones and also been paying debt collection companies for past debts, which combined I pay approximately £50-60 per month split between the various agencies.
It’s a mess!!
I tried to better myself by taking a new job with a very good salary, the snag was there was a year’s training salary. So I took out a loan to see me through… 2 months after I started covid struck and basically ruined everything financially!! It prolonged my training as I got furloughed, stuck on my training wage which didn’t even scratch our monthly outgoings so turned to credit in order to get through.
I am now qualified in my job and earning better salary, but with all the debt built up… it’s all too much to carry on!
My salary will increase quite considerably next year too as I enter into my 3 year as qualified in my profession.
The issue Iv seen with debt management plans.. is it the case that they can take years to resolve? Obviously it’s my debt and I’m not going to hide from that. Just I don’t want to be shackled to it for the next 10-20years.
Maybe I should give step change a call to see if they can help?
Thank you Sara
Much appreciated
Sara (Debt Camel) says
ok so expecting a big pay rise AND that the car loan will be repaid makes a huge difference – in favour of a DMP not an IVA. I will explain (and answer your questions) but first…
That list of debts adds up to 36k. Is one of those the car finance, or is another debt not on the list?
Tim says
Hi
Sorry these amounts are a rough but fairly close estimate of what I owe.
This list doesn’t include my car finance which is which oodle in which I owe £10000 approx
Sara (Debt Camel) says
ok so the car finance was also probably expensive – how long ago was it taken out? presumably you also had a lot of problem debt at that point?
Tim says
Hi
Yes my financial situation wasn’t great at the point of getting the car, but with no disposable income and about to start an intensive year’s training, I couldn’t afford to by a car off the side of the road and run the risk of it breaking down down so decided to buy from a dealership with 3 years warranty.
Sara (Debt Camel) says
how long ago was this? (weird question but it matters)
Tim says
This was in October 2019 just before I started my new job
The problem I had was my previous car was on a salary sacrifice deal with my previous employer so evidently when I left to start with my new employer, it had to be returned leaving me with no car.
My financial situation wasn’t ideal when I took this new job, but it’s a one in a million opportunity.
My job is now as a qualified train driver, so as you can imagine, I simply couldn’t turn it down due to finances not being great as I may not ever have got that opportunity given ever again.
It was my hope to get qualified then put in overtime in order to quickly repay what I owe, but unfortunately it’s got a bit too much to handle now.
Sara (Debt Camel) says
ok. So the short answer is that an IVA is a poor option for someone with no assets to protect. They are expensive, often fail and leave an insolvency marker on your credit record.
Sometimes an IVA can be worth it if you have no other sensible options, but you do…
You point out correctly that DMPs can go on for a very long time.
Suppose you originally pay £150 a month to your DMP – and carry on paying the car finance in full.
(I just invented £150 a month as an example to talk about – obviously I have no idea what you would pay.)
Then with all the interest frozen (which is what almost always happens in a DMP, you can assume it will when making a decision) your debts will only drop by £1800 a year which will take 20 years to clear them. Not a good idea!
But you are going to get a good pay rise next year…
In an IVA that just increases what you have to pay each month, it doesn’t mean the IVA ends any sooner.
But in a DMP you can increase your payment. Say you can pay an extra £200 a month so £350 every month – £4200 a year. Suddently your DMP is going end in 8 or 9 years.
Then when your car finance ends, you can pay off the rest of the DMP even faster.
So the starting length of your DMP isn’t how it is going to end up.
I suggest you talk to StepChange now about a DMP and if they suggest an IVA say you want to try a DMP as you are expecting your situation to get much better next year.
———————————————-
Then you can set about making affordability claims to all the high cost lenders. This is in addition to the DMP. You need to get interest stopped and to have an affordable monthly payment – that gets you into a safe finacial space to make these claims.
You probably won’t win all the complaints, but every one you do win will reduce your debts and shorten that DMP. Well worth trying for a few emails. And don’t be fobbed off by the lenders – send complaints to the Ombudsman if they are rejected. You are in a debt spiral caused by being given unaffordable credit.
Here is how to make the complaints – different pages for different types of credit:
Better borrow, Updraft credit, Savvy loans, 118 – https://debtcamel.co.uk/refunds-large-high-cost-loans/
Lending stream – https://debtcamel.co.uk/payday-loan-refunds/
Amigo – you and your partner both need to make a claim to the Amigo Scheme that they are trying to set up. If the Scheme fails, you make the claim to the administrators that will be appointed. See https://debtcamel.co.uk/amigo-which-way-to-vote/
Vanquis, Marbles, Next , JD Williams – https://debtcamel.co.uk/refunds-catalogue-credit-card/
Oodle – use the template here https://debtcamel.co.uk/refunds-large-high-cost-loans/ but don’t start the claim until you are half way through the HP. That’s why I was asking when it started. You may already be bassed this point or it may be quite soon.
(PS if you make affordability complaints in an IVA, it cuts your debts but you still have to pay the same over the 5 or 6 years.)
Tim says
Hi
Thank you Sara your advice has been greatly appreciated and I thank you very much for listening to my issues.
I did put a complaint in against lending stream and they reduced my total by £300, I emailed back to ask them to stop interest and offered an instalment agreement of £50 per month but I’m yet to hear back.
I have voted in the amigo scheme, although I tried to get my partner signed up but couldn’t get her signed in to do it, I’m not sure if the loan has been passed to me now as she couldn’t pay it?? Not sure, but there’s no mention of her on the site when I log in??
I’ll try the others you mentioned then contact step change and see about the dmp.
I’m glad I spoke to you as you better explained the pit falls of an IVA, I think the problem is, it’s made to seem attractive stating that debt can be written off, without fully explaining the finer details.
Thank you very much again
Kind regards
Tim
Sara (Debt Camel) says
I suggest you talk to StepChange now about the DMP.
You need to be able to reject poor offers from lenders and send the complaints to the Ombudsman which will take many months to go through.
Your partner also needs to make a complaint to Amigo – she can vote in the Scheme if she wants but the important thing is to make a complaint. You also need to make a complaint. You should both seperately send a very short email to hello@amigoloans.co.uk with COMPLAINT as the subject. Just say you want to make an affordability complaint about your Amigo loans. She is complaining the loan was not affordable for her. You are complaining the loan was not affordable for the borrower and that it was also not affordable for you. Amigo is not going to look at your complaint before the Scheme so there is no reason to write a lot. Don’t think twice about this, there is no downside to doing it, do it now.
Bob says
Have you seen many creditors write off a debt for a vulnerable person? I’ve had two do that and one ‘not pursue, one creditor put it on a ‘partial’ settlement’ while another ‘charged off’ the debt, I don’t understand the terms
Sara (Debt Camel) says
It happens if you can make out a good case. See https://debtcamel.co.uk/debt-options/less-common/write-off/.
If you aren’t clear about what they are saying, the things to get confirmed that they will not contact you again in future to ask you to make any payments to the debt, they will not sell the debt to a debt collector, and that the debt will be marked at satisfird or partially satisfies with a zero balance on your credit record.
How they account for it internally doesn’t make any difference to you.
Suzzyjen says
I had all my creditors do this when I was working at a retail store group, my job was in danger.I explained the situation and said I had about 6 month s work .I made arrangements to pay about a third of all my debts including student loan.I stuck to the arrangements and all 3 were signed off as satisfied. The only thing was I would never be able to have a student loan but I had peace of mind and I left that employment 3 months after for more secure employment and no debts.
I am only now able to get a small limit£700,credit card but things are better and less stressful.
Jane says
Hi Sara. I am unsure where to being with making a comment.
My mum took out a loan for 10,000 for which I was guarantor. She can no longer make payments and has just been accepted for debt relief order and now the loan has been passed to me. I cannot afford to take this on. I do not no what to do for the best. I have been getting advice from the citizens advice, I have made an affordability complaint. I am unsure whether to begin paying a little while my complaint is investigated to save my credit score. I really don’t no what to do for the best.
Thanks jane
Sara (Debt Camel) says
Who is the lender?
Does the loan currently show on your credit record?
What was your financial situation at the time the loan was given?
What is the rest of your current financial situation like, do you have other debts? Are you up to date with bills?
Kathleen Mason says
When the pension is increased in 2023 the council will deduct that amount from my rent allowance. The pension increase will take me even more over the tax allowance so I will pay more tax on my small private pension so I will actually be worse off.
I did not get the 380 payment as I do not get pension credit and the rent allowance is not counted as means tested even though it is because you don’t get it unless you supply information about your income which shows you need it. I worked all my life to get my private pension but now get penalised every which way
I am 75 and struggling to pay anything
Sara (Debt Camel) says
When the pension is increased in 2023 the council will deduct that amount from my rent allowance.
So you are getting Housing Benefit?
Income for HB assessment is after tax, so you can’t be worse off because your pension increases, even though you pay more tax on it. But you may not be very much better off.
You should be eligible for a Winter Fuel Payment, see https://www.gov.uk/winter-fuel-payment/eligibility which has an extra amount this year to help with fuel bills.
Do you mind saying what your state pension is? And what any other pensions are?
But if you are struggling already, then this will get worse in October when energy bills go up, possibly by about 65%. Do you have any debts that you are paying?
Dan says
Hi Sara,
NCO were chasing me regarding a CC debt with AMEX. I emailed NCO recently and asked them to provide the CCA agreement.
AMEX have sent me a secured email which contains my online application but this does not look like any agreement.
Please note:
The application provided is an Internet Application. Any information highlighted has been
provided by you at point of application and kept on record by American Express. Any other
field is either blank or relates to the card product but is not personal information.
Additionally, the section named “Sign Ind: E“ shows you agreed to the Terms and Conditions
of the account and signifies an electronic signature
It’s just a spreadsheet of data I input when applying by the looks of it. Where it says “the section named” doesn’t actually exist on the document either. What’s the best way of proceeding with this and notifying NCO it’s not the CCA(I am assuming, what do they look like?) agreement?
Again, really appreciate everything you’re doing I feel hopeful
Dan
Sara (Debt Camel) says
go back to them and say you did not ask for a copy of your application, you asked for a copy of the Consumer Credit Act Agreement.
But are you sure this is a credit card and not a charge card?
Dan says
Will do. I’m sure it’s credit card, I don’t know what a charge card is. It was a British Airways AMEX card that I wasn’t required to pay the full balance on each month, which I think a charge card does?
Congratulations and welcome – your application for the
British Airways American Express® Credit Card has been approved.
This is from the email I received when taking out the card. Was second guessing just now but that confirms it was a CC
Sara (Debt Camel) says
yes. Well ask them for the CCA agreement. But unless this is incredibly old, it is likely they will be able to produce it.
It’s normally only worth asking for this if the debt has been sold.
See https://debtcamel.co.uk/ask-cca-agreement-for-debt/ for how exactly to ask for the CCA – you have to send them £1
Dan says
Yeah I asked NCO for it, they got AMEX to contact me and send me the document but it’s not the CCA agreement only the online application with no signatures or agreements attached. I opened the account with AMEX in June 16. Will see what NCO come back with. I’m not requesting the information directly with AMEX, just letting NCO request that as they bought the debt.
Dan says
Hi Sara,
I posted above re AMEX/NCO
I followed up asking for the CCA agreement and they replied with this.
Please accept my apologies for the delayed response.
In relation to your recent Consumer Credit Act (CCA) request, please be advised that there is no signature when a card application is completed online. However, as part of the application process, a box is ticked confirming understanding of the card Terms and Conditions. A copy of these can be found directly on American Express’ website.
I hope that this has provided you with the information you require.
What’s the best way to move forward with this? Sounds very much like “you ticked a box, the terms are on the website and take our word for it”
Surely they need to produce something?
Thanks
Dan
Sara (Debt Camel) says
I suggest you reply that it is your understanding that under the Consumer Credit Act 1974, creditors are unable to enforce an agreement if they fail to comply with the request for a copy of the CCA agreement. Ask them to confirm that the debt is currently unenforceable as they have not provided you with this.
If you don’t think you are getting anywhere when they reply, contact National Debtline on 0808 808 4000 and ask them for help.
Dan says
Hi Sara
I had a reply today..
In relation to your recent Consumer Credit Act (CCA) request, please be advised that the information and explanation provided would be sufficient to fulfil your request, should you still wish to discuss this aspect further you will need to contact American Express direct on 0800 032 7292.
I hope that this has provided you with the information you require.
In the meantime I have placed your account on a 7 day hold pending your response on how you would wish to proceed going forward.
They say “it would be sufficient” but it isn’t and they still haven’t provided it. Is that what I can go back to them and say? I am not required to speak to AMEX myself they can do this right?
Thanks
Sara (Debt Camel) says
I suggest you talk to National Debtline on 0808 808 4000.