In November 2020, the FCA has changed the rules about Coronavirus payment breaks. You can now have 6 months of payments breaks from a mortgage, car finance, most loans, all credit cards and catalogues.
If you have had 6 months already for a debt you won’t be able to get more from that lender.
More than four million of these payments breaks have been taken up until the end of October. And even with these breaks helping many people, Citizens Advice found that in September that 6 million people had fallen behind with an important household bill because of Coronavirus.
Some people have been able to go back to work. With the children back to school in September, this may have felt like some normality was returning.
But local lockdowns and children being sent home from schools with Covid-19 cases made it hard to predict what anyone’s position might be in a few weeks. And we are all back in lockdown in November.
This article looks at what support you can get now and where to get advice if you are struggling. All contact details are at the bottom of the page.
Contents
Benefits that may help
At the start of lockdown in March the government increased some help from benefits:
- the standard rate for Universal Credit was increased by £20 a week;
- people getting Council Tax Support an extra £150 this year.
If you haven’t claimed any benefits before, websites such as Turn2Us can show you what you might be able to claim and your local Citizens Advice can help.
If you already get some benefits, tell them immediately your income drops.
People who currently get tax credits and housing benefit will have these stopped if they claim Universal Credit – and it’s not possible to go back to claiming them once you have applied for Universal credit. So use a benefits calculator to see if you might be better off by switching to UC and take advice if you aren’t sure.
Know what is top priority
When there isn’t enough money to pay everything, you have to make difficult choices.
It’s important to know what must be paid first and in full, even if this leaves not enough to pay non priority debts. See What debts and bills are my top priority for a list of these.
Paying your rent and car finance – and of course food, clothes, transport and heating! – may leave little or nothing for your credit cards and 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 having to explain your budget on the phone to lots of different people.
Important bills and priority debts
Rent and Mortgage
Universal Credit can get you some help with the cost of renting. You may be able to get an extra Discretionary Housing Payment (DHP) from your council if your Universal Credit doesn’t cover your full rent.
Landlords have to give 6 months notice of eviction to most tenants. It doesn’t matter if your tenancy agreement says something shorter or your landlord says you have to leave next month – these are new laws so find out your rights.
You can’t get help with your mortgage through Universal Credit until you have been getting it for 39 weeks. See When mortgage payment breaks end, can you pay your mortgage? for the support lenders should give you if you are struggling and what you should ask for.
Get help – 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 or Shelter.
Council Tax
You can apply for Council Tax Support on your local council website.
The government has provided extra help to local councils. People getting Council Tax Support will get an extra £150 reduction in addition to the normal reduction your council gives someone on a low income or benefits.
If you have council tax arrears but your income is now back to normal, talk to your council about making an arrangement to pay the arrears.
Get help – If you are worried about council tax for this year or previous years, your local council wants you to pay too much or you are getting bailiff letters, talk to your local Citizens Advice.
Electric, gas & water bills
If you are on a low income or are getting some benefits you may be able to get £140 off your electricity bill this winter through the Warm Home Discount Scheme. Check with your electricity company and apply as soon as possible, as some companies close their schemes early.
New rules are being brought in so gas and electric companies will give people more help, see Ofgem strengthens protections for customers struggling with energy bills this winter.
Talk to your supplier and explain your income has dropped because of coronavirus and ask if you can pay a bill 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.
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. So get in touch with your water company and see what help there is.
Get help – if your gas, electricity or water company wants you to pay more than you can afford, talk to your local Citizens Advice.
Car finance
For many people this is their biggest expense after their rent or mortgage.
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 now payment breaks are ending? 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.
Get help – if you aren’t sure about what the best option for you is, talk to National Debtline.
Business debts
Business Debtline helps people who are self-employed or who have a small limited company. They can help look at your personal finances as well as your business problems. Their Your budget tool can give an overview of your situation.
The LITRG has produced a guide to Coronavirus: Self-employment and paying tax.
Get help – talk to Business Debtline.
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, see Who to contact about money taken off your Universal Credit.
Get help – talk to your local Citizens Advice.
The non-priority debts – choose which help is right for you
Have you taken your 6 months of payment breaks?
In the first lockdown, the FCA introduced payment breaks across almost all consumer debt. For most debts you could get a 3 month payment holiday, and then later a second 3 month break.
These were supposed to end at the end of October. But with the new lockdown, the FCA changed the rules so that people who haven’t yet had 6 months break on a debt can now have the rest of their 6 months:
- if you have already had a 6 month break from a lender, you can’t have more – but the lenders have to give you different help instead, see below.
- if you had say 4 months then were back at work and started making the normal payments again, you can now have 2 months..
- if you haven’t had a break at all from this debt, you can now take the full six months if you need it.
The only exception to this 6 month is payday loans, where you were only allowed one month.
During these breaks, interest is still added. The payment break did not directly affect your credit score but lenders may be able to see you have taken one so it may make it harder to get credit in the future.
But lenders still have to offer you help!
When you have used up your 6 months of breaks, lenders have to listen if you still have financial problems and provide you with support.
The FCA’s rules say customers who can’t make payments should be treated “with forbearance and due consideration” by lenders and debt collectors. This always applied, even before Coronavirus.
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.
I can’t say this “lender lottery” won’t happen, but for non-priority debts it is very likely that most banks, credit cards and other lenders will 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. And you can show the report from that to your lender – it proves what you are doing with all your bills and debts.
If you have little money spare you can ask for a £1 a month token payment instead.
Payment arrangements will 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.
One bit of good news: if you need this forbearance, the lenders should help you by removing the extra interest that they have added during the payment breaks.
2) opt for a 12 month Coronavirus Payment Plan (CVPP)
If your finances were fine at the start of 2020, you may just need some temporary help from your lenders while things get back to normal for you.
So StepChange have introduced a Coronavirus Payment Plan (CVPP). This is a sort of DMP that will only last 12 months, aimed at allowing people time to get their finances back on track.
This may suit you if:
- you can pay all your priority bills and debts, or have a payment arrangement in place for them;
- you can pay a “reasonable amount” towards these non-priority debts, say a third;
- you expect things to improve in the next year;
- you weren’t in already in a DMP or an IVA last year which has now failed.
To find out more, complete a short eligibility check and StepChange will get in touch with you.
3) look at a Debt Management Plan
Some people will know they need more than 12 months help.
Perhaps you were already struggling with your debts before lockdown. Perhaps you have lost your job or your business and you know it’s going to take a long while to recover.
StepChange operates debt management plans (DMPs) for hundreds of thousands of people. They make one affordable payment to StepChange each month and the money is then divided between their 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 look at insolvency.
4) other debt options (and why to avoid an IVA)
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.
At the moment if your situation is uncertain and 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.
And if your situation may get worse, you should avoid an IVA. Even before the pandemic, about 30% of IVAs were failing as people couldn’t make the repayments. 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.
Not sure what to go for?
Get help: if you have some money to pay to your non-priority debts talk to StepChange. If you think you have little or no money for non-priority debts, talk to National Debtline.
Already have a debt solution in place but now can’t afford it
Payment arrangements and Debt Management Plans (DMPs)
If you are already in a debt management plan, talk to the company running it and ask to make lower payments or have a payment break. DMPs are informal, flexible arrangements, they can be changed.
This is what happened when one reader called StepChange about her DMP:
Have just come off the phone to a lovely lady. Payment suspended for 3 months. Had options of 1/2/3 months but like you and she said no one knows how long this is going to go on for so best taking 3. Coronavirus impacted code placed on file so will go out to all my creditors. Took me a lot of strength to call up as been worrying about it and the mindset to talk to someone about something so stressful right now x
The same applies if you have already made a payment arrangement with a lender/debt collector. Ask for it to be reduced, to zero if necessary and tell the creditor if you have priority debts such as mortgage/rent/council tax/car finance arrears.
Insolvency – IVAs, bankruptcy, DAS and trust deeds
The Insolvency Service has brought in new rules, see Coronavirus – new rules to help people in IVAs for the extra help available. Your IVA firm and your creditors will not want your IVA to fail because of a temporary coronavirus problem. So talk to your IVA firm about how they can help.
If you are bankrupt and paying an IPA, tell your OR’s office and the IPA will be reduced, to zero if necessary. This will not extend the length of time you have to pay an IPA for – that can’t be more than 3 years.
For DAS & Protected Trust Deeds (Scotland), see Can’t Pay Trust Deed or DAS? by a Scottish adviser. The Accountant in Bankruptcy has said that DAS arrangements will not be revoked (the legal term for failed) if you can’t pay because of Coronavirus.
Summary – where to get help & contact details
If you don’t know what to say to the lender or someone you owe a bill too, or you have tried to talk to them and they are not helpful, talk to a good debt adviser.
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.
- if your problem is urgent and you cannot get an appointment with Citizens Advice quickly, phone National Debtline.
- if your priority debts are under control and you have some money to pay to your other debts talk to StepChange.
- if your priority debts are under control leaving you with little or no money for other debts, talk to National Debtline.
- if you are self-employed or have a small limited company, talk to Business Debtline.
Contact details:
- Find your local Citizens Advice.
- National Debtline: phone 0808 808 4000 or use the National Debtline webchat.
- StepChange: phone 0800 138 1111.
- Business Debtline: 0800 197 6026 or use the Business Debtline webchat.
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 the real thing!
Bella says
Finally, after complaining to both the FCA, the Ombudsman and to Likely Loans, I got a response and was asked to call in. We called and got sorted out immediately with the payment holiday put in place for three months – April, May and June. The advisor was great and also put a complaint in on our behalf to Likely Loans which we have had confirmation of. It’s annoying that you have to complain and complain to get results but it is sorted now. Thought I would put it on here in case someone else is having problems.
Sara (Debt Camel) says
It is good news that this difficult lender has been made to comply – for anyone interested your previous comments were here https://debtcamel.co.uk/coronavirus-can-you-pay-debts/comment-page-1/#comment-359332 – and that FOS was helpful. It is a shame that you have had so much stress getting this sorted.
Grace says
Dear Sara
My husband and I were guarantors for our son ( pub trade ) and he is no longer able to pay – we have been in contact regularly with the lender making them aware we are waiting on universal credit next month and waiting to sell our house ( sale fell through due to corona ) we were able to make partial month payment but this took several calls from us for them to accept this – we have also emailed as well as asking on the phone to put in writing that they would not accept our payment – they have not – today we called to make another £100 and were informed it has been moved to the litigation department and again would not accept payment – I’m a wreck – what can we do ?
Sara (Debt Camel) says
Hi Grace,
who is the lender?
Grace says
Hi Sara
The lender is bluerock finance / nationwide finance
Many thanks
Grace
Sara (Debt Camel) says
This is business lending not consumer credit. I suggest you talk to Business Debtline about your options https://www.businessdebtline.org/EW/pages/default.aspx As they are specialists in this area.
Grace says
Thank you 😊
Sharon says
I have credit union loan and requested payment break or take payment from savings which they did for last two months. They said they are not included in FCA guidelines and will not help as I haven’t been furloughed or lost my job. My income is reduced by about £300per month as I have been told to work from home so have no additional expenses on my now basic income. My partners wage is reduced due to his reduction in hours but they say the loan is in my name. Where do I stand as they take money straight out my wage? £161 each month.
Sara (Debt Camel) says
Many CU loans are not FCA regulated and the FCA’s rules don’t apply to those.
your income may have been reduced because of no expenses, but presumably you also aren’t incurring those expenses? So perhaps not that much worse off? But the fact your husband’s income has dropped is relevant as it has affected your household income.
Having the loan directly deducted from your salary is a difficult situation.
Do you have other debts as well? I think you should talk to a debt adviser about your situation – call National Debtline on 0808 808 4000.
One thing you could consider is putting in a complaint to the CU in writing – email preferably – saying they are not treating you fairly, that your household income has fallen and you don’t understand why they cannot use your savings to cover more loan repayments.
Steven says
Sara,
After a sustantial loss of income and taking the realistic senario that things won’t improve for 12 months, I am facing the following:
£55,000 of debt (1 loan and all the rest cards)
£385 per month available to creditors after expendtures.
Home owner but no mortgage to pay.
Credit score of 400 but no markers (yet!)
I decided to approach each creditor directly rather than through an intermediary.
I have 90 days arrears on two of the credit card accounts. And I’ve been told at 180 days that unpaid arrears will be transferred to a debt purchaser. I have already begun a pro rata payment plan with these two. I am yet to agree on flexible payment plans with the others and they have all agreed to allow me any offer I choose to pay. All other cards are currently up to date.
I don’t know if I should be hung up on credit scores, but I was wondering if there is good reason to just default on the larger debt balances and get it over with, thereby starting that 6 year period as soon as possible? I guess what I’m asking is I’d like decent credit worthiness 5-6 years from now even if I’m still paying down balances.
I could possibly pay the outstanding arrears (£1000) before the 180 days is up I just don’t know if it’s worth doing, as cards have or soon will all be stopped and payments have been missed anyway.
Thank you.
Sara (Debt Camel) says
I guess what I’m asking is I’d like decent credit worthiness 5-6 years from now even if I’m still paying down balances.
If you think it’s likely to take you that long to repay the debts (and 55k is a lot!) then usually the best things is to stop paying them all for a few months now to ensure they all get defaulted and drop off after 6 years. Not just the larger ones.
If your income is very secure in these difficult times, you could also look at an IVA.
Although another option is to default on everything and then go for settlement offers in a few years when they have all been sold to debt collectors.
What could you do to improve your situation – do you have a room you could rent out?
Or you could look at getting a mortgage if your house is worth a lot? you will have to move fast on that before your credit rating is wrecked.
R says
Hi Sara
Advise please if I may.
I set up a payment deferral with Satsuma in May as my wages had been impacted by corona. They repeatedly told me on the phone (when recommending the option) that my credit file would not be impacted. Despite me contacting them to make my next payment, and it now being back to normal, i’ve had a notification this morning to say my credit score has dropped. Upon checking, they have registered a missed payment on my credit despite assuring me they wouldn’t! It’s my only missed payment in 6 years so my score has dropped quite considerably. I’ve put in a complaint, but they take months to reply due to un affordability complaints. Am I right in my understanding that they shouldn’t be doing this based on the FCA’s guidelines for the pandemic?
Sara (Debt Camel) says
can I double-check, your arrangement was just for 1 month? This makes a difference to the payment deferral rules for payday lenders.
Are the payments now really affordable?
R says
Yeah it was one month, but due to them Putting the arrangement in place for X amount of days, it meant that 2 payments were due within that period, I ended up contacting them and Ending the period earlier so that I could start making my payments again
Sara (Debt Camel) says
OK, then they should not have registered a late payment.
Correct to put in a complaint, I suggest you ask for compensation, eg £100 if they resolve this quickly and say you will be asking for more if it has to go to the Ombudsman. And send it to FOS at 8 weeks.
R says
Thank you very much for your advise Sara, I am so angry! The sacrifices I have put myself through in order to never miss a payment in 6 years and they go and do this! Angry is an understatement!
Sara (Debt Camel) says
The sacrifices I have put myself through in order to never miss a payment in 6 years and they go and do this!
That suggests that you have a good affordability complaint against them…
Nana says
Hi Sara,
Thanks for the great website, lots of valuable advice.
I’m a guarantor for a loan yet and the borrower is currently affected by the pandemic and is losing his job.
However the loan company say that only if I’m not able to make payments either can they then consider the payment holiday as that was part of the agreement.
I have mentioned the FCA and said that is not what they say, that they’re supposed to be helping the borrower? Also he’s been making all payments up until when he asked for help.
The lender is Guarantor My Loan.
The borrower has asked again about the payment holiday but they are requesting his and my bank statements – I don’t understand why they need my bank statement though, as obviously they would then start taking payments from me and therefore would not be helping the borrower at all.
Nana says
Also last month when he was struggling he made a partial payment and had spoken to them yet they took the full monthly instalment from my account. It was only when I called to question it that they refunded me just the amount that was paid by the borrower.
Should I cancel the direct debit?
Sara (Debt Camel) says
yes cancel the DD!
And send GML a complaint saying they had no right to take a payment from you when the borrower was on a payment deferral because of coronavirus. And your finances are irrelevant to whether the borrower should be given a further payment deferral so you will not be sending them your bank statements. Quote from this FCA document: https://www.fca.org.uk/publications/finalised-guidance/personal-loans-coronavirus-temporary-guidance-firms which says:
“In this guidance, ‘payment deferral’ means an arrangement under which a firm permits the customer to make no payments under their regulated credit agreement for a specified period without being considered to be in arrears. As the customer would not be considered in arrears we would expect firms not to pursue relevant guarantors for payment during a deferral period, in respect of payments deferred under this guidance.”
You could also do the borrower a favour by sending them a link to this page: https://debtcamel.co.uk/how-to-complain-guarantor-loan/ and suggest they consider whether to make an affordability complaint. If they win this, interest is removed from their loan (a big win for them) and you are released as guarantor (a big win for you).
Also have a think about whether you can argue that you couldn’t have afforded the repayments, see https://debtcamel.co.uk/amigo-complaints-by-guarantor/.
But these affordability complaints are extras, on top of the basic complaint that GML are not applying the FCA’s rules on payment deferrals.
Nana says
Thanks Sara. Would this be considered a payment deferral if the lender refused to help the borrower?
In this case they’re refusing to do anything until they’ve seen both our bank statements, but I’m not sure why they need to see mine in order to determine if they can help the borrower? As from what I understand, according to the FCA, they should be expected to help the borrower?
Thanks, just wanted to be clear before I raise a complaint! Could the borrower raise a complaint that they’re not following FCA regulations?
Sara (Debt Camel) says
The problem is this is all third hand. You are telling me about a conversation between the borrower and GML. Did he ask for a payment deferral or to make a reduced payment because of cornavirus? If he did, why was this not granted? If it was granted, you should not have been asked to pay the rest.
And they should not be asking for your bank statements now as your finances are not relevant to giving him a payemnt defaerral because of coronavirus.
Nana says
I’m not aware of the exact conversation that the borrower had but when I spoke to GML yesterday they were telling me they had to see our bank statements before they can decide to help him.
It looks like they are not following the FCA guidance then.
Sara (Debt Camel) says
It does. I think you can complain about this.
Cherrelle says
Hi I had an arrangement with the bank to repay an outstanding overdraft as I switched to a different bank. I lost my job just before Coronavirus and defaulted on the arrangement. I called them and Informed them of this and no payment holiday or any help was offered during Coronavirus. I was told I had to at least pay a minimum payment. I did so and was late on one payment last month and have now been defaulted due to losing my job again. Is there anything I can do?
I have credit cards and other debts also but no late payments with them
As I was on a payment holiday with all of my cards.
Sara (Debt Camel) says
ok, so how easy is it going to be to find another job? And if you do, will you then be able to afford all the minimum payments as the interest will have been increasing?
This overdaft was no longer active, it was already in a payment arrangement. What were the terms of this arrangement? And did it show on your credit record?
Cherrellea says
I have found another job and in employment full time with a contract paying monthly credit cards has been reinstated as I was on a payment holiday for all.
Yes the overdraft was no longer active. The terms were that I paid £200 a month which I didn’t want to commit to I tried to agree £50 and the bank said no so and that £100 was the minimum last month I couldn’t afford it and I paid £50 of which I could and now have been defaulted. I tried to contact the bank on the bank on several occasions but due to Coronavirus the phone lines are always and I could never get through.
The account is closed and there are no overdraft charges. It was a student account with a free overdraft. I switched banks and need to pay the outstanding overdraft to fully close the account
Sara (Debt Camel) says
was the £200 a month less than the monthly overdraft charges? and have the monthly overdraft charges continued while you are in the payment arrangement?
Joanna Nicholson says
My husband had a loan with Barclays. He phoned up and asked for a loan holiday when he lost his job due to Covid they said fine and cancelled his direct debit. Luckily now he has a new job 3 months later so phoned up to restart the loan. Barclays never put a stop on the loan just cancelled the direct debit we now find they have sold the debt to a debt collection agency and never contacted us at all. How can they be allowed to do this ? I am so angry now his credit rating will be rubbish.
Sara (Debt Camel) says
are you sure it was SOLD or are a debt collector just collecting on behalf of Barclays?
Ilya says
Hello Sara,
I’ve been paying my IPA (£220p/m) promptly for 2 and half years. Since April 2020 I’ve been furloughed up until September this year. In the beginning of furlough I’ve contacted my IPA receiver via Email stating that my income had dropped to such extend that it was impossible for me to maintain existing payment. I had no reply from the Receiver. I phoned to them and automatic message said that due to COVID the office was closed. I’ve skipped my payment and did so through the furlough period . In September 2020 I wrote an email again saying that I was back to work but my hours of work were reduced together with 5% salary reduction and reduction in my hourly pay. Still I haven’t heard anything from them.
Today I received a letter from IPA receiver stating that my debt has been passed to Debt Recovery Agency (?!) (This was the only reply I received from them despite my previous emails)
Dear Sara , please advice what are my options.
Thank you in advance
Sara (Debt Camel) says
The IPA receivers will have been dealing with hundreds of requests to suspend or reduce the monthly payments. You have been doing the right thing so far. You just need to persevere – I wouldn’t worry too much about this, it should all get sorted in the end.
The Insolvency Service has published new contact details here https://www.gov.uk/government/publications/contacting-an-official-receiver/contact-information.
Most payment agreements with Clarke Willmott are being changed to Advantis Credit Ltd in September or October 2020. To ask to vary these arrangements you can contact Advantis or complete the insolvency enquiry online form here https://www.insolvencydirect.bis.gov.uk/externalonlineforms/GeneralEnquiry.aspx. Or do both!
Maxwell Lennon says
This is really useful info! Thank you for sharing!
Linda says
Hello Sarah I’m on u/c and my husband has lost his job because of Covid I’ve had 2 payments holidays with my loan company and due to start making payments again in October which I cannot afford what are my options now I’m with 118118 loans would be grateful for any advice before I ring them thank you Linda
Sara (Debt Camel) says
You can ask 118 for a payment arrangement.
Do you have other debts as well? It’s best to get a plan for all of them, not just the ones you think are worst.
Do you have any priority debts – rent arrears? council tax? gas/electric?
Any benefit overpayments?
Also read https://debtcamel.co.uk/refunds-large-high-cost-loans/ and think if this 118 loan was always “unaffordable” for you – in which case complain about that.
Zac says
Hi, I have had 2 x 3 months deferrals (6 months total) from Amigo on a guarantor loan. I am unable to resume a payment to them please can you kindly advise what options are available to me. I am unemployed currently and not eligible for benefits. I am currently living with a friend who is providing a roof over my head and food. Amigo have stated they can only offer a maximum of 6 months. Further FCA guidance is awaited, surely many are facing uncertainty like I am currently with their finances. I know my guarantor is also in difficulities financially. Equally, I ma not in a fit mental state to be having a telephone discussion with Amigo as to my income & expenditure as my circumstances are severe and challenging currently. I’m happy to email them for now. My payment was due to resume on the 18th October and I find myself in desperate circumstances and worse if it were not for my friend with whom I’m staying with. Thank you and apologies for the long message.
Sara (Debt Camel) says
I am very sorry to hear that.
Can you say some more about this loan. Was it your first from Amigo? Have the payments always been a struggle, even before Covid-19? Many people are winning affordability complaints about these loans. See https://debtcamel.co.uk/how-to-complain-guarantor-loan/ and think if the loan was unaffordable for you when you took it out – if so make a claim. If you win a claim, interest is removed but also your guarantor is released from any liability.
What was your guarantor’s position when you took the loan – could they really have managed to make all the payments and still paid their own debts, bills and normal living expenses? Because they too can complain if the loan was unaffordable for them/
Zac says
Thank you for your response Sara. I originally took a loan of 10k with Amigo in 2017 and then 15k in 2019, around 2 years later. It has always been a major struggle for me to pay.
I think my guarantor’s position has always been reasonable financially. That said, he had to pay only once (in the entirety of the loans since 2017) back in March of this year as the pandemic unfolded, prior to that, by hook or by crook, I always managed to pay the monthly payments.
I am happy to make an affordability complaint but given my resumption of payments after 6 months freeze was due on the 18th October, I would like to seek some forebearance from Amigo.
My concern is that some payments need to be continued whilst any complaint plays out. I wonder what they would accept as it is currently impossible to pay the £592 monthly payment.
I really want to prevent my guarantor having to pay but need to be quick to agree something with Amigo beofre they debit his account. An affordable forebearance payment arrangement whilst initiating an affordability complaint without the guarantor being bothered would be the best option. How long would I need to keep paying whilst a complaint plays out? I’m just not in the frame of mind to discuss my finances with somebody at Amigo on the telephone currently. Thinking perhaps to email them with a proposal. So sorry for the long message and I am very grateful to you.
Sara (Debt Camel) says
Unfortunately you do need to carry on making the payments while a complaint goes through. That is not a reason to delay complaining though. If you think the loans were always unaffordable for you now, there is no downside to complaining today. It may not get you out of the current hole but there is nothing that will do that, so kick this off now, even if it takes months to sort out. Every week delayed delays the possible solution.
Amigo have to consider forbearance for you if you ask but many people find they are not sympathetic unless you can offer a large proportion of your normal payments. Much less and they would be very likely to ask your guarantor to pay.
What other debts do you have? Are you making payments to them? do you have priority debts – rent arrears, council tax, electricity/gas?
And it will be a difficult conversation to have, but it may be a good idea to talk to your guarantor about whether the loan is really affordable for them. Can they make all the payments out of their income and still pay their own debts, bills and everyday living expenses?
Zac says
You are so kind Sara and I deeply appreciate your advice. My current financial circumstances are exceptionally poor, nothing coming in and really unable to pay. During the pandemic I have incurred a CCJ and defaulted on several credit card accounts. I do agree with all that you suggest about submitting a complaint. What please, from your understanding typically would Amigo expect as an acceptable forebearance paymen? My monthly payment is £592. I could raise some funds whilst the complaint plays out to maintain a monthly payment to them. Do you think they would accept 50% of the payment or are people getting refused for that generally? So sorry to be asking you, you are a lifeline for me in terms of advice. Thank you.
Sara (Debt Camel) says
There is no recent experience. Before the pandemic I don’t think they would have agreed to half but you could try.
Have you applied for benefits? What are you living on, do you have rent arrears?
I really think you need to talk to your guarantor.
Nigel says
I took a payment hoilday with nationwide for 6 months
What they said numerous times is you can rewrite the loan after payment hoilday finishes, or continue same as before.
Now what they have done told me my loan been written off, either pay full amount back or start a Dmp with them.
Also theta added on internel arrears so my arrears have gone from 700 to 2000.
They also told me they should have never gave me a payment hoilday because of my arrears but they did.
I feel they have been dishonest and don’t all this behind my back would have never took a payment hoilday, if I knew this.
What’s by next option?
Sara (Debt Camel) says
So you had arrears before lockdown?
If they hadn’t given you a deferral, what was your realistic alternative?
were you making the normal payments at lockdown?
it sounds like they are offering you a fair option, what is wrong with it?
Nigel says
I had 700 arrears before the referral
Without payment hoilday I could have made the Monthley payments 200 a month and small amounts towards the arrears 50 a month
Just checked my credit file they just added on a defult
Sara (Debt Camel) says
Is this surprising? They shouldnt have done that is your only arrears were from the coronivius payment deferrals, but you had arrears before that.
Isnt a DMP a good option for you now, to pay this back at an affordable rate?
Nigel says
Yes because they never informerd me. they never warn me,
They already admitted their error they should have never gave me a payment hoilday.
Before I had 4 missed payments but doesn’t mean they just put a defult on
They did payment hoilday and I was happy thinking back to normal, they treated Pauline the hoidlay as missed payments
No dmp is not as my credit file is my main issue, and I can pay a bit more to cover arrears.
Sara (Debt Camel) says
A creditor can register a default if you are 3-6 months in arrears. You were 4 months in arrears so it is going to be hard to dispute it.
They aren’t actually obliged to warn you before adding a default to your credit record. And I can’t see their error has done you any harm – presumably you needed the payment holiday?
You can try to complain and say this unfair, they never told you about the default, they say they should never have given you a payments holiday and you are happy to set up a payments arrangement if they remove the default. You may not have a strong case, but it’s worth a try.
Nigel says
At one point I even called them to clear ALL the arrears before payment holiday, they said I will just have to wait till it’s over as arrears have been added.
I used that money now to clear other debts but I can still afford their Monthley payments.
The error has done me huge harm considering I want to buy a house. A default is the worse thing. At the time I took payment hoilday I was been scammed by a friend but would have found money to pay them.
Yeah I’ve complaimend so will wait and see
Sara (Debt Camel) says
OK, but the missed payments even without the default or subsequent payment break would still be causing your problems. if you are realistically in a position to buy a house, then you should be able to clear these arrears.
Nigel says
if I never had the hoilday, there would be no defult, and it was one of many errors they made by giving me paymnet hoilday
1)payment hoilday
2) extended payment hoilday
3) on every single call 4-5 calls saying I could rewrite or go back to before.
4) when I called up to pay all the arrears before the payment hoilday , they said it won’t make a diffence, and I can’t just call us up once payment hoilday has finsihed
The person below the manager said I have a strong case,
Nigel says
Thanks, forgot to ask , will a default affect my bank job And I don’t want to stay in same department for 6 years I was gona apply to move next year
I think the strongest argument I have is I literally called to pay of my arrears and asked about credit file,she said wait till you receive letter, and pay of then, credit file won’t make a difference as we gona rewrite anyway.
if I knew about the defult was on the way I would have paid off ALL the arrears including internel, this would have never happend now I’ve used that for other debt but could still pay 700 arrears before payment hoilday
Also I made complainet over the phone if it is written does that make a diffence.
As I’ve read somewhere, only coresponden in writing
Sara (Debt Camel) says
So you know all the arguments to make. I am sure Nationwide will treat this as a proper complaint even though it was made over the phone.
I don’t think many finance jobs would be affected by one default, but obviously I can’t say anything about yours.
sunny says
Hi Sara
Total debt £20800. loss in gambling about £6000.sent money abroad ranging £500 to £2000 (Oct 15 to Aug 20) .Daughter had cleared credit card in April 2018 (£2500) and then March 2020(£2700) Have paid back to daughter about £5000 in last two year.Have paid regularly since 2015 all loans and credit card with interest. Have paid more than £30000 towards loan and credit card payment since 2015. Made redundant in August 2020. At present on UC and unemployed..Have two bedroom house out of EU jointly. with spouse who died in 2015.After her death her share has gone to children. Does not have any document for ownership of the house If OR ask me any documents for house I don’t have anything.Now house is jointly held with two grown up children. In this situation if I go bankrupt am I committing any criminal offence? Can OR sale the house? Value of house will be app. £12000. I am sure to get bankruptcy restriction order my question is in case I am refused bankruptcy will I be tried for criminal offense?How far OR can check record and do my daughter has to return money and how much? Living in rented apartment and tenancy is jointly held with daughter. . Can OR informed landlord? I have read all your comment and find it very easy to understand..Would like to hear your views on my situation.
Thanks a lot in advance sara.
Sara (Debt Camel) says
Are you still gambling, if not, when did this stop?
You were paying all your debts up until August?
When did you last make a payment to your daughter?
Is she living in the apartment with you, if so is he paying the bills at the moment?
Can you say where the house is?
sunny says
Hi Sara
Thanks a lot for prompt response.I have stopped gambling this month.deleted all the gambling app. till now we have paid all bills together.last payment to my daughter is in Aug 2020. my daughter is staying with me.House is in india .I have paid all my installment towards loans till Aug. from Aug I am paying through overdraft so personal loan decreases but overdraft increases.I am about to hit my overdraft limit.
Sara (Debt Camel) says
ok, so if you can get another job, you would have real spare money and be able to pay down your debts? Is there any reason to think you can’t get another job in 6 months or a year?
sunny says
yes
If I get job I don’t mind paying all the extra money paying towards my debts. It’s very difficult to get job. I have osteoarthritis and can not bend my knees and can’t stand for long hours. I was working in reputed airlines and airlines will take at least two years more to start full operations. I have got job in royal mail for christmas casual for one month.
Sara (Debt Camel) says
There are 4 reasons why going bankrupt now may not be a good idea, but nothing you have said suggests that you have committed any criminal offence. Or that your bankruptcy would be refused.
I’ll give you some points to think about, but you need debt advice, not just some pointers from me because someone needs to look at your case in detail So I think you should talk to National Debtline on 0808 808 4000.
Some reasons for not going bankrupt now are:
1) your gambling. This won’t stop your bankruptcy being accepted. You may get a Bankruptcy Restriction Order but you know that and realistically you may not care. On its own a BRO would only be a minor factor and probably shouldn’t make any difference to your decision, But you have other problems as well.
2) the payments to your daughter. The Official Receiver looks for where people have “given preference” to some creditors in the last two years eg paying a relative rather than your other creditors. It may be possible to argue that you were paying the normal payments to your other debts at the time. It is up to the Official Receiver to decide if this was “preference” in which case your daughter may be asked to return the money.
3) the house in India. When you bankrupt, your interest in this property becomes the property of the OR. You have a duty to co-operate with the OR in his actions. He may want it sold. Or the other owners could offer to buy it from him. I have no idea how this works in India or what the costs of doing this would be. If you are right that it is worth only 12k, then there probably be a limit on how much the OR want to spend in legal costs to get your half of that value. But it may be unwise to assume that this can’t be done. National Debtline may have a better idea.
4) your own position may improve. Obviously you think it’s unlikely you will get a good job soon. But it may happen. And even a not great job may allow you strat making some repayments to your debts. This seems an early point to rush into banklruptcy as you were paying all your debts before redundancy and now you have stopped gambling (congratulations – one day at a time – but that is the best news) that will help.
So you may decide that bankruptcy isn’t a good idea. Or not now, but it could be in future. please take proper debt advice and look at other options, eg making token payments to your creditors.
I said it doesn’t sound as though you have committed any criminal offence. But if you do decide to go bankrupt it is ESSENTIAL that you list the house as an asset and mention the payments to your daughter. Leaving them off could be a criminal offence.
sunny says
Hi Sara
Thank you very much for explaining my case so nicely. I am trying to request my creditors to freeze interest and repay all of them in small amount every month. If they don’t agree and they want to take me to court how soon they can do it? this is my first instance that I will be defaulting.If my creditors decides to make me bankrupt what will be my situation?How soon they can do it?
Sara (Debt Camel) says
Here is an article on token payments: https://debtcamel.co.uk/token-payment-debt/.
If you explain your age, health problems and that you have recently been made redundant because of coronavirus it is VERY unlikely any creditor will think about going to court. You have no money – going to court doesn’t magically mean that you suddenly get money to pay them.
The only creditors that will often be difficult ar secured creditors (car finance, good on HP) and guarantor lenders.
And it is VERY VERY VERY unlikely any personal commercial lender would choose to make you bankrupt. It costs them a lot of money, you would have to owe over £5000, and they still wouldn’t get any money back from bankruptcy.
Are there any creditors you are particularly worried about?
sunny says
Thank you very much Sara. I am having second thought over going to bankrupt. Worried about Barclays? Have personal loan,credit card,overdraft.Total £14000.Have been paying loans EMIs to them since November 2015.your article on token payment is very good and now I have clear picture about it.thank you very much for that.
Sara (Debt Camel) says
So talk to Barclays and ask for token payments. They may be more sympathetic than you expect.
You can also ask for a coronavirus 3 month payments break on the credit cards and loans – that doesn’t stop interest being added, so your debts get worse, just a break from payments. You can only do this until the end of October – so THIS WEEK!
But you may feel it’s better to offer a token 31 a month payment and ask for interest to be frozen.
And again National Debtline can be good people to discuss token payments as an option with.
David says
Isn’t it time the Government tightened up the six year rules. If someone has paid payments on debts or been in touch with the debt collection the debt should become stature barred after six years. I have had debts hanging over me for over 12 yrs, it has extremely damaged my health. I could go bankrupt to get them off my back, but why should I. These companies should be banned, they must be costing the NHS a small fortune. The problems will get even worse after the current pandemic, thousands of people with little or no money. I gather they are hiring an army of debt collectors to inflict yet more suffering on people, and quite happy to chase you to your grave. They try to make out they are caring companies, rubbish. I think a possible solution is to take them to a court of human rights as they are damaging people’s health. The owner of Cabot said in the press last year, it’s like taking candy floss off a baby, shows how sick he is.
Sara (Debt Camel) says
I think there is very little chance of that happening.
What sort of debts are your old debt? Cards, catalogues, loans, overdrafts, other?
You have been making low payments for a long while? Are you in work? Have bad health?
kate says
Hi Sara,
I have an overdraft of 4,500 with TSB, contacted them back at the start of lockdown in April to ask for the interest on my account to be lowered and the £500 interest free to be put onto my account, i have had this is place for a 6 month period and now as of 31st October that has come to an end, i contacted them last week asking for more help because I’m going to struggle to pay the 40% interest on the amount i owe as i have other credit cards to pay off, they have actually refused all help, wont even lower interest rate to help me lower the balance, i have an ongoing complaint with them about them upping my limit so high that it is unaffordable for me, but that was only done two weeks ago and i understand this can take a long time to get a reply, the FCA states that banks have to help customers who ask for it, so why am i being refused help? do you have any advice for me?
Sara (Debt Camel) says
Are your finances affected by coronavirus?
Are you managing to pay more than the minimum to your credit cards?
kate says
Hi Sara,
Yes my hours have been lowered since returning to work from being furloughed, i have been told today from my employer that i will be furloughed again from Thursday.
At the moment i am paying just the minimum to my credit cards
Sara (Debt Camel) says
At the moment the FCA hasn’t said anything about whether banks will have to provide extra help to people with overdrafts. This will be known in the next week or so I guess. You could wait and see if there is anything helpful there?
If your wages will be dropping with furlough, then you will be struggling to pay the credit cards I guess. One thing you could look at which would cover the cards and the overdraft if StepChange’s Coronavirus payment Plan? A temporary measure for 12 months whether interst and fees are frozen to give you time to recover from these income shocks. See https://www.stepchange.org/how-we-help/covid-payment-plan.aspx and talk to StepChange about this – that wpuldn’t commit you to anything but it might be a helpful option that would make the whole of the next years easier.
Kate says
Great, thanks you Sara, do you know if this will affect my credit score badly if I take the coronavirus payment plan?
Sara (Debt Camel) says
It will harm your credit score. How badly depends on how good it is at the moment.
But you may need to start clearing your debts, even if this does harm your credit score for a while.
Lokanski says
So here it is, I lost my job and I have lost hope of finding a new one. I have crippling depression and panic atracks due to being overworked at my previous place.
My debts are:
1500 Lloyds Overdraft
1500 Lloyds Credit Card
1700 Barclays Credit Card
600 Likely Loans
234 Bamboo Loans
400 Capital One Card
1900 Paypal
I have no savings. My employer offered to pay my salary up to December, I intend to pay off Lloyds 3000 and go home abroad. If I find no work by December I will have to go, I am already feeling suicidal living in London.
My question is which other debt I should be worried about the most? I am worried about Paypal, they have been aggressive in the past.
Would other debtors follow me abroad after Brexit and quickly can I expect the debt to be sold off to debt collectors or sent to courts?
I know the standard answer is to look for job here, but my mental state is really bad and I worry something bad can happen to me if I stay in UK, I already been to AE last week with nervous breakdown.
So my questions are:
:which debt besides Lloyds should I focus on?
:how quickly will it be sent to debt collectors?
:how quickly goes it to court?
:do I have 1-2 years of safety abroad before being chased?
:can I ask some of the lenders to waive the debt off due to my health state(severe depression, panic attacks, self harming, suicidal thoughts)?
Sara (Debt Camel) says
I don’t know why you are planning to clear the Lloyds debts but not the others?
If you want to go home abroad, the most important thing seems to go, get yourself settled, which may involve some money if you need to rent somewhere, and find a job abroad. That could take a long while and who knows how much spare money you will have at the end of it?
You could offer to pay all your debts a token £1 a month until you have another job? You could not talk to any of them until they contact you?
How likely is it that you will return to Britain?
No-one knows what will happen after Brexit, but these are all small debts. realistically there is a limit to what a credit is prepared to pay to enfoce a debt in a different country.
Lokanski says
I have family abroad that can provide me with a place to stay, food and give some small change to travel for interviews.
I am clearing Lloyds because it is my main account and I want to have at least one debt off. I might ask my family for £1000 to either clear the small debts or part of Paypal or Barclays.
Sara (Debt Camel) says
ok, it’s your choice, but no debt adviser would suggest doing this – your debts should be treated equally, not some paid in full, others ignored. And certainly not borrowing off family to clear other debts.
Lokanski says
Well without work, there is little choice I have I am afraid :(
Clearing some of the debt will help with my mental anguish considerably, the idea of not clearing anything with what you have means in month or two when you are still unemployed you are still left with all thhe debts. At least I will clear some of it.
The only thing that worries me is how quickly they will follow me abroad.
Sara (Debt Camel) says
But £3000 would let you carry on making the minimum payments for a while.
Lokanski says
Is there any point in taking Job Seekers allowance if I apply for Universal Credit? It seems the first reduces the second? I don’t really understand it.
Sara (Debt Camel) says
Some people can get JSA who would nit be entitled to get Universal Credit. I suggest you talk to your local Citizens Advice.
Mark says
Will the government put in place payment breaks for people who have already had 6 months. Then paid a month. Then went back to furlough?
Sara (Debt Camel) says
Under the current FCA proposals, no. They only allow for more payment breaks if you haven’t had 6 months already.
These have been put out for consultation but are not yet final, so in theory something could change, although in practice changes at this point are rare.
What sorts of debt are you concerned about?
Adam says
Hi Sara,
Was fully up to date on payments for my AMEX, Barclaycard & Capital One up until March this year – my business was wrecked due to COVID as it’s export & I was completely priced out of the market in the sector. In the end missed payments on all three although taking the 3 month breaks – still my business was suffering after & I couldn’t make payments. During this time I suffered two deaths in the family from COVID, & fell ill myself to have only recently recovered.
All three cards now have defaulted (November), to a total of £6000.00
If I were to pay all 3 in full, would I have a leg to stand on to dispute the defaults with the lender? COVID has been a very tough time & now to have my credit ruined is just the icing on the cake… I also had no access to letters due to social distancing restriction (such a mess).
Thanks
Sara (Debt Camel) says
So you took two 3-month payment breaks on all the cards?
Adam says
Yes, on both other than the Capital One which I’ve offered a one off voluntary payment.
Sara (Debt Camel) says
So you should not have had missed payments or defaults recorded for those 6 months. But if you since missed payments then they can be recorded and a default can be added when you are 3 months behind – which would be Sept – Oct – Nov?
When the payment breaks came to an end, did you talk to the lender about not being able to resume normal payments?
Shazia says
Hi Sara,
I have a Capital One card, for which I haven’t been making any payments, and due to the covid situation, I haven’t been able to make payments and buried my head under the sand, so to speak. I have therefore defaulted on my account.
I am eager to get this default reversed somehow and start paying the card off.
Is there any way, that CapitalOne could cancel my default, especially due to the tough year?
Sara (Debt Camel) says
Can you afford to make the normal payments now?