In Debt and Furlough Ending

On the 12th August the UK government announced that the UK had fallen into recession. The Coronavirus has not only caused countless deaths, but untold damage to the economy.

In debt and on furlough

The furlough scheme has allowed businesses which are struggling to keep employees on their payroll, but delegate the payment of wages to the state. Furlough or job retention scheme, means employees are paid up to 80% of their income to a maximum of £2500,00, this has now dropped to 70% and the employer is paying 10% towards the salary of each employee. In October the government will drop it’s payment contribution to 60% and the employer will have to start paying 20%.

When an employee is on furlough they cannot work for their employer. The scheme began on the 20th April and on the 5th May the government announced that one in four UK workers had been furloughed.

The Question Is Now What Will Happen When It Ends?

When the scheme was first announced on the 20th March it was only to be available to business until 31st May, however on the 12th May the chancellor announced it would be extended until the 31st October, though it would start winding down from the start of August.

For the millions of people on furlough it is concerning to think about what will happen when it ends. The plan was always that the employee would return to work, the crisis would be over and their existing position would still exist. Many businesses however are no longer in a strong position and this may no longer be the case.

Companies will have 4 choices, bring back employees full time, agree reduced working hours, furlough employees longer (at their expense) or redundancies. The employer will have to put any decisions in writing and employees made redundant will be entitled to their full redundancy pay. It is important for employers to keep talking to their employees to ensure they are full aware of what is happening.

With furlough ending and many people facing redundancy, it is important to know what help is available, what benefits you may be entitled too, making sure you can pay your essential bills and if you are struggling with debt what options are they suitable for?

Debt solutions do vary depending on where in the UK you live, your circumstances have to be considered also, are you in employment? Do you have any assets? What is the level of your debt? It also good to do an income and expenditure to see what affordability you have to pay towards your debt. Once a debt advisor has gained all the relative information they will discuss your options going forward, it is important that you are aware of the pros and cons of each debt solution.

It is important you talk to someone so you are aware of all the different debt solutions that are available.

When The Payment Holiday On Your Credit Card Ends

Furlough endingMany people have applied for a payment holiday on their credit cards due to the COVID-19 pandemic, However, the question a lot of people are asking is what happens when it comes to an end?

Once the holiday period has ended the payments will automatically start again – it is important to know what dates your repayments will start. Any interest accrued over this period in time will be added to your outstanding balance. This in turn will mean your monthly minimum payments on your statement will increase. Your lender will inform you of this on your statement.

As long as you can make the payments you will not be required to do anything, If you are going to struggle to make the payments then it is important you take action now.

If you believe you are going to struggle to keep up with payments on your credit card when the holiday period ends it’s important to seek professional advice. You can call Debt Support Trust on 0800 085 0226 and we will be happy to advise you on the most suitable options available.

Dealing With Credit Card Payment Holidays Ending

In the first instance if you are struggling to make payments to your credit card you should review your budget, assess what is coming into the household (income) and what is going out (expenditure). Check if you can make cuts to any of your household bills – gas, electricity etc – comparison websites can be very useful for doing this. It is also worth remembering that if you have been made redundant then you may be entitled to a council tax reduction.

It is also worth speaking to your credit card lender, they may be able to extend the holiday period. You have until the 31st October to apply for a holiday payment. They may also be able to change your payment date if this would make it easier to repay. Some lenders will reduce your rate of interest, although you will still have to be able to make the minimum repayment.

If you are unable to make the repayments or have multiple lenders and are unable to negotiate with them all, we would recommend that you seek debt advice. This allows you to know what options are available to you and what the pros and cons are. There are many different debt solutions available and you may be suitable for more than one. Always seek advice from an independent debt advice charity, look in to all debt solutions and consider your options carefully before making any choices. If you do enter a debt solution it’s important to be aware that your credit rating will be affected for six years and obtaining credit within that period of time will be extremely difficult.

When Your Payment Holiday Is Coming To An End

Mortgage Payment Holiday

Mortgage Payment HolidayThe Government’s furlough scheme finishes at the end of October and many people who took payment holidays from their bank, credit card and / or mortgage company during lockdown, are now set to see their expenditure increase.  The economic situation for the remainder of 2020 looks bleak with job losses inevitable, however there are always solutions to help households.

We are here to help anyone who is facing problems with furlough or payment holidays coming to an end and you can speak to a qualified debt adviser on 0800 085 0226 or you can take our online debt test.

Cutting The Cost Of Your Credit Cards

You may have a credit card which has a high interest rate. You have the potential to cut this by moving the debt to a 0% interest-free period on a credit card. This can help to save you money, so that the payments you make each month are paying off the capital (amount your borrowed) instead of the interest. While balance transferring your credit card debt can help “buy you time” to repay the debt, it’s imperative that you’re able to reduce the balance and eventually become debt free again. If you don’t think you’ll be able to clear the debt with a balance transfer credit card then you can always receive free debt advice from Debt Support Trust.

Move From Expensive Overdrafts

This year banks have changed how they charge for overdrafts – they are no longer able to charge different interest rates for authorised, unauthorised, overdrafts or daily fees. This has resulted in interest rates increasing significantly. Another option is to clear your overdraft with a 0% credit card, however this will only save you money if you can pay the full balance of the credit card in the allocated time. If you decide on this option it is important you don’t go back into overdraft. If you’re not sure what you’re best option is then speak to a money adviser at Debt Support Trust and we will be able to help.

How To Deal With Your Mortgage

Mortgage payment holidays remain open until 31st October 2020, so you still have time if you need to apply. If you have had a mortgage payment holiday or are furloughed, it may be more difficult to remortgage and may be worthwhile talking to a mortgage broker. For many people a mortgage is the largest monthly expense, so it is worthwhile looking into remortgaging to see if it’s possible. If you’re in a fixed rate mortgage you may have early repayment penalties to consider too. It could be financially beneficial to assess whether another mortgage lender could offer you a better interest rate.

Conflicting Debt Advice

When you speak to a debt advice agency you hope to get crystal clear guidance on which solution is best for your circumstances. Unfortunately, what one organisation will advise could be different to another. When you can’t get a definitive answer to your debt problem it’s often frustrating and worrying and can leave you more confused than enlightened by the advice. Debt solutions can help you find financial freedom once again, however what happens when you’re given conflicting debt advice?

When someone takes the brave step to resolve their debt by contacting a debt advice organisation they want a straightforward answer to their debt problem. If you speak to multiple advisers you may get different answers and there’s a variety of reasons, which we’ll discuss, for this.

So, how can someone make a decision about which debt solution is best for them when they are given multiple choices and not enough information?

What Is Conflicting Debt Advice?

Conflicting debt advice can happen when someone is suitable for more than one debt solution. What should happen with any regulated debt advice organisation is that a statement of affairs is gathered, which includes your monthly income, expenditure, assets, liabilities and a list of debts. From there, we can determine what you can afford to pay towards your debt each month. It’s at that stage that some debt advisory companies will give advice based solely on the facts at that point. If you’ve got multiple options but a debt adviser (or their firm) favours one solution over another, then you may not be given all the applicable options.

People will often tell us they have been advised by one debt advice organisation they are suitable for a specific debt solution and are shocked when told they are also suitable for another.  At Debt Support Trust, we go through a process of “getting to know you” with the intention of understanding not just your financial situation but also your personal circumstances. This helps us understand if you’re likely to have a salary increase over the next few years or if your circumstances could change. It’s at this point we would explain which debt solutions are appropriate for you. We explain which options are available, the positives and negatives to each option and empower you with information so you’re able to make an informed choice. We often explain which debt solutions are not applicable and why we believe this.

By going through this process it helps ensure we have a full picture how you would like to resolve your debt, what’s important to you and we can make accurate recommendations based on the information.

Some people want to pay their debt back in full, others don’t want their credit rating to be affected and some people are likely to inherit money in the near future – all of which can impact on which debt solutions are applicable. Our role is to provide the information and help you decide which options are most suited for your needs. We can discuss ideas you may have to become debt free and explain any pitfalls to the plan, which you may not have considered.

It’s ultimately your decision as to which debt solution you choose, but having all the information is extremely important so you can feel confident about deciding which route is best for you.

Why Is There Conflicting Debt Advice?

Debt solutions exist to help people in financial difficulty, but the correct debt solution depends on a person’s personal and financial circumstances. There are various reasons you may receive differing debt advice.

You may be applicable for more than one debt solution. For instance, If your unsecured debt was £12,000 and you could afford £150 per month towards your debt, then you may consider – or be advised – on an IVA. This would see you, typically, debt free in 5 years and repaying £9,000 of the debt over 60  months. You may also be advised to enter a debt management plan where you repay all of the debt and this would last just over 6.5 years if interest and charges were to be frozen. It’s at this stage where we would learn more about you and your intentions before explaining the positives and negatives of all debt options.

Another reason that you could receive conflicting debt advice is that some companies may only specialise in one debt solution. Some companies have a licence to provide debt management solutions and they will advise a debt management plan is the best option. This isn’t always the right advice and consequently when you speak to another debt adviser they recommend a different solution.

It’s important that both personal and financial circumstances are taken into account when deciding which debt solution is best. It’s possible that a debt solution could affect someone’s job or housing situation – although this is rare – so it’s worth being aware of the consequences of each solution.

Find Out All Your Options

Have you had conflicting debt advice and would like to get a better understanding of which debt solution would be best for you? Perhaps you’re interested to get a second option on advice you’ve already received?

You can speak to a friendly, trained debt expert at Debt Support Trust today on 0800 085 0226 or alternatively contact us using our online form and we will be in touch at a time which best suits you.

We take the time to assess not only your financial circumstances but also your personal situation, because both are important when advising on your financial future.

Failed Debt Solution

From time to time we help people throughout the UK who have entered a debt solution but it hasn’t been successful in clearing the debts and resolving the money problems. This can happen for a number of different reasons including a change in circumstances, payments weren’t being made, creditors changed the plan, it wasn’t the correct debt solution or the payments weren’t affordable.

Whatever the reason, if you still owe money to your creditors then you may need debt advice to resolve any money worries.

Debt Support Trust can provide debt advice even if you’ve previously been in a debt solution which wasn’t successful. You can call our friendly advice team on 0800 085 0226 and speak to a trained money adviser for free.

Debt Solution Cancelled or Failed

One of the most consistent reasons debt solutions fail is because the solution itself wasn’t suitable. After speaking to a debt advice company you may have been advised to enter a debt solution which wasn’t appropriate for your personal and financial circumstances. This can mean your payments are too high/ low and the debt solution isn’t meeting your needs – to once again become debt free.

When you contact Debt Support Trust we’ll re-assess your circumstances, looking at your income, expenditure, assets and liabilities. We’ll then discuss with you all the available options and explain the pros and cons to each debt solution. It may be that the debt solution you entered previously was correct, however an unexpected change made the debt solution unsuccessful.

Our role at the charity is to empower you with information about all of the appropriate debt solutions and enable you to make an informed decision on which option is best for you. We aim to answer all calls quickly and provide immediate advice.

Failed Debt Management Plans

If you’ve previously entered a debt management plan which hasn’t been successful then you can enter another debt management plan, if it’s still a suitable debt solution.

Some debt management firms charge a fee from your monthly payments, typically between 10-40% of your monthly payments. At Debt Support Trust we recommend free debt management plans where 100% of the money you pay each month goes directly to your debt. Consequently you’ll be able to repay your debt faster.

If creditors refused to freeze interest and charges – which meant the debt was growing as opposed to reducing – then we could take this into account when advising on your next debt solution.

Debt management plans can help you freeze interest and charges and pay one affordable monthly payment towards the debts, until all of the money you owe is repaid. If the debt solution will last too long, we’ll often consider other debt solutions.

Failed IVA or Trust Deed

If you’ve previously entered an IVA or Trust Deed (Scotland only) which was unsuccessful then we would reassess your financial and personal circumstances and provide advice based on the information.

Typically IVAs and Trust Deeds fail because the payments haven’t been maintained, but this can happen for various reasons. If you’ve lost income and the payments become unaffordable then it could mean that your trustee discharges you from the debt solution.

After your trustee discharges you the debt will be your responsibility to manage once again and you may find creditors and debt collectors recommence action to cover the debt. If you’ve not been discharged from your IVA or Trust Deed and need advice you can call our friendly advisers for advice on 0800 085 0226.

We’ll assess your options and provide holistic advice on the suitable debt solutions for you. It may be that bankruptcy is the most appropriate option, however prior to entering any debt solution we’ll ensure you’re informed on all the options so you can decide which route is best for you.

Starting a New Debt Solution

The objective of becoming debt free hasn’t changed, however if your first attempt at a debt solution hasn’t worked, don’t be disheartened. There are various reasons a debt solution can fail and the only objective is it ensure you’re receiving the necessary support to deal with problematic debts.

Debt Support Trust advisers are on hand to support you with money worries. We can offer practical advice, in confidence and discuss options which can solve difficult debt dilemmas.

If you would like free debt advice from Debt Support Trust, please call 0800 085 0226.

Debt Solutions & Your Credit Rating

At Debt Support Trust we help people with a variety of different needs and concerns, such as “how will this affect my partner”, “will my employer know” and “what will happen to my credit rating”. Many people, understandably, worry a debt solution may affect their credit rating. It’s important when entering any financial solution that you know the positives and negatives, so hopefully this article can help.

There is life after debt problems, but how will a debt solution affect your credit rating? Will you be able to apply for a mortgage once you’re debt free? And, what if you have an excellent credit rating but you need to apply for a debt solution?

If you’re unsure whether your credit rating will be impacted then it’s best to speak to a debt adviser. Debt Support Trust advisers are available Monday – Friday 8am to 7pm on 0800 085 0226.

Protecting Your Credit Rating In Debt

One common misconception is that entering a debt solution is the only way a credit rating can be negatively affected. A person’s credit rating will be impacted any time a default is added to show a missed payment or anything which breeches the original contractual arrangements.

Entering any debt solution may negatively impact on a person’s credit file, however we often find by the time we speak to someone their file will already have defaults added. If you have never missed a payment to your credit card, loans or other contractual obligations then you may have an excellent credit score. If you’re not sure then it’s best to check your credit score. You can do this for free, for life with Creditkarma.co.uk.

If you do have a default on your credit file then each default will last for 6 years from the date it was added.

Life After Debt

If you have had a “poor” credit file due to missed payments and defaults then the next step is to attempt to improve your credit rating. You can do this by acquiring your credit report and ensuring there are no errors on the report. Unfortunately if you have defaults on your credit file or late payments, you won’t be able to remove these without the consent of the lender. However, moving forward these will be removed and your credit file will slowly improve.

Borrowing manageable amounts of credit and repaying the full balance each month can also help to improve your credit worthiness. If you have debt problems then it would be best to address these as a debt solution will most likely affect your credit file further, but can also help you on the road to repairing your credit report after the solution is complete.

Credit ratings can improve over time and people who have been in debt can often apply – and be accepted – for mortgages once their debt problems have been rectified.

Advice For Your Credit Report

If you’re unsure about the best way to deal with your debt and finance problems then you can speak to one of our debt advisers on 0800 085 0226. We can provide you with advice and support on how to access your credit file and provide a detailed understanding of what each section means.

Alternately you can complete our online debt test and we will be in touch to provide further support.

Council Tax Bailiffs Changes

The Government has pledged to make the collection of Council Tax arrears a much fairer system and work closer with debt advice organisations, such as Debt Support Trust.

As it stands, people with council tax arrears In England and Wales may find themselves with bailiffs turning up on their doorstep, however MPs want to see this changed.

While bailiffs will still be used to collect council tax arrears, Ministers want to see greater care taken when dealing with vulnerable and disabled people.

Local Government Minister Rishi Sunak MP outlined his thoughts behind the proposed changes:

“Council Tax collection is essential to running public services, like caring for those most at risk, collecting bins and keeping our transport networks running.

“The experiences of some innovative councils show that Council Tax collection rates can be improved without resorting to the unfair treatment of vulnerable people.

“That’s why I’m pushing forward work to make the Council Tax collection system fairer and more efficient – so people are treated with compassion while services get the funds they need.”

According to the Governments own website, the changes could include:

l Assessing a person’s affordability and taking this into account before escalating any action taken against them

l Having a closer link between councils and debt advice organisations

l Using fairer debt intervention methods

Stuart Carmichael, Chief Executive at Debt Support Trust, believes these changes are positive and long overdue, he said:

“Council tax arrears are one of the most common reasons people contact our debt advice charity. We often hear stories from people who are afraid they’re going to lose all of their possessions or believe they will be sent to prison. Bailiff action in recovering council tax arrears has been overbearing and excessive for some time, so we would be delighted if relief were to be granted, but it still needs to go further.

“Some people are vulnerable or simply unable to repay the full amount of arrears owed and in these circumstances we would urge bailiffs to take a person’s personal and financial positioninto consideration. In some instances, affordable and reasonable repayment proposals are being rejected and people are forced to continue to deal with threatening behaviour from debt collection agents.

“All too often we hear of arrears increasing simply due to a bailiff making numerous visits, further escalating the financial problems, when it could have been resolved earlier.”

Council Tax Arrears Increase Almost 40%

It was recently revealed that council tax arrears rose by nearly 40% across England in the last 6 years, to reach £944m during the 2017-18 financial year, up from £691m in 2012 – 2013.

The rise has led to a number of various debt advice organisations questioning the methods used by local councils to recoup money owed.

The Institute for Fiscal Studies has claimed 90% of English councils have cut their support for those of working age.

According to Caroline Siarkiewicz, director at the Money and Pensions Service, one third of people contacting debt advice organisations have council tax arrears, a figure we can confirm at Debt Support Trust.

Help For Council Tax Arrears

If you have council tax arrears and you’re unsure about your options in regards to dealing with them, speaking to a debt advice organisation, such as Debt Support Trust could help.

We will assess your financial circumstances and consider whether you’re applicable for a debt solution or if negotiating with a bailiff is your best route to dealing with the arrears.

You can call Debt Support Trust on 0800 085 0226 and speak to one of our debt advisers today. Alternatively you can complete our online debt test and we will call you back.

Easter Opening Hours

We would like to wish everyone a happy Easter holiday this weekend.

On Friday 19th and Monday 22nd, Debt Support Trust will be open between 10am – 4pm.

In the meantime you can complete our online debt test or fill in our contact form and we will call you back.

Happy Easter To All!

Bankruptcy And Employment

Bankruptcy is one of the most common debt solutions available to people struggling with their finances, however there is often confusion over how it could affect a person’s employment.

The choice to enter bankruptcy isn’t one most people take lightly and it’s important to ensure doing so isn’t going to have an unexpected impact on employment or housing

Some people may have an employment contract which states they aren’t allowed to enter bankruptcy, which is why it’s important to always seek advice.

Debt Support Trust is available Mon – Friday, 8am – 7pm and we would be more than happy to discuss your options.

Can I Enter Bankruptcy While In Employment?

The simple answer is yes, so long as they meet the criteria, however that doesn’t necessarily mean it’s the right solution for everyone.

One common misconception with bankruptcy is that debt will simply be written off, which isn’t necessarily true.

When someone applies to be declared bankrupt it becomes the job of the Official Receiver to recoup as much money for the creditors as possible. This could done via realising assets such as a property or applying an income payment order, typically for 3 years. In Scotland this could last for 4 years.

What Is An Income Payment Order

If someone is in employment and the official receiver decides they have a surplus income, based on expenditure guidelines, they will implement an income payment order.

An income payment order is a mandatory amount of money which has to be paid to the official receiver, who will then determine how the funds should be distributed.

Alternatives to Bankruptcy

When someone is in employment or has assets with significant equity, there may be additional options available to them other than just bankruptcy. This could be because of their employment contract, a surplus income or other factors which means they have to look at an alternative debt solution.

An IVA or Debt Management Plan (England, Wales & N.Ireland), Protected Trust Deed or DAS (Scotland), are alternative debt solutions which people may be applicable for. These solutions all have their positives and negatives, which is why it’s important to seek debt advice before making any final decision.

Get In Touch

If you’re unsure about whether bankruptcy is the right debt solution for you or if it will affect your employment, then we can help.

One phone call could clear up any doubts you may have and give you peace of mind about the route you’re taking to become debt free.

You can call Debt Support Trust on 0800 085 0226 or alternatively you can use our online contact form and we will call you back.

Debt Keeps Growing

At Debt Support Trust, our advice team know all too well that debt happens for a variety of reasons and that’s what’s important is getting the correct advice and a plan in place to once again be debt free. The plan could be to negotiate with creditors, which we can help with, or a solution whereby you repay what you can reasonably afford each month. There are positives and negatives to every debt solution, but if you’re finding that debt is continuing to grow, and the situation isn’t getting easier or better, then speaking to someone can often be helpful.

Debt Support Trust’s charity money advisers are available on 0800 085 0226.

Debt Problems Are Uncontrollable

Society tells us that credit is good, but debt is bad. In truth, they are the same thing. Your credit score reflects how creditworthy you are, so when you apply for finance for a car or perhaps are applying for a mortgage, you want a good credit score so you’re accepted and can get the best rate of interest. Ultimately, to improve your credit score you need to borrow money and repay the contractual amounts on time.
Debt problems occur when contractual credit agreements are no longer manageable. The reasons debt situations can arise vary, but often it’s linked to loss of income, separation or divorce, an over-reliance on credit or an increased cost of living. For instance, a £400 per month repayment to debts could be affordable, however there’s a loss of income then it can be very difficult to make the payments. For other people it may be that the debt was manageable with interest free periods, however when these ended the monthly payments increased and became unaffordable. When a debt problem continues to grow and the amount owed isn’t getting better then the best advice is to ask for professional debt advice.

Talking about debt and money worries can help. When we speak to people struggling to manage debt, they often explain that they didn’t mean for the situation to get out of control and that if they could go back they would do things differently.

Seeking Debt Advice

Making the first phone call is always the hardest, but we aim to make it as friendly and supportive as possible. Our objective is to ensure you have every available option to consider and more importantly someone who will listen, understand and offer useful advice.

If you would like to speak to a debt adviser you can call 0800 085 0226 or send us an email (contact@debtsupporttrust.org.uk) with your name and telephone number and we’ll arrange to contact you back. We’re happy to give advice over the telephone or via email.