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Furloughed Workers Struggle With Repayments

By | Financial Help, News

Furloughed Workers Struggle With Repayments

Consumer group Which? Has found that those people who have been on furlough during the Covid-19 crisis, are more than three times as likely to have defaulted on a payment than those who were not.

In not-so-surprising news, a recent survey by Which? Has found that those workers who have been on the furlough system (a Treasury-backed scheme where people are paid 80% of their salary, and has currently cost the taxpayer £31bn), are struggling to meet their regular financial repayments much more than those who are still getting paid 100% of their salary.

It is thought that around four million workers are still on the furlough scheme, with all or most of their wages being paid through the scheme, with many having reported missed a loan or credit card payment in the past four weeks.

It was also revealed that the number of those defaulting on housing payment (mortgage or renting) has doubled, with many admitting that they have defaulted on more than one payment in the last month. This means that as many as 500,000 missed payments in the last month alone!

Only The Beginning

Unfortunately, this debt crisis is only going to get worse. As the furlough scheme comes to an end in October, there is a suggestion that many businesses will have to make redundancies and/or close for good, as they come to the realisation that once they must fully pay their staff, the money simply isn’t there.

Richard Piggin, the head of campaigns at Which?, said: “Despite extensive action being taken by the government and the banking industry, it’s very worrying that people currently on the furlough scheme have reported experiencing much higher levels of financial difficulty than those who are working as normal.

“With just a couple of months until the scheme comes to an end, there is real concern that this gap could widen even further. The Financial Conduct Authority will also have to ensure consumers are provided with the help they need if they are in financial difficulty.”

Struggling To Meet Repayments?

If you have found yourself struggling to meet repayments recently, or if this crisis has simply pushed you even further into debt, please don’t hesitate in contacting our award-winning team of advisers. There is no cost for our advice and you under absolutely no-obligation to listen to our advice.

Use the contact form below and get help before it gets worse.

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Payment Breaks Coming to an End

By | Financial Help, News

Payment Breaks Coming to an End

There is a timebomb slowly counting down to a debt explosion. During the coronavirus pandemic, high street banks have allowed 1.5m ‘payment holidays’ for those struggling to repay credit cards and personal loans. These payment holidays allow people to not repay their debts for three months. However, interest rates are (generally) still accrued on the debts, and with many people losing their jobs or suffering a wage decrease, at the end of the three months, many people are going to return to a serious debt problem with no way of repaying.

Household debt on credit cards and loans and car finance had been rising before the coronavirus struck. Damon Gibbons, director of the Centre for Responsible Credit, said some lenders were being more flexible than others with consumers. “There’s going to be a lender lottery as a result of all this,” he said.

“We were in the midst of a growth of household debt problems before the pandemic, and this is going to tip huge numbers of people over the edge, whether it’s living on furlough with 80% of wages, or looking forward to the jobs market shattering. People are going to be in real difficulty.”

Terrifying Debt Letters

Due to an out-of-date law, millions of those struggling to meet repayments are about to receive ‘threatening’ letters demanding repayment from their lenders. Although these letters cause massive levels of distress and can ruin lives, they are a legal requirement, and the lenders have little option about sending them. Even though lenders have granted the payment holidays, they will be forced to send these letters demanding repayment, causing confusion and distress.

The letters even give out-of-date advice, causing further confusion. Currently the legally mandated warning says, in bold and in capitals: “IF YOU ARE NOT SURE WHAT TO DO, YOU SHOULD GET HELP AS SOON AS POSSIBLE. FOR EXAMPLE YOU SHOULD CONTACT A SOLICITOR, YOUR LOCAL TRADING STANDARDS DEPARTMENT OR YOUR NEAREST CITIZENS’ ADVICE BUREAU.

However, the correct advice for many people struggling with debt is not to go to a solicitor but to contact one of the many free debt advisers, including Debt Assist UK, that can help with putting together a repayment plan.

Research has indicated that in England, as many as 100,000 people in problem debt considered taking their own lives each year, and that the debt letters were a key contributing factor.

If you receive one of these threatening letters, or you are worried about your debts at all, please don’t hesitate to contact one of our friendly advisers. Alternatively, please visit this page for a list of mental health charities that can help.

Don’t struggle alone.

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Self Employed and COVID-19

By | Financial Help, News

Self Employed and COVID-19

The Chancellor announced a new Self-employment Income Support Scheme to support self-employed people who have been adversely affected by COVID-19. This will pay you an average of your last three years’ PROFIT – up to £2,500 a month.

If you are eligible for this you don’t need to do anything, HMRC will contact you by June. Unfortunately, we are aware of an increase in scam emails, calls and texts. If someone gets in touch claiming to be from HMRC, saying that financial help can be claimed or that a tax refund is owed, and asks you to click on a link or to give information such as your name, credit card or bank details, please do not respond.

Those Who Can Apply

You can apply if you’re a self-employed individual or a member of a partnership and you:

  • have submitted your Income Tax Self Assessment tax return for the tax year 2018-19
  • traded in the tax year 2019-20
  • are trading when you apply, or would be except for COVID-19
  • intend to continue to trade in the tax year 2020-21
  • have lost trading/partnership trading profits due to COVID-19

Your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment. This is determined by at least one of the following conditions being true:

  • having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
  • having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.

Banks and COVID-19

Banks and COVID-19

By | Financial Help, News

Banks and COVID-19

Are you struggling with making payments to your bank at this difficult time? Whether it’s overdrafts or loans, it can be difficult to repay them at the minute. There are people losing their jobs, working on reduced hours, statutory sick pay, plus it can actually be more expensive staying at home!

If you are struggling to meet your repayments, your first step should be to contact your bank. I know this can be a scary prospect, but they’re only human (in the main) and will try to help if they can.

Many banks have put in place measures, to help customers during the COVID-19 outbreak – follow the links for more information about your bank:

If your bank isn’t listed, they still may be able to help. If they can’t help, please don’t hesitate in contacting our friendly advisers. We’re still working to help people manage with their debts

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Debt and Coronavirus

By | Financial Help, News

Debt and Coronavirus

You may think that this is another cynical cash-in on the latest human tragedy, Covid-19, better known as coronavirus. However, there is a very real link between the virus and people struggling with debt.

As the virus spreads and more people take up voluntary seclusion, many people will be forced to struggle with the basic statutory sick pay (SSP) of just £94 per week. This will barely pay the rent for the majority of people, never mind essential such as food and household bills. In turn this means that thousands, even hundreds of thousands, of people will struggle to meet their financial repayments on credit cards or loans. Those that previously managed to repay their bills will begin to struggle, and those that previously struggled will be in serious trouble.

School Closures

Even if you are showing no symptoms and no need to self isolate, should the UK follow the lead of many other countries worldwide and cancel school, this will force people to stay at home and look after their children. Again, this will force many into accepting no pay or the SSP, in order to stay home and look after their children.

How We Can Help

Our trained advisers will go through your debts and any income you may have, and help find you the perfect solution to your debt problems – even if this is a (hopefully) temporary situation.

There is absolutely no cost in talking to us and getting our advice, and you are under no obligation to accept any of the advice given (Although we think you will). So if you are worried at all, please talk to us today. You can call us on 0800 029 3992 or complete the form below and we’ll get back to you as soon as we can.

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Credit Cards Set To Be Suspended In February

By | Financial Help, News

Credit Cards Set To Be Suspended In February

Come February, thousands of people will be unable to use their credit cards due to new rulings.

As part of new rules designed to help people in debt, the FCA has made the banks agree to force those who are continually in debt to agree a repayment plan – and in doing so, suspending the use of their cards.

Whilst we agree that this is a good idea in principle, it could massively backfire on those who continually live on borrowed money through their credit cards:

Myles Fitt of Citizen’s Advice Scotland said: “Persistent credit card debt is being tackled by the FCA and some people who have not been paying off their credit cards may be in for reality shock in the new year if they have been ignoring persistent debt letters coming through their letterboxes.

“These changes will help some people to pay off their debts quicker but we’re ­concerned about people who are forced to live in persistent debt because of insecure incomes in the first place.

“These changes could be a real problem for people who are ­unable to come to an ­arrangement with their credit card lender and this may trigger an increased demand for help with debts.”

Clear All Of Your Debts

The FCA has estimated that about 5.6million credit card accounts are held by customers who are struggling financially across the UK. Credit card companies have been ordered to send at least three letters to customers warning them to raise their payments. Firms must then offer ­alternative ways of repaying more quickly, usually over a period of three to four years. These could include transferring a credit card balance to a personal loan with lower interest.

Rather than taking four years to clear your credit card, you could clear ALL of your debts in just five years. Talk to our friendly advisers who can advise you of all of your options.

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Big Increase In Household Debt

By | Financial Help, News

Big Increase In Household Debt

According to a new report from the Office of National Statistics (ONS), household debt (excluding mortgages) is on the rise across the UK.

The average household debt rose by 9% to £9,400 – credit cards and personal loans rose by 11% to £119bn! However, the results are slightly skewed by student loans:

“The figures are skewed slightly by the £32bn of student debts – which the vast majority of graduates will never pay back in full,” said Sarah Coles, personal finance analyst at stockbroker Hargreaves Lansdown.

“However, even excluding that we’re carrying £87bn in loans, credit cards, hire purchase agreements, overdrafts and arrears.”

In a shocking result, it appears that the poorest 10% of households have debts three times greater than the assets that they own.

“Not all these debts are the same: there’s a world of difference between taking an affordable, low-cost loan for vital home improvements, and living on your overdraft month after month, because it’s proving so difficult to make your salary stretch to the end of the month,” said Ms Coles.

“But if you’re one of the 44% of people who see their borrowing as a burden, it’s worth taking steps to deal with your debts.”

Struggling To Repay Your Debts?

If you are one of the millions of people struggling to repay your debts, please don’t hesitate in contacting our friendly advisers. There is no fee for our advice, and you are under absolutely no obligation to use any of the services we may suggest to you.
If you are interested in getting help with your debts, please fill in the form below and one of our trained advisers will contact you shortly.

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Debt and Christmas

By | Financial Help, News

Debt and Christmas

Debt and Christmas seemingly go hand-in-hand, and this is a very serious problem, that people seem to be perfectly fine accepting as normal.

Over the next month, thousands of people around the UK will put themselves in unnecessary debt in order to try and have ‘the perfect Christmas’ – an idea manufactured in order to get people to spend more money.

Although the main cost of Christmas is usually the presents for others, the other costs of food, drink, and days/nights out all add up, and it quickly becomes difficult to think about the ‘boring’ things such as loan repayments, credit card and utility bills once you get caught up in the excitement of Christmas; particularly when everyone else is telling you what they’re buying, and how much they’ll be eating and drinking.

Change Your Mind-Set

At Christmas we often think about what we want to buy, and then try to find a way to pay for it. This year try figuring out how much you have and then trying to see what you can buy. Just this slight change in point of view, can be the difference between going into the new year in debt or not.

Secret Santa

Although most agree that all children should get presents at Christmas (if possible), many people – including several here at Debt Assist HQ – have found that a ‘secret santa’ for the adults’ presents works wonders in saving money. Setting a realistic budget (although £50 seems a lot, it’s cheaper than lots of £10 presents) on a present for just one person, not only means that everybody who takes part is saving money, but also that the adults get one good, thoughtful present instead of lots of lesser presents. Wins all around.

Universal Credit

Universal Credit, or the lack thereof, is a problem we’ve talked about several times before. However at this time of year it seemingly becomes a much bigger problem. When signing on to Universal Credit for the first time, it takes five weeks to get your first payment, which means if you are applying NOW, you will struggle to have any money at all before Christmas. In the mean-time you are getting further into debt to simply live, let alone prepare for Christmas.

A DWP spokesperson said: “If people think they might be eligible for universal credit they should apply without delay and advance payments are available for those in urgent need.”

School Uniform Aid Drops 70%

By | Financial Help, News

School Uniform Aid Drops 70%

Parents are being pushed into further debt as councils stop financial aid for school uniforms.

According to a new report obtained through the Freedom of Information Act, the majority of families can no longer access the ‘School Uniform Grant’ which was introduced in the 1980s, to help struggling families buy school uniforms for their children. Since 2010 there has been a drop 0f 70% throughout England.

Even though the Department for Education still advertises the availability of the grant, only 27 out of the 149 local councils actually provide the grant, and a third of those only do so in rare cases such as fire, flood or ‘extreme poverty’. Only three councils in the whole of England offer the grant to low-income children in all years and all situations.

Even with the grant available, the average amount offered was just £36 for primary school and £63 for secondary school, this is despite the average cost of uniform in 2018 being a staggering £300 per child! Only one council (based in London) offered the full £150 which the Board of Education advertise as being available.

Labour MP Lisa Forbes, who campaigns on school uniform cost says, “These cuts hit our youngest and most vulnerable,” she said. “Each day, there are children forced to go to school in clothes that are dirty, badly fitting and unsuitable, while some even report missing lessons as a result.

“These latest figures show that families are being squeezed between rising costs and the lack of support to help with them, and both lie directly at this government’s door. I have urged ministers to keep their promise to regulate uniform costs, but for four years they have dragged their feet. This research should be the final wake-up call they need to act.”

All this does is force those that are already struggling financially – those actually eligible for the grant – to borrow and get themselves into (further) debt in order to pay for their children’s school uniforms. It is estimated that 1.7 million children attend school in badly fitting, unclean or incorrect clothing. Last year, a Children’s Society survey found that one in 10 families reported getting into debt to buy school clothes for their children.

If you are struggling with debt contact our friendly advisers today, and see how we can help. There are no fees for our advice, and no obligation to use our services.

What Affects Your Credit Score?

By | Financial Help

What Affects Your Credit Score?

Your credit score is used by lenders to decide whether or not to lend you money. There is no standard credit score; there are three main companies that offer different scores; Call Credit, Experian, and Equifax. All three offer a free credit check – so don’t pay if you don’t have to!

  • Don’t apply for credit too often in a short time
  • Try and stay in the same address for a long time
  • Ensure that you’re on the electoral roll
  • Have an old credit account
  • Make some kind of repayment – even if it’s not enough
  • Use less than 50% of available credit
  • Unless you wish to take out further credit, your rating is not something to worry too much about

Applying For Credit

Each time someone makes a ‘hard search’ on your credit report, a mark will be left on it. Now, the odd search every now and then won’t really make a difference, however, if you are applying for a lot of credit (especially if you are being turned down), it can have a strong negative effect on your credit score.
If you apply for a credit card or loan, the search will affect your credit score, however if you stick within all agreed agreements, your credit score will rise quite quickly.

When Debt Assist makes a credit check on you, we use a ‘soft search’, which doesn’t affect your score.

Address Stability

Lenders like people who are (or appear to be) reliable and stable, as in their minds, this means you are more likely to repay your debts. One of the ways they establish this stability is looking at how long you have lived at your address. Living in the same place for a long time is better for your credit score than regularly changing address.

For similar reasons, being on the electoral roll also has a positive effect on your credit score as they believe that it shows stability, as well as proof that you are who you say you are.

Account Age

Having a credit account that you have help for several years is a positive for your credit score. It’s not the most sophisticated way of checking your eligibility for a loan, but if a lender sees that someone else has lent to you over a long period and you’re repaying it, they’re much more likely to lend to you than if all of your credit was taken out in a short period of time, as this could be a sign that you are struggling financially – therefore lowering your credit score.

Not Meeting Payments

This is the obvious one, if you are not repaying any current loans then this will be marked on your credit report and is extremely likely to have a negative effect on your score.

If you have missed several payments, then the lender may place your account into ‘default’. A default can reduce your credit score massively and will stay on your report for six years. As companies have different criteria for placing people into default, it’s not worth risking any more than one payment if you are bothered about having a good credit rating.

On the plus side, if you make payments towards your debts, even if they have defaulted, it shows prospective lenders that you are at least trying to repay your debts, and they may take this into account.

Credit Limit

How you use the credit available to you is also looked at by potential lenders. Using too much of your available credit, or too much from a single source, could damage your credit score. According to Equifax, you want to keep any lending under 30% of your available credit limit for each lender. If you use 50% – 75% of available credit this will be flagged as a warning to lenders. 75% or more will be considered a ‘red flag’ and can have a much larger negative effect on your credit score.

However, having a high credit limit shows lenders than someone else has trusted you with a large amount, and will have a positive effect on your score.

CCJs, IVAs and Bankruptcy

Having a CCJ, IVA or bankruptcy against your name is a big negative on your credit report, as it shows that you haven’t stuck to the agreed terms of a previous credit arrangement. Entering into one of these situations means that your credit rating will be negatively impacted, however, in order to be in the situation in the first place means that your rating is already likely to have been affected.

Make sure that you stick to any terms you have agreed to when entering into a CCJ, IVA or bankruptcy, as this can have more serious consequences.

Once you have cleared your CCJ, IVA or bankruptcy, you can slowly rebuild your credit report.