Almost 80% Enter 2021 in Debt

According to a recent report, just 22% of the UK did not have any debt as we entered 2021.

Discounting mortgages, and concentrating on personal debt, the report has mixed news; although this is a lot of people in debt, it also suggests that the level of debt is reduced when compared to previous years. The report also suggests that the most common reason for people getting into debt is just normal living expenses.
The report shows what we have all believed and seen with our own eyes: More people are struggling just to get by.

The report goes on to show that the debt of the average adult was £9,246 – with men most likely to be in greater debt (£11,581) than women (£7,016).

COVID Debt

Almost a third of the people said that the COVID-19 pandemic was responsible for their struggling to pay their everyday living expenses. With no end in sight as we enter 2021, this is extremely worrying, and action needs to be taken NOW!

Get Debt Help TODAY!

If you are struggling to meet your household living costs, and are worried that your debt level is rising, please don’t struggle alone. We can help!

You can talk to a professional adviser today, for no cost, and together can investigate your options – if we can’t help you, we will point you in direction of someone who can.

Simply fill in this form, and we will get back to you ASAP. Things aren’t going to get better by simply ignoring them.

The financial impact of lockdown has been hard on millions of us, and this has given rise to something known as Employer Salary Advance Schemes (ESAS). Through these schemes, cash-strapped workers can access up to 50% of their wages before their usual payday. However, as we know from payday loans, this can push their users into an ever-tightening spiral of debt and worry.

Working alongside your payroll company or employers, ESAS only allow you take money that you have accrued up until that point (keeping your company safe). They then retake their money and charges from you on payday. All good so far.

Often called “wellness packages”, or something similar, ESAS were created to offer a ‘safer alternative to payday loans’. If used correctly, ESAS look gerat. Unlike payday loans, which can still APRs of upto 1,400%, ESAS charge a flat fee, or percentage, per withdrawal – with some offering your first withdrawal for free.

Whilst this seems all well and good, here at Debt Assist, we know that this can be the first step into larger debts. Taking out money mid-month often leads to shortfalls in the next month, needing you to take out another loan, and another, and another… Each with their own fees to be repaid, giving you less money each month. Enter the spiral of debt!

The danger of ESAS is that they are (currently) unregulated by the Financial Conduct Authority (FCA), which means that their fees can actually be higher than the price cap on payday loans!

ESAS are used by some large companies as part of their employee packages and they are definitely being used. Latest reports show that on average people are taking out loans three times per month! And whilst most of these will have simply been used to smooth cash flow throughout the month, Debt Assist worries about those slowly trapping themselves into the debt spiral, with their final monthly salary reducing each month as they pay off previous loans.

Complete the simple form below and one of our friendly advisers will give you a call to discuss how we can help. There is no fee for our advice, and you are under absolutely no obligation to listen to us. What have you go to lose?! Get help today and stop worrying about tomorrow.

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!

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.”

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.

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.

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.

Self Employed and COVID-19

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.

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

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:

• Halifax
• Lloyds
• Bank of Scotland
• TSB
• NatWest
• Santander
• Barclays
• HSBC
• Nationwide
• Clydesdale Bank
• Virgin Money
• Ulster Bank
• Co-operative bank
• First Direct
• Metro
• Bank of Ireland
• Danske 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