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Author: Alex Swindells

10 Reasons an IVA Is Worth It

Do you have multiple debts to manage? Are you thinking of taking out an Individual Voluntary Arrangement (IVA)? Are you wondering if IVAs are worth it for you?

IVAs are a way to try and get out of financial difficulties, but they are not the only way to do so. There are different debt solutions available, so make sure the one you choose is right for you.

Having debts can be stressful, especially if you feel isolated by it, and it can seem to become more and more overwhelming until they start impacting your mental health. If this is you, there is help available. 

If you do meet the criteria, there are many reasons why applying for an Individual Voluntary Agreement could help you, and they can come with a lot of benefits for your situation.

What Is An IVA?

An Individual Voluntary Arrangement (IVA) is a legally binding agreement between you and your creditors, that usually enables you to pay back one monthly affordable amount and freezes the interest on your unsecured debts. It is overseen by a licensed Insolvency Practitioner. If you maintain regular payments as agreed, it usually lasts for 5-6 years. After that, the remaining debt you have not yet paid is written off.

An IVA is usually available for people who owe more than £5000 and do not have enough money to repay those debts.

There are a range of advantages for IVAs, from realistic payments to protecting your assets. Here is a list of 10 reasons why having an Individual Voluntary Arrangement could benefit you and your financial circumstances.

1) You only repay what you can realistically afford

Coins stacked up next to a jar of coins

Debts can seem more overwhelming and stressful when you have to pay off large amounts, especially if that amount is not something you have access to without going into more debt. By having an IVA, you only pay back an amount that you can afford.

The amount you can pay back is worked out after considering the amount of money you will need to pay for necessities, including food and childcare. Whilst you will still need to pay back a minimum of around £90 every month (dependent upon circumstances), this will encompass all the debts you include in your IVA and is usually a much lower amount than what you would normally pay.

2) Overturns a CCJ or bankruptcy order

Wooden gavel in a courtroom

A CCJ is a County Court Judgement. It is when someone takes legal action against you for not paying your debts, and the court decides that you owe your creditor money. It will contain how much you owe, how to pay it and a deadline by which to do so.

If you have an Individual Voluntary Arrangement, you no longer have to pay the CCJ directly. Whilst your IVA is in place the creditors included in it cannot take any further legal action against you to recover those debts including petitioning for your bankruptcy.

3) Stops all of your creditors contacting you over a debt

Woman putting the phone down in her office

Part of the stress that accompanies debts is the constant contact with creditors, whether that be via phone calls or letters. When you have an IVA, your creditors are legally obliged to stop contacting you to make payments towards debts, giving you peace of mind.

Your creditors are legally required to provide you with informational documents such as an annual statement. However, the rest of their contact will be with your Insolvency Practitioner (IP), who works with you concerning your IVA.

4) Writes off the debt completely after 5 years

Money in jar with green leaf growing on top

One of the biggest reasons why IVAs are so beneficial is that after the completion of the agreement, any remaining debt will be written off no matter how much you still owe. So at that point, you would be free of any debt that was included in your IVA, and your disposable income would be yours to do with as you wish.

5) Protects your career and job

Man shaking hands with executives after agreeing a new contract for job

If you go bankrupt, it can limit the type of job you are allowed to have, or the industries you can work in. For example, going bankrupt can mean you are no longer able to be the director of a limited company.

In contrast, it is significantly less likely that your job or employment will be impacted by taking an IVA, and sometimes you don’t even have to inform your employer that you have one.

If you have any questions about how an IVA may impact your job or career, check your employment contract and see if it mentions anything about having an IVA.

When considering any insolvency solution always check with your employer to see if there could be any consequences to your role.

6) Your assets are completely protected

Padlock on credit card

Assets include your car and home, and the threat of losing them can be a source of stress when debts are involved. With an IVA, the creditors involved are unable to repossess your home or other assets to go against the remaining balance of your debt.

You can sell some of your assets if you wish to, and this is something you can discuss with your IP. They may even encourage it to help pay off your debts quicker, but you are not at risk of losing your home, or anything required for living day to day.

7) No interest charges

Interest rates login screen on laptop with calculator next to it

Interest can make debts larger, especially if you can only afford to pay the minimum amount each month. When entering an IVA, the creditors involved set their debt at the amount that was owed on the date that it was approved. This means no further interest or charges can be applied whilst your IVA remains in place.   

8) Prevents legal action

Lawyer sitting down with man and discussing situation

If you are worried about legal action resulting from your debts, an IVA could be the solution you need.

If you have an IVA and you comply with its terms, your creditors cannot take legal action against you. This includes stopping bailiff action on any included debts.

9) All payments are included in one payment per month

Asian woman using smartphone buying online shopping by credit card while wear sweater sitting on desk in living room at home.

Having multiple debts can cause anxiety, especially if those debts are to numerous creditors. Instead of paying multiple amounts towards different debts, an IVA means you only pay one amount a month, which is the affordable amount you established with your IP. How that amount is divided between your creditors is worked out by your IP, allowing you to repay your debts with less stress and through one easy monthly payment.

10) A whole host of debts can be included

Close-up shot of family gathered together at wooden table and keeping records of expenses, woman taking notes in notepad

A large range of debts can be included in your IVA, which can make them easier to handle for you and your finances. These include credit card debts, personal debts and council tax debts to name a few.

Some debts cannot be included, such as mortgages and court fines, but the ones that are included can reduce the burden on your finances that can come with not having a debt solution.

When seeking help for your debts, you must find the solution that is right for you. Have a look and see whether a Debt Relief Order (DRO) or IVA would suit you and your circumstances more.

If you need help with your finances, you can apply for an IVA with Swift Debt Help, and they will help you manage your debts going forward.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Energy Saving Tips: Helping You To Avoid Debt

Since energy prices increased, millions of households are beginning to feel apprehensive about switching their heating on during the colder months. With rising utility bills, many are seeking alternative options to enable them to cut costs whilst keeping warm.

Although energy providers have introduced a price cap of £2,500, which is better than the original cap that was initially announced (£3,549), it is still an increase of 26% for the average household.

But, what is the energy price cap? 

The energy price cap is the maximum amount that energy suppliers can charge. This is set by Ofgem (The Office of Gas and Electricity Markets).

If you do decide to turn on your heating as normal but are unable to afford this increase, then you could end up in debt, which, if left unpaid, could reduce your credit score. This can negatively affect your ability to apply for credit in the future.
So, instead of automatically switching on your heating and having to deal with debt at a later date, consider other alternatives to help you keep warm this winter and reduce your energy costs.

6 Ways To Keep Warm Without Gas Or Electricity

As previously mentioned, many people affected by the increase in energy prices are discovering new ways to cut back on their energy usage. 

Below are just a few of the ways that could help you stay warm whilst reducing the number of times you have to switch on your heating. These tips will be particularly helpful if you are elderly and want to know how to stay warm in bed.

1.  Invest In Thicker Curtains

thick curtains making home warmer

Thicker curtains can help to trap the heat by acting as an extra barrier. Thick curtains tend to be more expensive than thin ones; however, this initial cost will save you money in the long run since they will be more effective in retaining heat and preventing drafts.

You may feel that you still need to turn your heating on, but it should be for a shorter period of time than usual.

As a side note, during the day, particularly when the sun is out, try to open your curtains to let in some natural daylight and heat.

2. Check Your Open Fireplace

open fireplace

If your home has an open chimney, it can provide an easy route for heat to escape. 

To prevent heat from being lost this way, you should try to have a closed damper or draft excluder installed on your chimney. Additionally, by adding either of these features, it can help to stop cold drafts from sweeping down the chimney and into your home.

3. Close The Doors Of Unused Rooms

closing internal doors

Unused rooms do not need to be heated. If you leave radiators on in unused rooms, the heat in there will be wasted, so you will be increasing your energy bills for no reason. 

Instead, you should only try to heat the rooms that are regularly used. If you do this, cold air will build up in unused rooms, so you should keep the doors closed, to prevent it from moving to the other rooms in the house.

4. Wrap Up

woman wrapping up to keep warm

It seems obvious, but layering your clothes will help you to stay warm. Try wearing multiple thin layers rather than a single thick layer; this way of layering will keep you warmer because heat is trapped between each item of clothing, acting as an insulator.  Focus on your extremities, such as your feet and hands, since these can lose heat fast.

Additionally, have a blanket to hand for particularly cold days, or invest in a long fluffy dressing gown.

If you are looking for more long-term solutions to help you save money on gas and electricity and you are a homeowner with the flexibility to make changes to your property, then you may want to consider the below options.

5.  Invest In Double Or Triple Glazing

window with triple glazing

Consider investing in double or triple glazing. Although having these fitted can be initially expensive, it will save you money in the long term. 

Double or triple glazing works by trapping heat between the panes of glass which then acts as an insulator. This insulated barrier helps to reduce the amount of heat that is lost, making it more difficult for it to pass through the glass.

So, even if you need to turn your heating on, with double or triple glazing, it should not have to be for long. Additionally, once off, the heat will remain in your house for longer than it normally would.

6. Invest In Solar Panels

house with solar panels

Use the sun to heat your house by investing in solar panels. Solar panels absorb the energy from sunlight and convert it into electricity.

The initial cost of purchasing a solar panel is high, and it takes around six panels to heat a one bedroom house. 

However, you could just purchase one panel, and use it to provide electricity to heat the main room that you use.

Hopefully, this blog has provided you with useful tips to help you stay warm this winter and reduce your energy bills, whether you are a homeowner or tenant.

Regardless of whether you are employed or  unemployed, there are things you can do to ease your financial situation if you are struggling with debt.
Additionally, you may want to consider a debt solution, such as an Individual Voluntary Arrangement (IVA), to help you manage your debt.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

How To Report A Loan Shark

The last couple of years have put a strain on many of our finances, and the recent increase in energy prices has not helped. When people are financially struggling, this can give illegal moneylenders, or ‘loan sharks’, the opportunity to exploit them.

If you suspect someone of being a loan shark, then you should report them immediately. But, what exactly is a loan shark?

The definition of a loan shark will be explained in this blog, but first, we will cover the type of people that loan sharks usually target.

Since Covid-19, many people have found themselves getting further into debt, particularly those on a low income and who need the money to cover rising energy and food costs. If they are unable to repay what they have borrowed, it can negatively affect their credit score. Once this happens, it can be difficult for them to apply for further credit, so they may consider taking out a loan from an unauthorised company.

This is where loan sharks come in.

Definition Of A Loan Shark

great white shark dorsal fin breaching sea surface

A loan shark is an unlicensed moneylender; they are not authorised by the Financial Conduct Authority (FCA). This means that they are illegally lending money and breaking the law.

Loan sharks often work from home, they can act as a business,  and they tend to have a lot of customers.

If you borrow money from a loan shark, there will not be much paperwork involved, which means you will have no terms and conditions to refer to, so you will not be able to thoroughly understand what you are getting yourself into. 

Additionally, the interest rates will be very high on any loan you take out with a loan shark. If you are unable to repay them, they often take illegal action against you, such as using threatening behaviour or even violence. They may even try to force you to borrow more money to pay off your existing loan shark debt.

How To Check If A Lender Is Authorised

couple facing debt problems able pay out their mortgage thoughtful woman looking frustrated holding pen while managing family budget making calculations using calculator notebook pc
Couple facing debt problems, not able to pay out their mortgage. Thoughtful woman looking frustrated, holding pen while managing family budget, making calculations using calculator and notebook pc

If you suspect that you have borrowed money from a loan shark, you can check if they are on the Financial Services Register

After you search the FCA register and discover that the lender is not on there, then you should report them. They are lending money illegally and they need to be stopped; you are under no obligation to repay them.

Reporting A Loan Shark

If you think a person is lending money without being approved by the FCA, you can contact the Illegal Money Lending Team, according to where you are located, and you can report loan sharks anonymously.

If you are based in England, then use the below details to contact the Illegal Money Lending Team.

This is a 24-hour service. Please note that if you live in Wales, Scotland, or Northern Ireland and you need to report a loan shark, then the contact details will be different from the above.

How To Get Out Of Loan Shark Debt

If you have borrowed money from a loan shark, then it should be of some comfort to know that you are not legally obligated to repay them. If a lender is not licensed by the FCA, then they have no legal right to take action against you if you do not repay them.

As previously mentioned, Stop Loan Sharks can provide valuable information to help keep you safe.

Swift Debt Help cannot help with loan shark debt since the lender is operating outside of the law; however, if you have any other types of debt, we may be able to offer a solution to help you deal with debt, such as an Individual Voluntary Arrangement (IVA).

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

8 Debts That Can Be Included in a Debt Relief Order

Are you struggling with multiple debts? There are many debt solutions available, so, depending on your circumstance and financial situation, there will be one that is right for you. For example, a Debt Relief Order (DRO) may be an option to consider.

What Is A Debt Relief Order?

A Debt Relief Order is a form of insolvency that is only available in England, Wales and Northern Ireland. It is an alternative to going bankrupt and instead writes off the debt you are unable to pay off in a reasonable amount of time. Debt Relief Orders have been designed to provide relief to people who have borrowed money, allowing them to try and improve their financial situation.

To meet the Debt Relief Order criteria in England and Wales, your total debt needs to be below £30,000 and you only have £75 or less per month as spare income after paying for reasonable or essential living expenses. Also, this must be your only Debt Relief Order in the last 6 years, and your assets must be worth £2000 or less. You must have lived or worked in England or Wales in the last 3 years.

If you are accepted for a Debt Relief Order, your name will be placed on a register called the Individual Insolvency Register, and it will remain there for the length of your DRO, plus an additional three months.

Not all debt can be included in a Debt Relief Order. For example, student loans and criminal fines are not included. The ones that can are called qualifying debts.

How Long Does A Debt Relief Order Last For?

When you have a Debt Relief Order, you can get your debt written off after 12 months if your financial situation remains the same in that time period and you continue to meet the qualifying criteria.

The Official Receiver, an officer of the Insolvency Service, is the one who accepts your application, and they may extend your DRO or end it early, depending on the circumstances. Most DROs last for 12 months.

After those 12 months, your debt will be written off.

8 Debts To Include In A DRO:

1) Utilities and Council Tax Arrears

Woman paying tax on her laptop, also using a calculator which is next to her hand
Account Assets Audit Bank Bookkeeping Finance Concept

A Debt Relief Order can help with household arrears, which include the likes of council tax, gas, electricity, rent and telephone bills. Council tax debts in particular are important debts to deal with as non-payment of these can have serious consequences such as imprisonment. 

Debt Relief Orders are one way of clearing council tax debt. Council tax going forward will need to be paid as normal.

2) Credit Card Debt

Man using his credit card for a purchase on his laptop

Credit card debts are common in the UK, with the average citizen having £2718 credit card debt in 2020, and as of April 2022, it is approximately £7264 per household. April 2022 has also seen the unsecured debt per adult increase to £3817
Using a credit card is similar to taking out a loan, and paying off credit card debt is important to prevent the amount of interest from the loan from building up into something unmanageable.

3) Payday Loans

Man providing a payday loan in cash with two small houses on top

Payday loans are small amounts of money that are lent between paydays, usually between £50 and £1000, and last for a few weeks. They are well known for having high interest rates and small windows in which the money can be paid back.

This style of loan often leaves people struggling to pay the loans back, and can make their financial situation worse. This is especially likely if you are already in financial difficulty when taking out a payday loan.

Having a DRO offers relief for your payday loan debt and can be written off at the end of the process.

4) Overdrafts

Man in debt holding an empty wallet

Overdraft debt often comes with high-interest rates, and can sometimes feel like the money is your own instead of borrowed. If you have a current account with the bank you owe money to, they may take money from said account to pay themselves back that overdraft debt you owe. 

A Debt Relief Order allows your overdraft debt to be written off at the end of the DRO.

5) Benefit Overpayments

Benefit overpayments are when you have been paid more than you are entitled to in benefits. It can be easy to struggle to pay back benefit overpayments, especially if the money has already been spent before realising it was an overpayment.

Benefit overpayments that are included in your DRO cannot be recovered.

Unless they are a result of fraud, benefit overpayments can be written off.

6) Hire Purchase or Conditional Sales Agreements

car dealer handing a customer car keys for her new car

Hire purchases and conditional sales agreement items do not legally belong to you until they are paid off fully. If you have paid less than 33% of your hire purchase agreement debt and you miss payments, you may have to return these items if you have a DRO. Transferring the ownership of these items to someone who can pay for them may also be an option.

In certain situations, you may be able to not have this included in your DRO if you are not in arrears with your payments. Speak with your Official Receiver about whether you need to include your hire purchase or conditional sales agreement in your Debt Relief Order.

You cannot have a hire purchase or a conditional sales agreement if you do not make them aware that you have a Debt Relief Order.

7) Finance Items

woman turning the dial on a washing machine

Some items, such as washing machines, can be bought on finance, which includes Buy Now, Pay Later (BNPL) purchases. These are short-term finance options where customers can make a purchase and pay for it at a later date.

Buy Now, Pay Later debts can have interest attached, although sometimes that interest only comes into place after a specific amount of time. Some BNPL debts can be interest-free. Whilst they don’t impact your credit score at the time of writing, they may in the future, and having Buy Now, Pay Later debts combined with other debts can still impact you financially.

Depending upon the nature of the agreement, the money borrowed may be secured on the item purchased. Failure to make the payment could mean that the item is repossessed so ensure you are aware of the terms and conditions of the agreement.

8) Loans From Family Or Friends

drawing of family holding hands

Loans from family and friends can also be written off with Debt Relief Orders, however, bear in mind that this means that the person you owe money to will not be repaid.

There are various options that are available for you to use if you are struggling financially, and it is important that you find the right solution for you. If you find you are in need of a solution such as a DRO or an IVA (Individual Voluntary Arrangement), you need to ensure the one you apply for meets your needs, and that you meet the criteria so it can help with your financial situation. At Swift Debt Help we can fully assess your financial situation to see if we can offer a solution that meets your needs.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

Thinking About Cancelling Your Direct Debit To Your Energy Supplier?

From 1st October 2022, the energy price cap increased by 80%. Due to this, millions of households will see their energy bills rise, and those working on minimum wage, particularly those in a single-person household, will struggle to pay for their energy. 

On average, people who pay for their energy by direct debit will see their annual bill rise from £1,971 to £3,549 per household.

Because of this dramatic increase, some people are considering joining the Don’t Pay UK campaign, cancelling their direct debits to their energy suppliers until energy bills are reduced. 

However, if a person cancels their direct debit, it can result in severe consequences, especially if they have no plan, or means, to pay in the future.  

There are other ways to deal with rising energy costs, some of which we will cover in this blog.

What Happens If I Cancel My Energy Direct Debit

Drawing of people holding an online banking login page and a credit card in front of a tablet

You may be considering cancelling your direct debit to your energy supplier if you cannot afford your energy bills. But here is why you should not do that:

  • You could be sent a CCJ (County Court Judgement); a court will demand that you pay what you owe.
  • Your energy supplier could apply to a court for a warrant, which will enable them to enter your home to disconnect your supply. It is very rare for this to happen; it is more likely that your energy supplier will offer to install a prepayment meter before they take further action.
  • A debt collector agency (a company that specialises in collecting a debt), may pursue you until you have paid off your debt. 
  • Your energy supplier could issue you a fine or charge you an extra admin fee, so you may end up paying more.
  • If your energy bill is left unpaid, or if action is taken against you by the energy supplier, then this will be seen as bad debt. In this instance, your credit rating could be negatively impacted.

Direct Debits Are Cheaper

Drawing of different 'Sales 50% off' labels

Usually, paying your energy bills by direct debit can work out cheaper. 

Many energy suppliers offer a discount on your bill if you pay by direct debit. It may only be a small reduction, but this could make a big difference over the next two years whilst the energy crisis lasts.

However, if you cancel your direct debit without warning your energy suppliers, you may lose this discount if you decide to pay by direct debit in the future.

Another perk to paying your energy bill by direct debit is that it is easier for suppliers to refund you if you make an overpayment.

What To Do If You Can’t Afford Your Energy Direct Debit

Man holding an empty wallet

As soon as you realise that you are going to struggle to pay your energy bills, contact your energy supplier. They should be able to offer a solution to make it easier for you to pay your bills at the same time as ensuring that they receive what you owe them. 

Some energy suppliers are offering grants to help pay people’s energy bills, particularly for those who are most affected by the rise in energy costs. To find out if you are eligible for a grant, contact your supplier.

As previously mentioned, your supplier may offer to fit a prepayment meter, also known as a pay-as-you-go meter, if you are struggling to pay your energy bills.

Prepayment meters can help you budget because it is easier to keep track of what you are using; however, they work out more expensive in the long run.

In some circumstances, you may be able to switch your energy supplier if you find one that offers you a better tariff. However, if your current supplier sent you a bill over 28 days ago that you haven’t yet paid, then you will be unable to switch until you do.

Help With Energy Bills

woman doing accounting

There are debt solutions available to help if you are unable to pay your energy bills and have outstanding utility bill debt

For example, Swift Debt Help can offer (if eligible) an IVA (Individual Voluntary Arrangement). 

An IVA is a legally binding agreement that can be arranged by a licensed insolvency practitioner (IP) to help you pay off your debt in an affordable way. Before the payment plan is arranged and put forward to your creditors, your income and expenditure will be assessed by your IP. This is to ensure that you have enough money each month to pay for necessities, such as your rent/mortgage and food. Once an affordable amount for the payment plan is put in place, then you will have to pay the agreed amount each month and stick to the agreed terms. 

To be eligible for an IVA you have to:

  • Owe at least £5,000.
  • Have 3 types of debt with at least two creditors.
  • Have a regular source of income.
  • Live in England, Wales, or Northern Ireland.
  • Be unable to pay the money that you owe.

For more help and advice on cancelling your direct debits, or applying for an IVA, contact us to see whether you are eligible for a viable financial solution to assist you with your energy bills.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

4 Benefits of Using Your Credit Card Sensibly

Credit cards are common in our society, and many people use them to pay for a large range of things, from the weekly grocery shop to washing machines and other household appliances. But just because we know about them, it doesn’t mean we know about the benefits that come with them.

If you know how to use a credit card wisely, there are an array of advantages that they can bring you and your credit score.

Here are 4 benefits of using your credit card sensibly.

Benefits of a credit card

1) A credit card can build your credit rating

credit card with credit score

The amount you can borrow from Lenders, and the associated interest rates depends on your credit rating.

A credit rating is what banks and other lenders use to establish the risk of lending you money. The rating is typically a three-digit number based on your credit report. The credit report is a record of how you’ve maintained bills and paid off debts in the past. The higher the number of your credit score, the better the credit rating. Different credit reference agencies have their own scales when it comes to establishing credit ratings, so yours might look different depending on who you use.

Your credit card account and payment history form a significant part of your credit report. This means that using your credit card responsibly and paying it off regularly can improve your credit rating.

Better credit ratings can make it more likely that you can access lower rate, or higher value lending, such as a mortgage. They can also increase your chances of getting better deals on things like mobile phone contracts.

There are different ways of improving your credit score, but they can all help you with bigger purchases later on, including car loans.

2) Credit cards can give you extra security

security from credit card

When paying for things online, there is always the risk that the items you order won’t be what you expected, if they arrive at all. This is where a credit card can help.

By paying for online purchases through your credit card, you can have extra protection concerning those products or services. If you are unhappy with the service or product you have received, you can request a chargeback through your credit card company. This is because of Section 75 of the Consumer Credit Act 1974, which means you can request a chargeback for numerous reasons, including if the merchant has closed down or if the product doesn’t arrive to name a few. It doesn’t apply to debit cards.

For Section 75 of the Consumer Credit Act 1974 to be in effect, the purchase must be over £100 but under £30,000. However, you don’t need to have paid the full amount on your credit card.

This extra protection can also apply to booking holidays, such as in some hotels and airlines.

3) Credit Rewards

rewards from credit cards

Using your credit card isn’t just about credit ratings and protecting your purchases, although they can be useful. You can get rewards by using it too.

Several credit card companies offer rewards to whoever owns the credit card when an eligible purchase has been made. By buying the likes of groceries and petrol on your credit card, you can gain credit card rewards through points for every pound spent.

Different credit cards can have different rewards available, with some offering cashback on items and others offering air miles. Reward points to be spent elsewhere, such as in restaurants or shops, could be another reward available for some credit cards.

For example, credit cards that offer air miles can be popular with people who have to travel frequently as they can offer discounts on flights. This can potentially apply to other elements of travel such as hotel costs too.

If your credit card offers cashback, it should be noted that some companies need you to log in to your account and have your settings allowing you to receive said cashback.

4) Responsibly using your credit card can increase your spending power

spending power with credit card

When using your debit card, you are limited to the amount of money you have in your current account, regardless of your situation or extenuating circumstances. With a credit card, you no longer have this issue.

By using your credit card responsibly, you can increase the amount of credit you have available to spend. This is particularly useful when an important purchase has to be made, or something immediately needs replacing, especially if it is an expensive item. Sometimes you just don’t have enough savings in your current account to cover unforeseen circumstances, and that’s where a credit card comes in. In the cases of those unpredictable emergencies, they can act as a safety feature so your life can continue, and you can pay off the money in manageable instalments later.

As well as increasing your spending power, using your credit card responsibly for a bigger purchase can also mean there are more rewards for you to gain on your credit card account, whether that be through cashback, points or air miles.

Remember, any credit borrowed from your credit card must be repaid.

Do you need help with credit card debt?

In January 2022, the average UK household’s credit card debt was £2100, which may increase as the cost of living rises.

There are various ways in which Swift Debt Help can aid you with your credit card debt, including offering advice to those who need it. Whether you need help to organise affordable payments, legal advice or just someone to talk to, we are here to help you get control of your credit card debt.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

9 Types of Loans – Helping You to Understand How They Work

Are you wondering whether taking out a loan is the right thing to do? Well, before you start applying it is best to consider what types of loans are available so that you can make an informed decision concerning your financial situation. 

There are many types of loans to suit people’s different circumstances. For instance, whilst student loans are commonly heard of, there are also types of loans that can help you pay off existing debt.

 Hopefully, this blog should help you to decide the option that best suits you.

How Do Loans Work?

Each type of loan works differently. Mostly, a loan is a fixed amount of money that a lender offers to you, and the amount that you borrow will have to be paid back in full, usually with interest, over an agreed period.

However, not all loans have interest rates. Additionally, some have variable rates, so the amount that you pay back each month can vary. On the other hand, a personal asset could be used as collateral, if you fail to pay back what you borrowed.

The different categories of loans are as follows:

Secured Loan 

So, what is a secured loan? 

A secured loan is a type of loan where a personal asset, such as a house, is used as security for the lender. In simpler terms, if you fail to pay back what you have borrowed, then the lender can repossess the asset. 

Generally, it is a property that will be used as collateral, but other valuable items can be used as well, such as a car.

 Unsecured Loan 

Now, what is an unsecured loan?

An unsecured loan is a type of loan where the lender does not require collateral. However, because the lender does not have any security in this instance, they will usually have higher interest rates.

Additionally, to receive an unsecured loan, the borrower would usually need to have a good credit history.

Instalment Loan 

An instalment loan is a type of loan where the borrower repays the lender the full amount of what they owe by instalments over a set period. Typically, the borrower would also have to pay interest. 

Before the loan is approved, usually an amount will be agreed on of what the borrower will have to pay each month as well as the date that it will have to be paid. 

Revolving Credit 

Revolving credit is a type of loan that is flexible. The borrower can make repayments but then withdraw again as long as it is within their pre-approved credit limit. This type of loan tends to be reviewed every 24/36 months to ensure it still suits the borrower’s needs.

The borrower would usually have to pay interest and, with regards to what they have borrowed, there is typically a minimum amount they would have to repay each month.

What Are the Specific Types of Loans?

1) Personal Loan 

Man stacking coins on top of each other

Lending taken out by an individual, and not a business would be considered a personal loan.

They can be used for a range of purposes such as home improvements, buying a vehicle or for consolidating multiple, high-interest debts. Often their flexibility and short-term repayment plans can be convenient if you have an unexpected expenditure, such as a high bill. 

Additionally, some people may take out a personal loan to help them with a new business venture.

Personal loans can be secured, but typically they are unsecured, meaning the lender will not require any collateral.

The borrower will usually have to pay interest on a personal loan, either at a fixed rate or variable; the rates you will be offered will depend on your credit history and current financial situation.

Find out how to improve your credit score to get a better interest rate.

2) Hire Purchase 

Man handing car keys to woman who has taken out a hire purchase loan for the vehicle

A Hire Purchase (HP) Agreement is a credit agreement where you hire an item (for example, a car or other high-value item) and pay an agreed amount in monthly payments. You do not own the item until you have made the final payment.

Because the lender has more security with this type of loan (they can seize the car or item if you fail to make your repayments) these lending agreements can often be available to those with a poorer credit history. Rates tend to be lower, the better the credit score that you have. 

The borrower will pay off the loan in fixed monthly instalments. Usually, the loan amount and the interest rate that the borrower will have to pay will depend on the price of the car, the value of the deposit that can be put down and the credit rating of the borrower.

As the Lender has security in the form of the vehicle it can be at risk of repossession if payments are not maintained.

3) Student Loan 

graduation hat and diploma on a table

A student loan is a sum of money that a student borrows to help them pay for their higher education, such as for a course at a college or university. They can also help to cover living expenses if a student isn’t earning enough or if they are unemployed. 

A student loan is available from both the government and private lenders and the borrower, and, typically, the borrower doesn’t have to start repaying it until they are earning a certain amount of money.

The interest rate will vary depending on the type of student loan.

4) Mortgage 

Key for a mortgage

Mortgage loans help a borrower buy a property, typically a house.

A mortgage is a secured loan, meaning that the lender will use your property as collateral (they can seize your property if you fail to make payments).

There will also be an interest rate to pay, which will depend on the credit history and current financial situation of the borrower. Additionally, the deposit amount that the borrower is able to put down will also be an important factor. 

The mortgage loan is repaid by the borrower via monthly instalments over an agreed period.

Some people decide to remortgage to clear the debt that they have accrued. 

5) Debt Consolidation Loan 

young happy couple making agreement with their financial advisor home men are shaking hands
Young happy couple making an agreement with their financial advisor at home. Men are shaking hands.

A debt consolidation loan is a way for borrowers to repay multiple debts, paying them all off with one bigger loan. This type of loan can be used to pay off multiple types of credit including credit card debt, overdrafts, and personal loans.

Since this allows all of the borrower’s debt to be in one place the interest rate may be lower which could help them to reduce their monthly payments. 

Additionally, a single monthly payment can be easier for a borrower to manage, rather than being responsible for making payments to multiple creditors.

6) Payday Loan 

Loan approved on a computer monitor, with woman holding a credit card up

A payday loan is a short-term loan, usually available on the internet or from high-street shops. 

This type of loan, typically, comes with a high-interest rate and it has to be paid back within a month. If you take out a payday loan, then you will usually have to agree that your lender can take the money that you owe from your bank account.

7) Doorstep Loan 

white doors

A doorstep loan (also referred to as home credit) is a type of loan that can help you with an emergency or any short-term costs. 

It is known as a doorstep loan because the lender visits the borrower’s home to give the loan in cash, then returns at a later date to collect the repayments. However, these days there is usually an option to receive the loan and make repayments online.

The amount you can borrow in a doorstep loan is usually up to £1000. They come with high-interest rates since they are typically easy to apply for even if the borrower has a bad credit history.

Find out how to deal with debt collectors at your door.

8) Logbook Loan 

Woman writing in logbook with calculator

A logbook loan is a secured loan since the lender will use the borrower’s existing car as collateral. 

This is a more expensive type of loan as interest rates are usually very high.

You can normally borrow between £500 – £50,000 depending on the vehicle value and repayments must be made within 78 weeks of you taking out the loan.

Find out more information if you need help with logbook debt.

9) Loan Shark 

A loan shark is a type of lender that is not authorised by the Financial Conduct Authority (FCA). 

This is an illegal type of lender. They charge very high fees and there is hardly any paperwork involved.

If the borrower fails to repay what they owe, then a loan shark will generally use illegal means to try and get the money. 

If you have taken out a loan with a loan shark and they threaten you, then contact the police immediately. You can report a loan shark on the following Government website

Find out more about loan shark debt.

Now that you’ve read some information about the different types of loans available, hopefully, you will be able to make an informed decision on the right option for you. However, Swift Debt Help can offer advice regarding other debt solutions, such as an Individual Voluntary Arrangement (IVA).

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

How To Efficiently Use Your Credit Card

A credit card can help you effectively manage your finances, improve your lifestyle, and expand your financial options. For example, a credit card can help increase your credit rating which is reviewed by most lenders. 

But how can you efficiently and effectively use your credit card and avoid getting yourself into overwhelming credit card debt? First, let’s explain what a credit card is.

Credit cards are a great way to make large purchases that you otherwise would not have been able to do. As you may already know, with a credit card you will have a credit limit (an amount that is available for you to spend), which, if you start to use your credit, you will be required to make monthly repayments as well as pay any interest gained. Some credit cards may have a 0% interest rate for a limited time; however, ensure that you know and understand your interest rate before you start using your credit card.

How To Use A Credit Card

As previously mentioned, if used sensibly, a credit card can help to improve your finances and, overall, your lifestyle. However, it can be easy to use your credit card in the wrong way, getting into debt that is unmanageable. 

So, below are a few tips to help you use your credit card sensibly and to stay on top of your debt.

1) Spread The Cost

A credit card is good to have when an unplanned event occurs, resulting in an extra expense. The credit you have available can be seen as your credit for emergencies.

For example, if your car suddenly breaks down, but you don’t have the money to fix it, then this is when having a credit card is handy. You can pay to have your car fixed without affecting the money you need to live. Additionally, you will be able to spread the cost out.

Being able to make a big purchase and spreading the cost over several months is particularly useful if your credit card has a 0% interest rate (the terms and conditions of your credit card, including interest rate details, should be provided when you apply for your credit card).

Additionally, it can work out cheaper to use your credit card for big leisure purchases, such as buying a new TV. Rather than paying for the TV in monthly instalments, which usually comes with a high-interest rate, you can pay for it in full by using your credit card.

2)  Pay The Balance

Only use your credit card when you know you will be able to pay off the balance. If you are considering using your credit card to pay for a large purchase, consider whether you will be able to afford to repay it through monthly instalments. 

If you do not think you will be able to repay what you have borrowed over a reasonable amount of time and without it putting you further into unmanageable debt, then you should not use your credit card to make the purchase.
Remember, a credit card is good to have in an emergency or to ease your financial situation. When you start making unnecessary purchases that you cannot afford, then that is when having a credit card can lead to unmanageable debt and cause your credit rating to fall.

3) Limit Credit Card Usage During A Mortgage Application

saving money for a mortgage

When applying for a mortgage, it is advisable not to overuse your credit card, particularly during the months leading up to you searching for and comparing the best interest rates that you may be offered. 

This is because you need to demonstrate to lenders that you have control over your finances; that you can manage your earnings and expenditures sensibly and without the use of continually using credit. The higher your debt, the harder it will be to secure a mortgage offer from a lender. 

When considering whether you can actually afford a mortgage, lenders will look at your credit report, which will include details of your credit card limit and how much you have used. The more credit that you have available, the better it will look to lenders because they will see that you are not having to rely on this credit to keep on top of your bills.

Your credit report will also detail any late payments you have made, which we look further into in the next tip.

4) Avoid Late Payments

If you fail to pay your credit card bill on time, then not only could this show up on your credit report and lower your credit rating, but you could also be charged a late fee, putting you further into debt. 

Additionally, you may be asked by the credit card company to pay back the amount you owe in full, or they could even try to take you to court. As a result, your credit report will be negatively affected, making it more difficult to gain other types of credit. 

If you know that you may struggle to pay your credit card bill on time in the future, then it could be worth getting in touch with your credit card company because they may be able to reduce your payments or pause them temporarily.

5) Avoid The Minimum Payment

When using your credit card, try to make more than your minimum payment each month. If you only pay the minimum amount each month, then it could take years for you to repay what you owe, particularly if your credit card has a high-interest rate.

Ideally, try to pay off a large chunk each month via direct debit or, if you can, pay the full amount of what you owe each month, increasing the available credit that you have, which will also look good on your credit report.

6) Do Not Make Cash Withdrawals

using a credit card to withdraw cash

Do not use your credit card to make cash withdrawals because your credit card company will charge an extra fee, which will increase the amount that you owe that month. Then, if you are unable to repay what you owe, again, it will impact your credit score.

If you do need to withdraw cash, consider applying for a money transfer card, but be aware that there will still be an extra fee involved.

We hope that these tips will help you to efficiently use your credit card, easing your financial situation instead of putting a strain on it.

However, if you are struggling with credit card debt and are unable to repay what you owe, then an alternative debt solution may be worth considering, such as an Individual Voluntary Arrangement (IVA).
With this debt solution there will be IVA Protection, so to find out more, get in touch with Swift Debt Help.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

What To Do If Bailiffs Are At Your Door

If you allow your debt to escalate, and fail to take action to pay your bills even after receiving warning letters, then you may be visited by bailiffs. They will try to collect money from you, or assets for the value of your debt.

This is a situation that no one likes to be in; however, bailiffs have to follow certain procedures, which means, if you are visited by them due to unpaid debt, then you do have some rights that you should be aware of.  

What Are Bailiffs?

bailiffs collecting debts

Bailiffs (also known as enforcement agents) are usually self-employed or employed by a private debt collection company. Although they are not, typically, employed by the court, they are certified by the court to collect unpaid debts on behalf of creditors.

Bailiffs have the legal power to remove goods that they’ll sell to pay off your debt. 

Additionally, they can also be instructed to visit your home to deliver court documents.

If they cannot gain access to your property (if you fail to let them in), then bailiffs may take items from outside of your property, such as your car. 

Depending on the type of debt, or whether they are trying to enforce a High Court Writ (a formal order allowing them to gain access and seize assets to sell), then a bailiff can apply to the court for a warrant. If this is issued, then it will allow the bailiffs to use reasonable force to enter the property.

There are different types of bailiffs and agents:

High Court Bailiff (High Court Enforcement Officer)

This type of bailiff is an officer of the High Court in England and Wales. They are responsible for the oversight of Writs of Control and usually give this authority to a Certificated Enforcement Agent.

County Court Bailiff 

This type of bailiff is employed by the county court and enforce county court orders. They can try to obtain payment from you (of up to £5,000, if that is what is owed) or some of your items to sell at auction.

Certified Enforcement Agent

A certified enforcement agent is no longer classed as a bailiff (since new laws came into effect in 2014). These agents are certified by a local court. They can enforce rent arrears, council tax arrears, and parking fines, just to name a few.

What Can Bailiffs Take?

As previously mentioned, once access to your property is gained, bailiffs can take some of your items to sell. The money received from the sale will be used to pay off your debt.  

The items that bailiffs are permitted to take and sell include:

  • Luxury items, such as a TV or jewellery.
  • Items that belong solely to you or items that you own jointly.
  • Items from outside of your property, such as a car.

However, there are certain items that bailiffs cannot take. For example:

  • Items belonging to someone else (known as third-party goods).
  • Items that you need to live, such as a table and chairs, cooker, bed, phone, washing machine, etc (which are covered under ‘basic domestic needs’).
  • Items that you’re still paying for.
  • Anything that could cause damage to your home if removed.
  • Items that you need to work or study, such as tools, computers, vehicles, etc.
  • A vehicle displaying a blue badge permit.
  • Pets or guide dogs.

If a bailiff tries to take any of the items listed above (known as exempt goods), try to provide evidence as to why they can’t. 

If evidence isn’t provided and they still take the items, then you need to complain within seven days, providing evidence and explaining why the goods are exempt. The bailiff should respond to your complaint within ten days.

However, if you don’t receive a response or if the bailiff refuses to return the items you believe to be exempt, then send the complaint directly to the creditor to whom you owe money.

Can A Bailiff Force Entry?

In some circumstances, a bailiff can force entry into your property, but it does depend on the type of debt you owe.

However, you should know that:

  • You don’t have to open your door to a bailiff. Keep your door locked. If your door is unlocked, then bailiffs are allowed to gain entry as this isn’t classed as a forced entry.
  • They cannot enter your home by force, such as pushing past you (call 999 if you are physically threatened by a bailiff).
  • If only children are present, all under the age of 16, then a bailiff cannot enter the property.
  • They are not allowed to try to gain access to your property between the hours of 9:00pm and 6:00am.

It is worth noting that a debt collector is different from a bailiff since they do not have the same power. If they say that they’re a debt collector, tell them to leave.

Can Bailiffs Force Entry With A Locksmith?

key in door

It is very rare, but bailiffs may sometimes have the right to gain entry into your property by asking a locksmith to open your door.

However, you are usually given the chance to arrange to pay off your debt before it leads to the above situation.

Options For The Debtor

If you’ve been sent warning letters stating that bailiffs will be used if you don’t pay off your debt, then your best option is to get in touch with a debt solution company, such as Swift Debt Help.

For example, a debt solution that could ease your financial situation is an IVA (Individual Voluntary Arrangement). Bailiffs cannot take action against you if you have an IVA in place. 
If you’re seeking further advice on IVAs to help you gain control of your debt, then get in touch with us today, and we’d be happy to assist.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.

How To Improve Your Credit Score Before A Remortgage

If you are considering remortgaging your property, you should aim to improve your credit score. The higher your credit score, the more likely you will be approved for a remortgage in addition to being offered better rates. 

So, what is a credit score and how are they calculated?

A credit score is based on the information in your credit report. This information is provided primarily by creditors and lenders, but other sources are used, such as the Electoral Roll and the council, to gather further details on your financial history.

Your credit score can vary depending on which credit reference agency you use. Each agency has its own maximum credit score and they will analyse metrics differently to calculate the credit score they decide to give you.

For example, you can achieve a maximum credit score of 999 with Experian whereas, with TransUnion, the maximum credit score you can get is 710.

According to Experian, the average credit score in the UK is 759, which is rated as a fair credit score. 

This blog will provide you with some tips to help you improve your credit score. But first, what is meant by remortgaging and can you do it to pay off debt?

Can You Remortgage To Pay Off Debt?

Remortgaging is the term used when you pay off your original mortgage with the proceeds of your new mortgage. You may choose to do this to release equity from your property to pay off any debt you have.

The equity released will be tax-free and, with the new mortgage, your new monthly payments could be reduced; however, this isn’t the best solution for everyone.

If you are unable to remortgage, a debt solution, such as an IVA (Individual Voluntary Arrangement) might be a more viable option for you, depending on your circumstances.

An IVA is a legally binding agreement that can be arranged to help you affordably repay your creditors. A payment plan is put in place, according to your income and expenditure, to ensure that you have enough money each month to pay for necessities, such as your rent/mortgage, bills, and food.

Why Has My Credit Score Gone Down?

Many factors play a part in the rise and fall of your credit score. 

Below are just a few reasons why your credit score might have dropped:

  • If you have missed a payment.
  • If there is a derogatory mark on your credit report.
  • If there is a change in the credit utilisation rate.
  • If your credit limit has been reduced.
  • If you have closed a mature account.
  • If you have recently applied for, or opened, new lines of credit.
  • If there is a mistake on your credit report.

5 Ways To Improve Your Credit Score

1) Pay Your Bills On Time

woman paying her bills on time

As previously mentioned, if you miss a payment, then this can negatively affect your credit score. So, to ensure your monthly payments are made on time, consider paying your bills by direct debit.

2) Avoid Hard Searches

Whenever you apply for new credit, (for example, when you take out a new phone contract,) the company will carry out a hard search, which will then be recorded on your credit report. 

It is possible to ask some companies to carry out a soft search, which is better for your credit score. 

But what’s the difference between a hard search and a soft search?

Well, whilst both a hard search and a soft search will appear on your credit report, lenders will only be able to view the hard searches; the soft searches will be invisible to them, so it will not affect their decision as to whether they lend to you.

3) Settle Any Debts

If you owe multiple creditors money, then this can negatively affect your credit score. 

Consider setting up direct debits to ensure you are making regular payments to these creditors.  

Additionally, try not to use all of your available credit; keep it below 30% if possible.

4) Regularly Check Your Credit Report

Your credit score could be negatively impacted because of false information on your credit report. To be able to correct any discrepancies when they occur, you should check your credit report often. 

Your information should be up to date, including personal details, and all of your accounts and credit cards should be listed. 

Any irrelevant, out-of-date information should be reported to the credit agency as soon as it has been identified.

5) Register To Vote

person posting a vote

Registering to vote is possibly the quickest action you can take to help increase your credit score. 

You can register online, providing your current address, and by doing so, you could add up to 50 points to your credit score. 

We hope this blog has provided you with the information you need regarding remortgaging and how to improve your credit score; however, read more on Swift Debt Help to discover more about remortgaging your property.

Request a Debt Assessment

Disclaimer: For guidance only. Financial information entered must be accurate and would require verification. Other factors will influence your most suitable debt solution.