Author: Alex Swindells

7 Quick Tips on Dealing With Debt

Written by Alex Swindells on September 8, 2022. Posted in Debt help.

Managing your finances when you are in debt can be incredibly stressful. It’s difficult to find the right balance so you can manage debt repayments and increasing interest, while also covering your monthly living expenses. More people find themselves in this situation at the moment because energy price hikes, inflation, and the increased cost of living are putting more pressure on their finances. Currently, the average UK debt for adults is £33,000 and this figure is likely to increase in the near future.

When debt is piling up, it’s always a good idea to seek advice from a specialist before things get out of hand. However, there are some key things you can do to stay on top of the situation. Here are 7 tips on dealing with debt.

1. Pay Off Credit Cards

Credit card debt should be a priority because they usually have high-interest rates and it’s easy to get into a debt spiral if you have multiple cards. If you are not in a position to pay off the full balance, pay off whatever you can afford. Paying little and often will bring the balance down and

reduce the interest, making the debt more manageable. When paying off credit cards, focus on the ones with the highest interest first so you can reduce your overall monthly payments as much as possible.

If you have over 3 lines of credit with at least 2 creditors, you may qualify for an Individual Voluntary Arrangement or a Debt Management Plan. An IVA allows only pay back what you can realistically afford each month with any remaining debt being written off at the end of the agreed term.

2. Build an Emergency Fund

Drawing of man and woman adding coins to a jar to build an emergency fund

People assume that all disposable income should go towards paying off debts, but that is not true. As long as you are meeting the required contractual repayments on your debts, it can be a good idea to save money, even if you have a lot of debt payments to make. That way, if you are hit with an unexpected expense like home or car repairs, for example, you have money to pay for it.

Without an emergency fund, you may otherwise be forced to borrow more and push yourself further into debt. So, even if you can only afford to save a small amount, put aside whatever you can. If you do decide to save, always make sure you pay your contractual monthly repayment amounts on your debts first.

3. Take Account of All Your Debts

Young caucasian family having debt problems, not able to pay out their loan

Knowing exactly what you owe allows you to make an informed decision about how to deal with your debts. But when you have lots of different debts, it is easy to lose track. So, gather all of your debts and write them down on a piece of paper so you can get a total figure for what you owe and how much your monthly repayments are.

Visualising your debts in this way helps you see whether you can actually afford to pay them back or if you need to seek help. If you find that you cannot realistically afford to pay your debts, Swift Debt Help can assist you. You may be eligible for a formal debt solution such as an IVA or Debt Relief Order if you have multiple debts. Otherwise, we can talk you through the rest of your options and find the best way for you to tackle your debts.

4. Prioritising Debts

Man writing down his debts, using laptop to look at finances

If you do decide that you can pay debts on your own, you should start by prioritising them. Sort them into the most and least important based on how much you owe, what the interest rates are, and what the consequences for non-payment are. For example, if you are on a last warning your creditors could take legal action and pass the debt onto collectors. This could result in bailiffs being instructed who may attempt to repossess items from your home as a means of satisfying the debt. This debt would be considered a priority debt.

If you have council tax debt and your arrears reach a magistrates court, you could be issued a CCJ, an Attachment of Earnings Order, or even sent to prison, so this debt would also need to be dealt with as a priority.

Ideally, you should pay all debts on time. But when this simply is not possible, prioritise them and focus on the most important ones first.

If after prioritising your most important debts you find you don’t have enough left over to pay the rest of your creditors what they are demanding, get in touch with Swift Debt Help to explore all the options available to you so you can understand the help available to people struggling with debt.

5. Create a Spending Plan

A strict spending plan can free up more money to go towards clearing your debts. Start by tracking your income and all of your essential outgoings to calculate how much disposable income you have left. You can then start finding areas to cut back and save money.

Meal plans help you be more economical with your shopping, for example. You can also try turning down your heating a few degrees to make savings during the winter. Look at all of the small expenses like subscriptions too because these quickly add up.

6. Seek Help

Person holding man's hands, showing moral support through debt problems.

Trying to deal with debts on your own can often be difficult and extremely stressful. When things get out of control, always remember there are services available to assist you in resolving the problem.

Struggling to deal with the problem alone could make your situation worse, so if you find that you are unable to pay your debts, contact us at Swift Debt Help right away and we can show you what your options are. There are many different processes available that can help you deal with debt.

7. Exclude All Luxuries

Finally, you should try to exclude all payments that are not completely necessary. This includes eating out, delivery meal plans, TV subscriptions and memberships, buying lunch or coffee at work, cosmetic treatments, and any other non-essential purchases. Although this may seem extreme, it allows you to pay more towards your debts and chip away at them little by little.

Once you are meeting the minimum required monthly repayments on all of your debts, you will be in a more stable financial situation, and you can start paying for luxuries again if you wish.

If you have numerous debts of different types in varying amounts, it can be difficult to keep track of payments and manage your finances.

If you have read the above tips and feel that you may need more help, or wish to understand the options available to you in your circumstances, Swift Debt Help debt solution finder is a great first step in finding the help you need. You just need to enter your debt amount, your residential status, and your contact information and you will one of our friendly team will provide you with essential information about your available options. Otherwise, get in touch with Swift Debt Help directly and we will give you all of the expert advice you need.

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

Close up portrait of a man in debt showing empty wallet

The 5 Stage Process of Dealing With Debt

Written by Alex Swindells on September 1, 2022. Posted in Debt help.

People with debt problems often hide their situation because they are ashamed. But the reality is, that it is more common than we realise. In February 2022, the average adult in the UK owed £33.410 in total debt.

Mounting debts create a huge amount of stress and we all have coping mechanisms to deal with this. We have identified 5 stages many people might go through as debt begins to spiral out of control. Consider if these ring true for you, and if so, understanding where you are in the process could make it easier to intervene and take action to resolve your problems.

1. Denial

Debt is incredibly common and most people use credit in some form. Borrowing an affordable amount on a credit card and paying it off right away can benefit you. But when your debts get out of control, it’s important that you address the problem right away. Unfortunately, the first stage of dealing with debt is usually denial.

Even though the payments are out of control, people tell themselves that they are borrowing responsibly and they will easily be able to get back on track next month. Their spending habits don’t change, so they still make a lot of luxury purchases and don’t save money or pay their debt.

Emergency spending is also common in people that are in denial about debt because they fail to plan for the future. When all of your money goes into credit card payments and you don’t have any emergency savings, an unexpected payment pushes you further into debt.

A large proportion of people in debt denial will overspend and build up large credit card debts. Ultimately, this means that the situation gets worse every month and people in denial tend to avoid looking at their bank balance or credit card statements because they are afraid of the outcome.

2. Panic

Tired teen girl feeling dizzy, having panic attack and massaging her temple.

Denial can only last so long before you are forced to face your debt problems. Interest payments will increase on unpaid debts and the situation will snowball. Missed payments and unpaid bills start piling up and creditors will send letters and call you on the phone, demanding payment. Eventually, collection agents may start coming to the house too, so it is impossible to avoid the situation. This is when panic sets in. Once people realise that they are in a serious debt situation and they don’t know how to deal with it, they usually react in one of two ways; some people accept that they are out of their depth and seek help with their problems. However, some people try to manage the problem alone and move into stage 3.

3. Self-Determination

Successful businesswoman working hard on laptop computer in her office dressed up in white clothes.

Sometimes, people believe they can fix the problem themselves or are too proud to ask for help. Depending on the severity of the problem, some people can make positive changes to resolve their situation themselves and get back in control. But often, small changes to habits or using money-saving tricks only make a tiny dent in the large debts. Even getting a second job and making big cutbacks on spending can fail to solve the problem, especially if it has been ignored for so long.

Although people can buy themselves a bit of time, serious debt problems cannot always be dealt with on your own. In many cases, it is too late for budgeting and you need to consider formal debt solutions. It is a good idea to have a realistic look at your situation and what you can practically achieve to help. For some people, it might be best to skip the self-determination stage and seek professional advice as soon as they recognise the problem, rather than delaying the inevitable.

4. Frustration

Frustrated woman with head and glasses in hands. Laptop open in front of her with paperwork on the desk.

Eventually, people get to a stage where they have tried everything and their debts are still increasing every month. At this point, the frustration begins and the debt problem starts impacting other areas of their life. Relationship problems are very common because people hide the scale of the debt. When they recognise that they cannot fix the problem and they need to admit how bad the situation is, this can lead to family tensions. People also try to shield friends and family from the situation, so they will isolate themselves.

Realising that they have tried everything and nothing has worked also creates a feeling of helplessness. This, coupled with the sheer stress of the situation, can lead to mental health issues like anxiety and depression.

If you do find yourself in this position, you can fill out a ‘debt and mental health evidence form’ and send it to your creditors. This gives them your consent to access information from your doctor about your mental health, so they are aware of the impact that debt is having on you. Many creditors will take this into account when contacting you about payments or negotiating a payment plan with you.

5. Acceptance

Acceptance is the end of the debt cycle. After trying everything else and seeing the impact that it is having on their lives, people finally accept that they need help dealing with their debt issues. When people eventually reach acceptance, they seek the advice of a debt solution company like Swift Debt Help.

If you have debts with multiple creditors and you are unable to pay, an Individual Voluntary Arrangement may be the right option. This allows you to write off a portion of the debt and consolidate all of your different debts into one manageable payment. It also stops creditors from chasing you, so you can take the pressure off and focus on repaying the debts.

Being trapped in a cycle of debt can feel hopeless and you might experience all of these stages, but help is out there. At Swift Debt Help, we can give you advice about different debt solutions and support you through the process. There are processes you can enrol in before you get to the debt recovery solutions stage, so you can protect your financial future,

If you are looking for a way to solve your debt issues, our excellent solution finder tool can help you find the right processes for you. Alternatively, get in touch directly and our expert team can give you all of the advice you need.

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

What Are The Differences Between Good And Bad Debt?

Written by Alex Swindells on August 25, 2022. Posted in Credit Score, Debt help.

Not all debt is considered bad debt. There is such a thing as good debt, which can benefit your financial position.

For example, good debt can help to improve your credit score, making it easier to apply for credit and to be approved for loans at better interest rates. In the long run, this will have positive effects on your life.

Bad debt, however, will financially drain you, lower your credit score and make it harder for you to better your financial position or apply for loans, such as a mortgage.

If you are struggling with bad debt, then you may want to consider applying for an IVA (Individual Voluntary Arrangement). An IVA is a legally binding agreement that can be arranged by an Insolvency Practitioner to help you affordably repay your creditors.

In the meantime, to help you understand the differences between good and bad debt, we’ve created a list of the types of debt that fall under each, along with ways to help you go about ensuring you obtain good debt.

What is Good Debt?

Businessman pushing credit score dial towards a good score

Good debt should allow you to improve your credit score. This will help to demonstrate to lenders that you can effectively manage your finances, which will open further credit options for you.

To obtain good debt, careful planning needs to be involved. For example, you need to have a budgeting plan in place to ensure you can afford repayments in the long term.

Examples of good debt include:

Taking out a loan to open a business or grow an existing business. With a business plan and budgeting plan in place, borrowing money to help build a business can provide financial stability in the future if the business succeeds.

For educational purposes, such as a student loan to attend university. Repayments will only need to be made once you’re earning a certain amount of money.

Applying for a low-interest credit builder card and sticking to the monthly repayments. Late or missed payments will affect your credit score negatively.

Taking out a mortgage to enable you to buy a home. A mortgage is a type of secured loan since it is protected by an asset (in this case it is the house) that can be used as collateral should you not fail to make the repayments.

At a later date, you may decide to remortgage your home to allow you to get a better interest rate. This can be made possible if you have acquired a better credit score since applying for your first mortgage.

What is Bad Debt?

Drawing of man chained to a debt wrecking ball

Bad debt usually occurs when you apply for unnecessary credit, such as a personal loan, and you haven’t planned how you’ll repay the lender.

Debt can also accumulate, turning into bad debt if you don’t have the resources to make regular repayments.

Examples of bad debt include:

Applying for a car loan. An item that isn’t considered a necessity, such as a new car, quickly depreciates in value and usually has a high-interest rate.

An instalment payment plan, such as a phone payment plan. If managed well and monthly payments are made, then an instalment plan can improve your credit score. However, if you’ve opted for a phone that costs beyond your means, then this may affect your ability to stick to the payment plan and it will negatively impact your credit score.

High-interest credit card. For example, credit cards that have a 20% APR or over will make your debts a lot more expensive and harder to repay.

Payday loan. This debt can come with extremely high-interest rates. This type of loan is designed for short-term use, so if you aren’t able to repay the amount when you’re next paid, then the debt will accumulate quickly.

We hope this blog has provided you with a clearer understanding of the differences between good and bad debt.

If you are struggling with debt and would like to find out if you qualify for an IVA, then get in touch with Swift Debt Help, 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.

5 Myths Of Debt Consolidation Loans

Written by Alex Swindells on August 18, 2022. Posted in Uncategorized.

Debt consolidation is a term used when a person has several debts that they decide to merge into one loan. This is done by taking out a new loan to pay off their original debts. Since all of the debt is in one place the interest rate may be lower which should help to reduce the monthly payments.

You may not fully understand what debt consolidation is, or you may be unsure whether a debt consolidation loan is the right debt solution for you, which is why we have listed some of the myths that are associated with debt consolidation loans below.

1. Debt consolidation impacts your chances of credit

Initially, once you’ve applied for a debt consolidation loan, you will see a dip in your credit score; however, this dip should only be temporary.

If you stick to your new monthly payments as well as continue to keep an eye on important factors that affect your credit report, such as ensuring that you’re enrolled on the electoral register, then you should see your credit score begin to increase over time.

This means that a debt consolidation loan will not affect your chances of successfully applying for new credit or getting a mortgage in the long term.

2. Debt consolidation allows you to pay back less money

Many people find a debt consolidation loan to be an attractive option because obtaining one bigger loan with a reasonable interest rate can work out cheaper in the long run.

However, before applying for a consolidation loan ensure to calculate what you will pay back in total compared to your current repayment arrangements.

Depending on your existing lines of credit and their interest rates, along with your credit rating, there is a risk that you could potentially only qualify for a loan with a high-interest rate. This means that you could end up paying back more than you would have done in your current situation. That is why it is essential to do the comparison exercise mentioned above.

3. They Result in more debt

A better way to view a consolidation loan is that you are restructuring your existing debts into a new form that works better for you. As detailed above, whether or not you ultimately pay back more or less in total will depend on your circumstances and the loan that you take out.

You may want to take a consolidation loan that is of a higher interest rate than your existing credit, if it gives you the ability to spread the payments over a longer term to make them more manageable for you on a monthly basis. Some people find that having one payment to make is much more manageable than having to pay many creditors individually.

4. You’ll save on interest

Usually, creditors will assess your credit report before deciding on a suitable interest rate for you.

If you have a high credit score, then you may be able to get a good interest rate deal on your new loan.

However, if you’ve been struggling to pay your creditors, then it’s unlikely that your credit score will be high which means you may be offered a poor interest rate deal.

5. Debt consolidation is a scam

Debt consolidation is a legitimate solution for those struggling with multiple debts.

Be wary of any companies that approach you out of the blue, directly offering financial assistance. It is unusual for a reputable lender to approach people directly if you are not already a customer of theirs; or you have not made an application for credit.

If you are considering consolidating your debts then you should be able to find a reputable lender through comparison websites.

Benefits of a Debt Consolidation Loan:

All of your debts will be in one place.

Once the original loans are paid off in full, you will no longer be threatened with legal action by the initial creditors.

The debt of your new loan will be repaid through monthly instalments. As it’s only one loan that you’re repaying, the interest rates can be much lower (depending on your credit score), making it more affordable.

Simplifies your outgoings, making it easier for you to budget.

Hopefully, this blog will help you to decide whether a debt consolidation loan is right for you; however, if you’ve been declined a Debt Consolidation loan and are struggling to meet the demands of your multiple creditors then submit your details at Swift Debt Help, and we’d be happy to give you a callback to discuss alternative debt solutions.

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

Five and twenty pound notes laid out on table

How To Pay Off Debt When You’re Unemployed

Written by Alex Swindells on August 11, 2022. Posted in Bankruptcy, Debt help, IVA.

Unemployment can be stressful, particularly if you aren’t prepared for it when it happens. Not only do you have the pressure of looking for another job whilst trying to pay your utility bills and rent/mortgage, but if you’re already in debt, then this can add further stress if you’re unable to make regular payments.

The average UK person has an unsecured debt of £3,817. The types of unsecured debt include credit cards, personal loans, or overdrafts.

And, of course, if you’re unable to pay for the cost of living, you may see yourself going even further into debt with no means to repay your creditors.

Paying off debt while unemployed can be hard; however, there are actions you can take to help limit the amount of credit you use.

Additionally, there are debt solutions available, such as a DRO (Debt Relief Order) or a DMP (Debt Management Plan), that can help to relieve your financial stress.

Ways to Help Reduce Debt:

It is worth getting in touch with your creditors to explain your unemployment status and, because of it, that you’re struggling to make repayments. Your creditors may give you some breathing space on the proviso that you’ll restart paying your debt once you’re back at work.

In the meantime, consider the below points:

Try to avoid further use of your credit card or dipping into your overdraft.

Also, don’t be tempted to increase your overdraft or credit card limit since the credit will only help you temporarily, and you’ll put yourself further into debt, particularly if there’s interest to pay, which there generally is.

To help prevent you from using more credit, cut down on your expenditures. Only buy the necessities. Set out a budgeting plan and stick to it. With any money left over, use it to slowly start chipping away at your debt.

Avoid taking out any more payday loans.

Increasing your debt whilst you’re unemployed will make your situation worse. This is especially the case with payday loans because they tend to have very high-interest rates.

Options for Debt Help When Unemployed

If you’re in debt and without a job, then it may feel like there aren’t any means to ease your financial situation.

However, some options may be available to you if you meet certain requirements.

Below, we have provided a summary of these options to help with your debt.

1. Breathing Space

If you live in England or Wales, you can get temporary protection for up to 60 days from your creditors while you consider your options and get debt advice. This is a Government scheme called ‘Breathing Space’.

If you receive it then:

enforcement action cannot be taken against you
your creditors cannot contact you about debts included in your Breathing Space
your creditors cannot add interest or charges to your debt, however you will ultimately remain responsible for your debt repayments

To apply for the ‘Breathing Space’ scheme, you need to talk to a debt adviser who will check you are eligible. If you are, then will submit an application on your behalf. You can look for a ‘debt adviser’ on the MoneyHelper website.

2. DRO (Debt Relief Order)

A DRO allows your debt, and any interest owed, to be put on hold for twelve months.

To be able to apply for a DRO, your debt must not exceed £30,000, you must reside in England, Wales, or Northern Ireland, and you can’t be a homeowner.

Once you have a DRO in place, your creditors will be unable to take legal action against you.

After twelve months, when the DRO is complete, if you continue to meet the eligibility criteria, then any outstanding debt will be written off.

Although this can be a useful solution for many people, one essential criteria that must be met is that you have less than £75 per month left over after paying your essential bills. If you get back into work during the twelve-month period, and you have more than £75 available then it is likely that you will have to find an alternative debt solution.

3. Bankruptcy

Bankruptcy could be a debt solution to consider. This is a legal status where your valuable assets (these do not include ‘tools of the trade’ or items that are necessary for living, such as clothes and furniture) are sold to pay what you owe to your creditors.

You can file for bankruptcy regardless of how much debt you’re in. When applying, you’ll need to pay £680 to the Insolvency Service.

Once you’re declared bankrupt, creditors can no longer take legal action against you.

The details of your bankruptcy will be published on government-owned websites; the Gazette, and the Insolvency Practitioner.

Additionally, the details of your bankruptcy will go on to your credit report and will remain there for six years.

There are bankruptcy restrictions that you’ll have to abide by, but you are usually released from these after twelve months.

Bear in mind that people in receipt of benefits, with no other income, will not be asked to make a monthly payment contribution into the bankruptcy to reduce their debts. However, if a person does become employed during their bankruptcy, they may be required to make regular monthly contributions.

4. DMP (Debt Management Plan)

A DMP is an informal arrangement between you and your creditors where you use a third-party company to set up a payment plan to pay off your debt.

Your financial situation will be assessed and a figure decided as to what you can realistically afford to pay each month.

You’ll still have to pay the full amount that you owe to your creditors; however, since your monthly payments will be reduced, your finances will be a lot easier to manage.

Additionally, the payment plan is flexible, so if your situation changes, then a new amount that you pay each month can be negotiated.

This is a suitable option for you if you have many unsecured debts (non-priority debts).

The DMP will come to an end once all of your debt has been cleared.

5. Individual Voluntary Arrangement (IVA)

An IVA (Individual Voluntary Arrangement) is a legally binding but flexible agreement that can be arranged by an Insolvency Practitioner to help you repay your creditors in an affordable way over a set period of time.

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, bills, and food.

Once an affordable amount for the payment plan is decided, and if it’s accepted by your creditors, then you’ll have to pay the agreed amount each month and stick to the agreed terms until your circumstances change.

If you find a new job, and your income increases, then get in touch with your Insolvency Practitioner who will reassess your circumstances. If you can afford to pay more towards your debts, then you will be required to do so.

We hope that you’ve found this blog useful by discovering ways to help you out of debt.

If you want to find a debt solution that is right for you, then get in touch with Swift Debt Help, and one of the experienced members of the team will call you to discuss your options.

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.

Top 5 Bankruptcy Myths

Written by Alex Swindells on August 5, 2022. Posted in Bankruptcy, Debt help.

Have you been struggling with debt and looking for a solution to help you out of your financial situation? You may have considered bankruptcy but are concerned that there’s a stigma attached to choosing this debt solution. Well, there are a few myths regarding bankruptcy that we’re going to uncover in this blog, which will, hopefully, help you see a clearer picture of what bankruptcy involves.

Before we go into some of the bankruptcy myths, let’s summarise what bankruptcy is.

Bankruptcy is a legal status that allows you to obtain a clean slate if you’re in debt. You can file for your own bankruptcy regardless of how much your debt is; however, if your creditor decides to apply to make you bankrupt, then your debt needs to exceed £5,000.

It costs £680 to apply for bankruptcy. To pay for this as well as any other administrative fees some of your assets may be sold. Whatever money is left will be shared between your creditors to pay off your debt.

If you manage to repay all of your creditors, then you may apply to have your bankruptcy cancelled.

After twelve months, regardless of whether you’ve repaid all of your creditors or not, your bankruptcy should come to an end as long as you’ve stuck to the agreed terms.

So, what are the bankruptcy myths?

1. Everyone will know that I filed for bankruptcy

Once you’ve been made bankrupt, then it does become public information. The details of your bankruptcy will be published on two government-owned websites: the Gazette and the Insolvency Register.

However, unless your case is already high-profile, then it’s unlikely that the information will be published in your local papers.

So, people can search for the details of your bankruptcy and this information will be available for them to view, but they’d already have to know about your bankruptcy to do this.

2. You always lose your job if you file for bankruptcy

Are you wondering whether you should file for bankruptcy if you have a job? You may be concerned that your job could be affected.

Well, the impact bankruptcy has on your job does depend on the type of job that you have and in which sector you work.

For example, if you work in a bank or for the police, then your bankruptcy could affect your position. You might not necessarily lose your job, but the duties you usually perform may be changed.

However, in most cases, you are not legally obliged to share your bankruptcy with your employer. Ensure that you read your contract thoroughly to understand the terms set out by your employer. If you’re still unsure after checking your contract, then speak with your employer.

Your employer must treat you fairly. If they decide to dismiss you, then seek external advice to ensure that your employer has treated you fairly and to find out whether you can challenge the dismissal.

3. You will lose all of your assets

A lot of people tend to think that once a person goes bankrupt they will lose everything. This isn’t true.

If you go bankrupt, then certain items will be excluded from the assets that are sold to pay off your debt.

For example, any items that you need to be able to work, such as books, equipment, or even a vehicle, will not be taken from you. These items are known as ‘tools of the trade’.

Additionally, you will be able to keep any items that are necessary for you to function normally, such as clothes, furniture, kitchen appliances, and so on.

4. I’ll never be able to get credit again

You may have limited access to credit options for up to ten years after your bankruptcy has ended, or for as long as the bankruptcy stays on your credit record, which is usually for six years.

However, if you actively try to manage your credit report, then you can work at increasing your credit score.

For example, making all of your payments on time, taking out small loans and managing these well, and making sure you’re on the electoral register are all factors that can help to increase your credit score.

Additionally, you can do all of the above even while the bankruptcy is on your credit report.

5. Bankruptcy gets rid of every type of debt

Most types of debt are covered by Bankruptcy and you will be released from them when you are discharged. These include debts such as unsecured loans, council tax arrears, utility debt, However there are some debts that are not included within a bankruptcy that you are still responsible for paying. These include:

Debts gained by fraud
Money owed under family proceedings (maintenance and lump sum settlements)
Damages payable to anyone for personal injuries
Student loans
Court fines
Debts created after the bankruptcy order

We hope that this blog has helped you to decide whether bankruptcy is the right financial solution for you.

But if you wish to know more about bankruptcy, then Swift Debt Help can offer some further bankruptcy advice.

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 You Can’t Afford Your Payday Loan

Written by Alex Swindells on August 2, 2022. Posted in Bankruptcy, Debt help, Uncategorized.

A payday loan is usually a small amount of money that a person can borrow from a lender on a short-term basis. Since people who require a payday loan typically have bad credit, the interest rates are usually high. This can make it difficult for borrowers to pay the lender back. If you’re in this situation, there are steps that you can take and various debt solutions available which can help you out of your financial situation.

Before being accepted for a Payday loan, the lender should consider whether you’ll be able to pay it back. They’ll take into account your incomings and expenditures; however, they can’t advise you whether a Payday loan is the right debt solution for you.

There are debt solutions that may be more financially practical which we’ll provide details on.

However, if you’ve already borrowed money from a payday lender and are struggling to repay them, then consider the below steps:

Contact your lender and explain your situation. They are required to advise you on where to seek independent debt advice. They may be able to temporarily freeze any interest as well as accept smaller repayments.

If you’re certain that you’re unable to make payment you could consider cancelling your direct debit so that no further payment can be taken. Before you do this, assess the risks; get in touch with your lender to let them know that you’ll be cancelling. Also, find out if there’d be any cancellation charges. If you’d still like to cancel any further payments being taken, inform your lender of your decision.

Keep a record of all conversations you have with the lender regarding your payday loan. A paper trail may come in handy should you ever need it in the future for evidence purposes.

If your lender offers to roll your loan over to the next month do not accept it. There will be extra charges to rolling your loan over which will add to your already outstanding debt.

If you think that your financial problems are long-term, then consider the various debt solutions that are available to help you with your payday loan and other unsecured creditors.

Debt Solutions

The debt solutions that may be available to you if you’re struggling to repay a payday loan include the following:

1) Individual Voluntary Arrangement

An IVA (Individual Voluntary Arrangement) is a legally binding agreement that can be arranged by an Insolvency Practitioner to help you repay your creditors in an affordable way over a set period of time.

Once an affordable amount for the payment plan is decided, and if it’s accepted by your creditors, then you’ll have to pay the agreed amount each month and stick to the agreed terms.

2) Debt Relief Order

A Debt Relief Order (DRO) is ideal if you have limited assets. This debt solution lasts twelve months and if your situation hasn’t improved in this time, then any remaining debt will be cleared.

Once your DRO is in place, your lender will not be able to take any legal action against you.

To be considered for a Debt Relief Order, you must meet certain criteria, such as your debts not exceeding £30,000. Additionally, you must have resided in England, Wales or Northern Ireland. Also, your surplus income must not exceed £75 per month. If you own a property, you will not be eligible to apply for a DRO. You must also pay an upfront fee of £90.

3) Debt Management Plan

A debt management plan is ideal for someone who is struggling with non-priority debts. This includes credit card debt and unsecured loans, such as a payday loan.

A DMP is an informal arrangement between you and your lender where a payment plan is set up based on what you can realistically afford. They are relatively easy to arrange; a third-party company will set up the plan and pay any money owed by you to your lender.

It is worth mentioning that if your lender decides they are no longer happy with the informal arrangement, then they could still take legal action against you.

4) Bankruptcy

If you’ve explored all other avenues and failed to find a solution to pay back your payday lender, then bankruptcy may be an option for you to obtain a clean slate.

You can file for bankruptcy yourself. When applying, you’ll need to pay £680 to the Insolvency Service.

Once you’re declared bankrupt, creditors can no longer take legal action against you. However, if you do have any assets, then these can be sold to pay off your debt.

Your bankruptcy will become public information, and it will remain on your credit report for six years.

Additionally, there are bankruptcy restrictions that you’ll have to abide by, but you are usually released from these after twelve months.

If you are considering entering into a debt solution and want to learn more, then get in touch for further advice. Alternatively, we have several guides and articles available online with more information.

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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 Deal With Rising Utility Bills

Written by Alex Swindells on July 14, 2022. Posted in Debt help.

A lot of people are struggling with the cost of living due to many factors, such as the increase in wholesale gas prices which has caused a rise in household energy bills.

The price cap of energy bills is expected to rise again in October 2022. The price cap is the maximum limit a supplier can charge. This expected rise will put extreme pressure on households.

With the price of goods and other services also being affected by inflation, a lot of people may find it difficult to make utility bill payments on time. If unpaid bills accumulate and a solution hasn’t been negotiated with the supplier, such as the energy supplier, in some circumstances, the service provided can be disconnected.

If you’re in a situation where you’re struggling to pay your utility bills, or you can see that you’re potentially going to struggle, then there are a few things you can do to help ease your financial pressure. Additionally, there are several debt solutions available which we’ve detailed later in this blog.

What Can I Do If I Cannot Pay My Bills?

1. Arrange A Payment Plan

The first thing you should do is try to find a solution with your service provider.

For example, you could agree to a payment plan, such as paying off your debt in small instalments.

In the above instance, you would pay fixed and affordable amounts over a period of time. This payment plan should cover any outstanding debts plus any current usage.

The service provider must take into account how much you can afford to pay as well as how much your consumption is likely to increase in the future based on past usage and metre readings.

2. Negotiate A Better Deal

Another thing you could consider, if a payment plan isn’t right for you because you don’t have a regular income, is to try and negotiate a better deal with your service provider.

Contact them to explain that you are consistently having trouble making the payments; they may be able to offer you a cheaper deal.

In the case of an energy supplier, they may offer you a prepayment metre. This is a good option for people in debt; however, it is possible to end up in further debt if you use emergency credit.

What Options Can A Debt Solution Company Offer?

As previously mentioned, there are various debt solutions available to help people who are struggling financially. Below you will find a brief overview of some of the most popular options.

Finding the right one will depend on your particular circumstances and needs. A debt solutions company like Swift Debt Help can help you decide what’s right for you.

1. Debt Consolidation Loan

A Debt Consolidation Loan is a term used when you have several debts which you decide to combine into one loan. This can be done by taking out a new loan to pay off your original loans.

This option is suitable if you’re struggling with numerous credit commitments and debt repayments. If you decide a debt consolidation loan is right for you, then you’ll only have to manage one single payment per month, and your overall interest could be considerably reduced.

2. Debt Management Plan

A Debt Management Plan (DMP) is an informal arrangement between you and your creditors where you use a third-party company to set up the plan and distribute money to them.

If you are eligible for a DMP, a payment plan will be set up based on what you can realistically afford.

A debt management plan can last between five and ten years.

3. Debt Relief Order

A Debt Relief Order (DRO) allows your debt, and any interest owed, to be put on hold for twelve months.

To be eligible, you will have to meet the specific debt relief order criteria. For example, your debts must not exceed £30,000 and your surplus income must not be over £90 per month.

After the twelve months of your debt and interest being on hold, and if you continue to meet the eligibility criteria, then any included debt will be written off.

4. Individual Voluntary Arrangement

An Individual Voluntary Arrangement (IVA) is a legally binding agreement that can be arranged by an Insolvency Practitioner to help you repay your creditors in an affordable way.

Once an affordable amount for the payment plan is decided, and if it’s accepted by your creditors, then you’ll have to pay the agreed amount each month and stick to the agreed terms.

To be eligible for an IVA, you need a minimum debt of £5,000.

This is a solution offered by Swift Debt Help. As part of our assessment of your eligibility, we will discuss with you alternative options, and if an IVA isn’t right for you, we can point you in the right direction for the solution you need.

If you’d like to find out more about the debt solution available at Swift Debt Help, then contact us, 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 Can Spiralling Debt Affect Your Mental Health?

Written by Alex Swindells on July 7, 2022. Posted in Debt help.

If you’re in debt, you’re not alone. As of March 2022, the average debt for a person in the UK was £33, 410, and that figure is still increasing. However, knowing that many people are in a similar financial situation does not lessen the burden, and you may feel that the stress of debt is now affecting your mental health.

You may also believe that there’s a stigma attached to being in debt due to the common assumption that people get into unmanageable debt because of poor budgeting or bad spending habits. However, it can be dramatic life changes, such as losing a job or splitting up with a partner, that force people to apply for credit.

Additionally, with the increase in living costs, it has become more difficult for people to pay off their debt, which can then result in additional fees, interest & charges, making it seem even more impossible to get back on track and into a financially stable position. This, again, can put a strain on a person’s mental health.

How Does Debt Affect Mental Health?

Having uncontrolled debt can harm a person’s physical and mental health.

Half of all adults living with a debt problem suffer issues with their mental health. The stress of debt can cause a person to have a constant feeling of anxiety and/or depression, and it can also affect their sleep, which in turn can lead to low energy levels and irritability. Having a continued lack of sleep can weaken a person’s immune system and increase the risk of heart disease.

Symptoms of stress can be exacerbated if a person in debt has no support from family and friends. Without any support, they can feel isolated and unable to see a way out of their financial situation. In this case, many people may decide to ignore their debt, choosing denial as a way to deal with their emotional stress.

Although denial seems like the easier option by not dealing with their finances, it will worsen the situation, and send them further into debt.

How Can Mental Health Affect Your Life?

The endless worrying about debt can affect sleeping patterns. If a person is having sleeping difficulties, such as insomnia, it will begin to impact their mood and energy levels. They’ll become more down and irritable, with little energy or enthusiasm to do anything. Additionally, severe sleep deprivation can cause heightened anxiety.

If insomnia persists, then it can eventually lead to a person being unable to work. The case could be the same for someone who is suffering from depression. So, once they’re out of work due to ill health, their debt will continue to spiral.

Having poor mental health can affect how a person thinks and reacts. It can also put a strain on their relationships.

Where Can I Find Help With My Debt?

Swift Debt Help can talk to you about various solutions to help get you out of debt. We have listed just some of the options that we will discuss below, and if an IVA is right for you, then we will be able to provide that solution for you:

Individual Voluntary Arrangement (IVA)

An Individual Voluntary Arrangement (IVA) is a legal agreement with your creditors for you to pay back some or all of your debt. The IVA is arranged on your behalf by a qualified person, called your IP (Insolvency Practitioner). Your IP will arrange a payment plan for you to repay your creditors over a period of time (typically 5 years) through monthly payments, and, once approved, your creditors will have to stick to this agreement.

Debt Relief Order (DRO)

A Debt Relief Order (DRO) allows your debt, and any interest owed, to be put on hold for twelve months. After this time, if you continue to meet the eligibility criteria, then any included debt will be written off. A DRO is an alternative to bankruptcy if you have limited assets and affordability.

Debt Management Plan (DMP)

A Debt Management Plan (DMP) is an informal arrangement between you and your creditors where you use a third-party company to set up the plan and distribute money to them.

Advantages Of Finding Help

There are many advantages to finding a solution to help get you out of debt.

With less of a financial burden, you should find it easier to sleep, which will improve your cognitive behaviour, such as your memory and concentration.

If you’re struggling with debt, then we may be able to help. Please contact us, so we can advise you on the various debt solutions available, then we can help you find one that’s right for you.

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.

5 Common Causes of a Decreased Credit Score

Written by Alex Swindells on July 5, 2022. Posted in Credit Score, Debt help.

Your credit score plays a big role in your life when it comes to making financial decisions. This is because there are fewer credit options available to you if your credit score is low. It can also be more difficult to acquire a mortgage, or to even rent a property, with a low credit score.

So, if your credit score decreases, then it’s very important to understand why, and how you can go about increasing it.

But what exactly is a credit score? And how is this figure calculated?

A credit score, also known as credit rating, is a number generally between 300 and 850, although there are some credit scoring models that go higher. The number is calculated based on information provided by credit reference agencies. This information is called a credit report.

A credit report contains details on a person’s credit history, such as the number of accounts they have open, their total number of debts, and their repayment history.

Credit reference agencies collect this information from utility companies, mobile phone companies, and mortgage lenders, just to name a few. The higher the credit score is for a person, the better it looks to lenders, and the more likely that person will be accepted for credit.

For example, if a person would like to apply for a credit card, the lender will check their credit score to ascertain whether they are eligible. Generally, the lower the credit score, the higher the interest will be.

To help you, we have put together a list of 5 possible causes as to why your credit score might have decreased.

We advise monitoring your credit report regularly, so that you can keep track of your credit score and notice if/when it decreases. If it does, then it could be due to any of the 5 reasons below.

1. Making large purchases on your credit card

person making large purchase using a credit card

If you use too much of your available credit limit, then this could signal to lenders and/or credit reference agencies that you aren’t in a financially stable position. However, using too little or no credit could also affect your credit score.

You should try to find the right balance between spending too much and not enough to help you limit the negative impact on your credit score. It is recommended that you use around 30% of your credit, and that you make regular repayments.

If you do decide to make a large purchase on your credit card, ensure that you are able to repay the full amount as soon as possible, so that you don’t incur too much interest.

2. Missing credit card payments

When checked by agencies, your payment history plays a major role for the credit scoring models they use in determining your credit score.

A 30-day missed payment can have a negative impact on your credit score. If you have a high credit score, then the amount the figure drops will be greater than it would be if your credit score was low.

Additionally, if you have gone into arrears on one of your accounts because you have missed multiple payments, then this can drastically affect your credit score for a number of years.

However, the decrease in your credit score because of missing one payment can easily be fixed. If you are late with a payment but you manage to keep on top of your payments thereafter, it shouldn’t be long before you see an increase in your credit score.

3. Paying off loans

Although it is a good idea to pay off some debt in full, this can have a negative impact on your credit report by causing your credit score to decrease.

This is because credit scoring models prefer you to have a mix of credit types to prove that you can adhere to the agreements made. The more credit you have available, and as long as you’re managing it sensibly, the higher your credit score will be, which will help to show lenders that you are trustworthy.

4. Applying for new credit

If you apply for new credit, such as for a new credit card, then lenders will carry out a hard check. A hard check is when a lender pulls your credit report because they want to ascertain whether you have a good credit history. This hard check can lower your credit score by a few points.

If you’ve recently applied for new credit, then consider waiting at least three months before applying elsewhere.

When applying for new credit, you can limit the impact it may have on your credit score by requesting lenders to carry out a soft check.

A soft check does not affect your credit score and other lenders cannot see when one has been carried out. A soft check is not always possible, but it can be worth enquiring about it before applying for new credit.

5. Closing an old bank account

It is not uncommon for people to find they have old, often unused accounts that still appear on their credit report. Whilst you may think that closing these may be helpful, it could actually harm your score as the presence of older accounts can be a positive thing as they can increase the average maturity of your credit profile.

However, it is important to check that any historic accounts do not have any forgotten outstanding balances, even if they are small amounts, as these could be negatively impacting your credit score without you realising.

If you’re struggling to improve your credit score, then you may want to consider alternative financial solutions, such as a Debt Management Plan (DMP) or an Individual Voluntary Arrangement (IVA).

To find out more about these debt solutions, please contact us, and we’d be happy to help.

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