Tag: debt management plan

How To Report A Loan Shark

Written by Alex Swindells on November 3, 2022. Posted in Debt help.

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).

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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.

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.

4 Alternative Solutions If Your IVA is Rejected

Written by Alex Swindells on June 1, 2022. Posted in Bankruptcy, Debt help, IVA.

An Individual Voluntary Arrangement, commonly known as an IVA, is a legally binding agreement between you and your creditors that helps you pay off your debt in an affordable way.

An Insolvency Practitioner (IP) will assess your income and expenditure to determine how much you can afford to pay. Your IP will then put a repayment plan forward to your creditors, detailing why you’ll be paying the amount suggested. It is at this point that your IVA can be rejected by your creditors.

If your IVA is rejected, this does not stop your IP putting forward another repayment plan to your creditors. However, if your IVA is rejected again, or if you have come to the conclusion that an IVA debt solution isn’t right for you, then it should be a comfort to know that there are other options available which could help you in your financial situation.

We have put together some of the pros and cons of debt consolidation, bankruptcy, a debt management plan, and a debt relief order, to hopefully help you decide on the best option for you.

1) Debt Consolidation Loan

Debt consolidation 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 in order to pay off your original loans. There are a few pros and cons to debt consolidation. We have listed some of these below.

Pros:

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 can be repaid through monthly installments. As It’s only one loan that you’re repaying, the interest rates can be much lower, making it more affordable.

Cons:

If you have poor credit, then it’s unlikely that you’ll be approved for a new and bigger loan.
If you are approved, then the interest rate could still be high, although you’ll only be paying for one loan.
There may be extra costs involved so it is important that you seek impartial advice.

2) Debt Management Plan

A debt management plan 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. As with debt consolidation, there are a few pros and cons to a debt management plan and we have listed some of these below.

Pros:

It can be relatively easy to arrange.
You can make one regular monthly payment.
You pay back your debt in full, but at an affordable rate for you through reduced monthly payments.

Cons:

Your debts must be paid in full.
If your creditors decide they are no longer happy with the informal arrangement that you agreed upon, then they could still take legal action against you.
It could take longer for you to be debt-free than other formal debt solutions.

3) Bankruptcy Pros and Cons

Bankruptcy is a legal status which allows you to obtain a clean slate. If you owe less than £30,000, then you might be able to get a debt relief order (see more on this below). But in terms of bankruptcy, there are a few pros and cons to consider. We have listed some of these below.

Pros:

Most types of debt can be written off if you cannot pay them.
Once declared bankrupt, creditors can no longer take legal action against you.
In most cases you will be discharged from Bankruptcy after 12 months.

Cons:

Some of your assets may be taken from you and divided equally to pay off your creditors.
Your bankruptcy is publicly available information. Details will be published in the London Gazette and on the Insolvency Register.
If you have a business, this can be taken from you or sold.

4) Debt Relief Order Pros and Cons

A Debt Relief Order (DRO) is an alternative to bankruptcy if you have limited assets and affordability. There are a few pros and cons to a DRO and we have listed some of these below.

Pros:

Any future interest and charges will be frozen on any debt you owe.
Your creditors will no longer be able to take legal action against you.
Your DRO will only last twelve months after which any debts will be written off.

Cons:

To be considered for a DRO, you must meet certain criteria, such as your debts must not exceed £30,000 and you must reside in England, Wales or Northern Ireland. Also, your surplus income must not exceed £90 per month.
Homeowners are not allowed to apply for a DRO.
Your DRO will go public, appearing on the public register.

Now that we have detailed some of the pros and cons to various debt solutions, you may find it easier to decide which option will suit you best. However, if you are still in need of IVA debt help, then contact us today.

Request a Debt Assessment

May not be suitable in all circumstances, Fees may apply, your credit rating may be affected.

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