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Tag: DRO

money after payday loan

What To Do If You Can’t Afford Your Payday Loan

Written by Alex Swindells on . 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. 

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.

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.

Gas stove utility bills

How To Deal With Rising Utility Bills

Written by Alex Swindells on . 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?

money to pay 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?

post it note with pay debts written

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. 

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. 

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. 

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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.

mental health debt

How Can Spiralling Debt Affect Your Mental Health?

Written by Alex Swindells on . 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?

woman looking at her debts on computer

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.

Pound notes iva debt solution

IVA or Debt Relief Order: Which Is Right For Me?

Written by Alex Swindells on . Posted in Debt help, IVA.

IVA or Debt Relief Order -If you’re in debt and are struggling to find a way to repay your creditors, then there are several formal, legally binding debt solutions that could help you to clear your debts in a more manageable way. You may have heard of an IVA or a DRO but are wondering exactly what each of these debt solutions are. So, we have put together a brief summary of each debt solution below.

What is an IVA?

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. 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. 

What is a DRO?

A DRO (Debt Relief Order) 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. 

Which is better? IVA or Debt Relief Order?

Now you understand what an IVA and a DRO is, you are probably wondering which would be the best debt solution for you. Below, we have put together a list of some of the pros and cons, which will hopefully help you decide on whether or not an IVA would suit your financial situation, or if a DRO would be the right solution to help you out of your debt.

IVA Pros and Cons

IVA Pros:

✓ Write off unaffordable debt. At the end of your IVA, any outstanding debt will be written off.

✓ You only pay what you can afford. The payment is tailored to your circumstances. As previously mentioned, your IP will assess your income and expenditure to ensure you’ll have enough money for necessities. 

✓ You will no longer be harassed by creditors and/or bailiffs for payment. As long as you stick to your IVA agreed terms, legal action, such as CCJs, cannot be taken against you.

✓ Business owners can continue to trade. 

✓ An IVA is an option for homeowners.

✓ Interest and charges will be frozen. As long as you stick to your agreed terms, your creditors will not be able to add on any extra charges.

IVA Cons:

X There’s still the risk of bankruptcy if the IVA fails. 

X An IVA could affect employment. This does depend on the sector you work in, or are considering working in. For example, working in the financial sector, there may be certain conditions in place regarding IVAs.

X It will negatively impact your credit rating. An IVA will stay on your credit file for six years, which will affect your ability to apply for loans, car finance, or a mortgage.

X You have to follow a strict budget. 

X An IVA isn’t private. It will be registered on the Insolvency Register, which anyone can access

X If you are a homeowner, you may need to release equity from your home to pay off some debts.

DRO Pros and Cons

DRO 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.

✓ This debt solution is one of the fastest ways to clear your debts.

✓ No monthly payment

DRO Cons:

X 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 £75 per month.

X Homeowners are not allowed to apply for a DRO.

X A DRO isn’t private. It will be registered on the Insolvency Register, which anyone can access.

X If your situation changes, and you no longer meet the DRO criteria during the 12 month period, the DRO will be revoked. 

X It will negatively impact your credit rating. A DRO will stay on your credit file for six years, which will affect your ability to apply for loans, car finance, or a mortgage.

So, an IVA vs a Debt Relief Order: which is the right debt solution for you? Hopefully this list of some of the pros and cons for each will have helped you to decide. However, If you’d still like further information on IVAs or DROs, please contact us, and we’d be happy to answer any questions you may have.

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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.

Pay debt sticky note

How To Clear Council Tax Debt

Written by Alex Swindells on . Posted in Debt help.

If you are in a difficult financial position and you are unable to make your council tax payments on time, you will end up in arrears. You still owe the money for the missed payments to the council on top of any future payments. So, it is easy to quickly build up significant council tax debts if you cannot afford to pay. There comes a point when the council will take action to collect the debt and if you fail to pay, there could be serious consequences, including criminal prosecution in some cases.

Fortunately, there are ways to manage the situation and either clear the debt or have a portion of it written off so you can pay the rest. This guide will outline the different options available to you and help you clear council tax debt before it gets worse.

Dealing With Council Tax Debt

Row of credit cards

What Are The Consequences Of Not Paying Council Tax?

Failing to pay your council tax debts can lead to serious consequences. The severity of the action that the council takes depends on how much you owe and how long you have held the debt for. Potential consequences include:

  • County Court Judgements
  • Bailiffs arriving at your home
  • Repossession of your assets
  • Prison sentences in the case of continuous missed payments

These are the most drastic consequences of failing to pay council tax, but you will be given options before these steps are taken. When you first miss a payment, the council will send you a reminder within two weeks. You will be given seven days to pay and if you make the payment on time, no further action will be taken.

However, if you fail to pay after being sent a reminder, you will then receive a final notice. This gives you another seven days to pay. If this is your third missed payment within a year, you will get a final notice immediately without a reminder first.

Continued failure to pay will lead to more serious consequences like those discussed above. At this stage, the council may take you to court and take out a Council Tax Liability Order against you. The court will order you to pay the full amount and give the council the right to apply to send bailiffs who can seek to take control of your assets to repay the debt. You will also have to pay the court fees, so your debt is increased. But you can avoid this if you settle the debt before your court date.

As well as sending bailiffs to collect the debt, the council can also take money from your paycheck or benefits including:

  • Universal Credit
  • Employment and Support Allowance
  • Pension Credit
  • Jobseeker’s Allowance
  • Income Support

The money will be deducted automatically and you will be unable to avoid this unless you can find another way to pay. If the deductions will make it difficult to pay other bills, you can discuss this with the council and they may agree to take a reduced amount so you can avoid further financial difficulty.

In certain circumstances, you can be sent to prison for not paying your council tax. If you are in legitimate financial difficulty and there is no way that you can afford to pay the debt, it is very unlikely that you will be sent to prison. However, if you refuse to pay and the court decides that you do not have a good reason for failing to pay, you can be put in prison for up to three months.

A single missed payment can usually be dealt with easily, but if you are in a difficult financial position and you build up significant council tax arrears, the situation can quickly spiral out of control. That’s why it’s important to take action sooner rather than later.

How To Deal With Council Tax Arrears

Person using ATM machine

1. Do not ignore your debt

The worst thing you can do is ignore your debt and hope that it goes away because it won’t. When you miss a payment, you should contact the council immediately, before they’ve even sent you a reminder. There are options to help you manage your council tax bill and avoid further missed payments in the future and the quicker you put measures in place, the easier it is to avoid council tax arrears. 

Call your council and inform them that you have missed the payment as you are unable to afford it. Ask them about payment holidays or payment plans. Many councils will give you a break from payments or agree to a reduced monthly payment with you if you cannot afford to pay. This allows you to continue paying, and the council are aware of the situation so they will not take further action against you.

There is also additional help available to you and it’s important to claim everything you are entitled to. We will discuss this in more detail later.

2. Figure out what you can repay

When you are already in arrears and you cannot afford to repay the full amount, you should still offer to pay a percentage of the debt. By paying off a portion of the debt, you can delay further action and give yourself more time to get your finances in order. So, you need to figure out what you can realistically afford to repay. This is also important if you are trying to negotiate a reduced monthly payment with the council.

Make a detailed budget with your income and all of your outgoings. Make sure that you include all small bills like subscriptions as well as your main utility bills. This will give you a clear idea of how much money you have left each month after making all of your essential payments. You can then use this figure to make an offer to the council. When determining how much you can afford to pay, make sure that you have accounted for all outgoings and don’t put yourself in more financial difficulty by offering to pay too much.

The aim is to be able to pay off as much of the council tax debt as possible while also maintaining your other financial responsibilities and avoiding further missed payments in the future.

3. Apply for everything that you are entitled to

You can apply for assistance if you are having difficulty with your council tax bills. As discussed earlier, you can ask the council for a payment holiday or reduced payment plan. If you are on a low income, you can also apply for a council tax reduction (CTR). This is a long-term reduction in your council tax bill so it is more affordable. Every council has their own system for taking applications and granting reductions, so you will need to get in touch with your council and find out about the process. However, they usually consider the same factors when making their decision:

  • Your household income – this includes every adult in the household and all benefits you claim.
  • Your circumstances – whether you rent or own the house, if you have children, etc.
  • The area that you live in.

You are not guaranteed to be granted a CTR, but you should always apply because it can make things more manageable. Depending on your income, you may be entitled to up to 100% off your council tax.

Certain groups are exempt from council tax in the first place, so make sure to check this too. Exempt groups include: 

  • Under 18s
  • Students (including apprentices and nurses)
  • People with a severe mental impairment
  • Live-in carers (as long as the person you care for is not a spouse, partner, or child under 18)
  • Diplomats
  • Recipients of money from the Education and Skills Funding Agency (as long as they are under 25)

If you or somebody in your household falls into one of these categories, you may not have to pay council tax at all, or you may be eligible for a partial reduction.

There are also income support programmes in place for people that are struggling financially. If you are unable to afford your bills, see whether you are eligible for Universal Credit, Child Benefit, Child Tax Credit, and Housing Benefit, as well as a CTR.

Many people find themselves in council tax arrears because they have not claimed all of the financial assistance that they are entitled to. With a bit of extra help, you may be able to avoid the situation in the first place.

4. Apply for an IVA

Council tax arrears can quickly build up and if you are unable to repay them, you need to explore debt management solutions. An IVA (Individual Voluntary Arrangement) is one of the options for dealing with council tax debt. 

An Insolvency Practitioner will assess your finances and determine how much you can afford to pay each month. They will then make an offer to your creditors and, in most cases, negotiate a portion of the debt to be written off. If your creditors agree to the IVA, you can start making monthly payments. Ordinarily, you will pay the debt over a period of five to six years, after which you will be debt free. During your IVA, you are also protected against further action, including bailiffs.

Still Need Help With Council Tax Arrears?

If you are having difficulty with council tax arrears, Swift Debt Help can give you the advice you need. Our experts will discuss different debt management solutions with you and guide you through the process, so you can be debt free. Fill out the contact form below and we will get back to you soon. 

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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.