iF IN DEBT IT IS ESSENTIAL YOU TAKE ACTION
- Face the debt; admit the truth
- Do not ignore the debt
- Do not ignore reminders to pay
- Talk about the debt with the lender
- Understand the debt: know what you owe, to who and when
- Take advice if you cannot deal with it yourself
- Involve your family so they all understand the extra family pressures of being in debt
- Understand your personal income and expenditure and devise a budget to plan your way through and past your debt problems
Catastrophes happen and you can be placed in a situation where you cannot meet your debts, even when it is not your fault. An emergency in your home; the loss of a job or the breakdown of your vehicle or family can drastically alter your budgeting and cash flow overnight.
The key factors to your recovery are to accept what has happened, find a way through the debt problems and find a way (a plan) to look forwards into the future.
Debt advice can vary between the countries which make up the UK, so it is important to seek accurate advice for the country in which you live.
SHOULD YOU TAKE OUT A PAYDAY LOAN?
A payday loan is unsuitable for individuals who have considerable debt problems at present. At the very best, a payday loan might only temporarily solve the immediate needs of your larger debts. Nevertheless, this will only put off a small problem momentarily, because it will become a greater problem, in just a few days, weeks or months.
CANT MEET YOUR PAYDAY LOAN PAYMENTS?
The majority of people take out a loan with the full intention of making the payments agreed with the lender. However, on occasions, your plans will be set aside when a disaster changes your arrangements and you’re unable to make your payday loan on the agreed date.
The first step is to contact your lender as soon as possible, preferably before the payment is due. Computers will automatically add additional fees, charges and interest on to any debt that is unpaid by the intended date. By speaking to the lender in advance, you may be able to talk them out of making your debt situation worse by offering new and suitable terms that you agree to. Some lenders will understand your situation and try to help you where possible, whereas some will remain hard and fast within their rules and insist you make all the additional payments as well. By researching your choice of payday loan lender before you make your application, you may know more about how they are likely to handle your circumstances, should you find yourself in trouble.
The majority of payday lenders will be able to offer you the option of making a payment from your next (following) due payday, and will add interest up to and including that date, so you can clear the debt on the next possible day.
By taking control of the debt problem and speaking to the lender as soon as you are able, you may reduce the size of your debt when your lender agrees to avoid adding penalty charges.
The Financial Conduct Authority places strict lending guidance on all lenders and requests that individuals, with financial difficulty, are treated fairly. This means, in plain English, that the lender should work closely with you to devise a new plan to help you repay your debt over a new and reasonable timescale.
The rules suggest that any actions taken by your lender must be proportionate to the size of your debt. They can’t take your home if you owe them £100!
Your payday lender may be a member of a trade association, who have specific rules about how their members are to treat consumers in a debt crisis. See our Trade Association website page. (link to it)
You can contact:
- Consumer Finance Association (CFA),
- The Finance and Leasing Association (FLA),
- The Consumer Credit Trade Association (CCTA) or
- The BCCA.
ASK FOR HELP
There are several organisations, charities and free help available for individuals to seek advice about debts and how to plan a way forward to get out of debt.
You can contact;
- National Debtline
- Citizens Advice
- Your local authority can direct you to local organisations
- Your payday lender can recommend free debt help options
You do not have to pay for help and advice with your debt problems. These organisations will not judge you, but will listen sympathetically to the details and help you arrange a plan to get out of debt.
These organisations have a number of sample letters that you can complete and send to your lender. This helps ensure that the letter is presented correctly, and contains the necessary detail so the lender may be able to understand why you have a debt problem.
You can meet with these organisations or charities in face-to-face discussions, a visit to your home, over the telephone or by using a chat facility online.
They all offer online and off-line tools that can help you understand your debts and prepare to deal with them, often through careful budgeting and planning of how to deal with the debt.
Being able to understand what money comes into your household and where it goes, or is spent on, is essential if you are to tackle your short and long-term debt problems.
To be able to offer advice, your lender or the debt and advice organisations will need to see a detailed breakdown of your income and your expenses. They will offer either a paper or an online form (or app) for you to work out what money comes into your household and how it leaves your bank or what you spend in cash.
They will need to understand what assets you own and any liabilities that will become due, such as a debt on a car or a mortgage on a property.
When you list your debts, they should be split between priority and non-priority debts. Simply, some are more important to clear sooner than others because of how they affect you when you do not clear the debt. With some, you may lose your home or the ability to turn on gas and electricity supplies to cook, whereas with others you can still live at home with your family; eat, feed and clothe them, while still having outstanding debts.
Priority debts are;
- Mortgage or rent.
- Gas, electricity and utility bills.
- Council tax
- Child maintenance.
- Any outstanding parking and court fines.
- Overpayment of tax credits and benefits.
- Hire purchase and secured loans.
- Television licence
Your non-priority debts are;
- Bank and building society loans/overdraft.
- Charge cards.
- Credit card debts.
- Personal loans
- Catalogue company debts.
- Payday loans.
- Personal debts owed to your friends and family
By identifying where you spend every single pound and penny during the course of a month (including every high street coffee, newspaper, and the paid for apps that you download) you will quickly see how much money you have available to pay your mortgage or rent, keep you and your family in food and clothing, as well as the niceties in life, like entertainment, eating out, and paying your mobile phone bill.
This will clearly show how much money you have available to pay your debts, each week or month.
Your debt adviser will be able to help you agree how much you can afford to pay for your loans so that you can make an offer to the lender to repay the debt and be realistic in understanding what payments you can agree and make.
Click here for more detailed information about Personal Budgeting and Money Tips, (link to website page Personal Budgeting and Money Tips I will write this page later and include your original notes from your website.
INCREASE YOU INCOME
The most obvious way that you can clear your debt problems is by increasing your income.
To increase your income;
- Find a job that pays more
- Take on another job
- Check you are receiving all of the benefits, tax credits or universal credit that you can claim
- Get help from grants
Changing job and increasing your income can be achieved in days, but more often involves a great deal of planning, which may take you several months to complete.
THE HELP YOU CAN RECEIVE
People who are able to offer you sensible debt advice will show you;
- The best ways to clear your debt
- They will explain the different types of debt
- Advisers will show you how to deal with the people you owe money to
- The different types of court action possible
- Discuss insolvency and bankruptcy options
- Explain how credit reference agencies work
- Describe how bailiffs can remove your goods to clear your debts
- How to deal with business debts
- The best way forward with your payday lender and loans
Your payday lender may have signed up to a Customer Charter which requires them to:
- Deal with debt problems positively and sympathetically
- Accurately explain how a payday loan works
- Show the total cost of the loan, together with fees and charges
- Freeze interest and charges after 60 days of non-payment
Where you feel that the payday lender has been irresponsible in their lending, in the way that they have dealt with your debt problem, or in any other way, you can complain about the lender.
The rules of the financial conduct authority, that regulates all legal payday lenders, indicate that all financial providers must deal with your complaint within an eight-week period.
HOW TO STOP THAT CONTINUOUS PAYMENT AUTHORITY
The majority of payday lenders will use a continuous payment authority (CPA) to take money from your bank account when it is due. If the lender refuses to cancel a continuous payment authority and continues to attempt to remove money from your bank account when you have insufficient funds, leaving you open to further charges from your own bank, you can make a complaint to the Financial Ombudsman Service (add link).
COMPLAINING ABOUT OR TO YOUR PAYDAY LENDER
Click through to read our advice about how you can complain to or about your payday lender concerning any issues that you are not happy with; issues that you have asked your payday lender to resolve and have been unable to reach an agreement.
How to complain about your payday lender
FINALLY FOR NOW
The sooner you act to deal with your debts, the sooner they will begin to go away. This will reduce the stress on your life and that of your family and you will be able to concentrate on your work and getting towards living debt free or with debts that you can easily manage.
WHERE YOU FEEL DEPRESSED ABOUT THE STATE OF YOUR DEBTS AND HOW THEY ARE AFFECTING YOU AND YOUR FAMILY, YOU SHOULD SEEK HELP FROM YOUR GP (DOCTOR) IMMEDIATELY.