Q&A with StepChange Debt Charity - let’s talk about managing debt

Good luck with your work Rachel!

25 quid;45611:
Good luck with your work Rachel!

Thank you and thanks for popping into the thread! :)

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Bev;45616:
Loving your sign, Rachel , just to prove you’re sitting there waiting for questions

But yes, such an excellent idea, and kind use of your time. I’m thinking maybe, as such a sensitive subject, would members benefit more from DMs rather than public QA? Don’t know, just a thought.

Great work tho

Hi there Bev, thanks for posting :)

Haha, glad you guys like my cheery selfie. Not bad for a Monday morning, eh?

You're right about debt being a sensitive subject and that can sometimes make it difficult to discuss in a public setting.

If someone reading this thread would like to talk to us privately, they're more than welcome to send a DM with any questions they might have. It's likely that we can give the guidance they need or point them in the right direction for help. I'd just like to remind everyone however that our advisors are unable to give specific debt advice or recommend a debt solution, either on this forum thread or in private messages.

If you have debt worries, our online debt advice tool can help you put together a personal action plan. As part of this, you'll be recommended a debt solution which is best suited for your circumstances. It's free to use and completely confidential.

Best wishes,

Rachel

Great idea to do a feature here with regard to a difficult/sensitive subject, especially at this time of year. Thanks to Rachel for coming to join our Pure Community

Scubaseahorse;45640:
Great idea to do a feature here with regard to a difficult/sensitive subject, especially at this time of year. Thanks to Rachel for coming to join our Pure Community

Thank you for stopping by and the warm welcome

Morning everyone :)

I've put together list of questions that often come up when we host debt advice clinics, along with some answers and helpful info. I'll try to do this each day, just in case there's anything you're curious about. Please feel free to jump in with any questions though!

What kind of debt solutions are available to me?

There are a whole host of debt solutions that may be available to you,depending on your circumstances. These range from debt management plans (where you make a single payment to your debts each month based on what you can afford) to various forms of insolvency such as Individual Voluntary Arrangements (IVAs), bankruptcy and Debt Relief Orders (DROs). If you're based in Scotland or Northern Ireland, there are debt solutions that are specific to your location. You can find out more on our debt solutions page.


What's a default notice?

A default notice is a letter from your creditor warning that your account is about to default because you're behind with your payments.

The default notice will give you at least two weeks to catch up with any missed payments. If you can do this your account will carry on as normal. If you can't pay the missed payments in this time your account will default and a missed payment note will be added to your credit file.

Default notices only apply to debts which are regulated by the Consumer Credit Act, such as credit and store cards, payday loans, personal loans and hire purchase.

If you receive a default notice, please don't worry! It's not as scary or serious as the label might suggest. A debt advice charity such as StepChange Debt Charity, Citizen's Advice, National Debtline or Christians Against Poverty can talk you through what to do next.


Can a debt be 'written off'?

You may have seen online ads or Google results promoting 'government schemes to write off XX% of your debt'. In reality however, debt is usually only written off in very exceptional circumstances, such as if you're dealing with a terminal illness or are in a vulnerable situation. You can find more information on our writing off debt page.


What about if a debt's older than six years? Could it be written off then?

We get asked this question a lot, and it's often because there's an old misconception that if you ignore a debt for long enough, eventually your creditors will give up and write it off. This is loosely related to the Limitation Act.This act gives creditors a deadline of six years to seek court action against you (or five years, if you're in Scotland). The six year/five year window starts from the last time one of the following things happened:

• You acknowledged the debt in writing to your creditor
  
• You made a payment towards the debt
  
• The earliest date that the creditor could've started court action against you, such as 14 days after you were sent a default notice
  

If a creditor tries to take court action or pursue you after the deadline has passed, you can send them a letter to inform them that the debt is 'statute barred' under the Limitation Act (or 'extinguished' if you're based in Scotland). There's more info on our statute barred debt page.

It's important to note that the Limitation Act only prevents the creditor from taking court action or pursuing you for payment outside of a reasonable timeframe. It does not cancel the debt balance after the deadline is passed. It may still remain on your credit file, and you're still technically liable for it. There are also some debts that the Act doesn't apply to, so make sure you check the list of applicable debts on our statute barred debts page.

Thanks!

Rachel

Morning!

I'm back again with some Frequently Asked Questions.

• Have you ever wondered what would happen to your debts if you moved abroad?
  
• Are you trying to rebuild your credit score but don't know where to start?
  

Answers below :)

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If I moved to another country, would my UK debts eventually go away?



Moving to another country would make it harder for a creditor to find you, but it wouldn’t guarantee they’ll stop chasing you. Depending where you move creditors may have a branch of their company in that country, and some large debt collection agencies trade in different countries.

If a creditor has taken you to court in the UK they may be able to transfer proceedings to other European countries. They could make you bankrupt in your absence and, depending where you’ve moved to, the bankruptcy may affect assets you have in that country.

If your move abroad isn’t permanent you could come back to the UK to find your debt situation is much more serious and harder to deal with it. There are steps you can take to deal with your debts from abroad.


What can I do to repair my credit rating?

The simple answer is: pay your bills on time, at the minimum amount or more each month. However, life is very rarely simple. You may find that minimum payments aren't affordable for you at the moment.

If you’re unable to make the minimum monthly payment right now, it’s still a good idea to pay whatever you can afford. A reduced payment is still better than no payment at all. The other good news is that your credit score will improve with each payment you make. So if your credit file isn’t ‘perfect’ right now, don’t despair. It will repair over time.

It’s also a good idea to register on the electoral roll, which creditors use to check you're living at the address you gave them.

You could also take out what’s known as a ‘credit-builder credit card’. These cards don’t tend to be as strict with their application criteria as other cards. By using them and paying them off on time, these payments will be logged on your credit file, which will improve your overall score.

We as a charity don’t usually recommend taking out further credit if you have debt you still need to pay off. Instead, it may be worth putting a budget together to see if there are ways you could pay your debt off quicker, or if a debt solution might be a good idea.

Read our page on repairing your credit file for more information.


Will speaking to StepChange affect my credit score?

The act of contacting us and getting advice from us doesn't affect your credit score. However, if you enter a debt solution, you’ll be making lower than the minimum payment on your debts. This’ll be recorded on your credit file. If you choose an insolvency solution such as bankruptcy, IVAs or DROs, these will also be recorded on your credit file.

More info here: www.stepchange.org/debt-info/debt-collection/how-does-debt-affect-a-credit-file

Simply speaking to us or using our online debt advice service will have no detrimental effect at all, so please don’t worry. We also won’t tell anyone that you’ve been in touch unless you ask us to.

Contact us in confidence, look at all your options, and make the decision that feels right for you.

Nice words our Jonny. Even hypothetical questions, on behalf of others maybe

Jon1;45966:
This is a great service so well done for highlighting the issue in such a way.
from experiance it is all to easy to fall into the debt trap and takes a great deal of courage to admit a problem exists. Sadly some lenders will persuade you the answer is to borrow more and consolidate the issue.
​​​​​​​stepchange and others provide great help and advice to anyone who asks and it is well worth asking even if you feel you dont have a problem.

Hi there @Jon1, thanks for posting :)

It's absolutely correct that debt can become a problem due to many reasons. Every year we release a Statistics Yearbook. Much of our research is centered around the different causes of debt, and how it affects different parts of the UK.

One of the key things we want to make clear is that more times than not, it truly isn't the person's fault that they find themselves with a debt problem. Life has a way of catching you off guard sometimes. Speaking to a debt advice charity such as us can give some clarity on what to do next.

Best wishes

Rachel

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Bev;45976:
Nice words our Jonny. Even hypothetical questions, on behalf of others maybe

Very true @Bev :)

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Jowl;46072:
Hello Rachel

I'm just catching up on PP and noticed this thread (had a little heads up too tbh )

Stepchange are brilliant. I know somebody who works for them (after initially seeking some help) and I'd always recommend talking.

For help to save / general spending advice / tips I always recommend people visiting moneysavingexpert.com Its my go to website before any purchase.

Hi there @Jowl, thanks for posting and for your kind words. It's great to hear when we've helped someone deal with their situation, and thank you for continuing to recommend us!

We've worked alongside MoneySavingExpert for many years and they're a great resource for moneysaving and budgeting tips. StepChange and MSE have also campaigned to raise awareness of the link between mental health and debt, as it's such a prominent issue in the UK.

Best wishes

Rachel

This should interest anyone interested in dealing with debt, I hadn't quite thought through the implications of the banks removing the excessive unauthorised overdraft charges.

BBC Call you and yours (today) 14th Jan
https://www.bbc.co.uk/sounds/play/m000d70s

Good morning all,

I'm back with a couple more frequently asked questions (and answers!) :)

Best wishes

Rachel

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I'm paying the monthly minimum on my credit card / store card / catalogue. Why isn't the balance going down?

if you're paying the minimum each month on these products, you're mainly paying off interest and charges rather than the balance itself. If you make 18 minimum payments in a row, chances are that your lender will write to you and tell you that you're in 'persistent debt'.

Getting a letter like this can be confusing, especially if you don't feel that you're 'in debt' at the moment. However, because minimum payments do very little to reduce your balance, it's likely to stick around for a long time. By paying a bit more each month, you could reduce your persistent debt balance off quicker. You could also save yourself money because you'll pay less in interest.Find out more about how to pay off persistent debt on our website, and use our 60 second credit card repayment checker to see how much quicker you could pay the debt off with increased monthly payments.



Could I be sent to prison for being in debt?

Many people worry that they could be sent for prison for not paying their debts. While this was a real risk in the days of yore, there’s absolutely no need to worry about prison for almost all debts.A prison sentence could technically be enforced for non-payment of the following debts, but this is extremely rare:

• Criminal fines
  
• Council tax
  
• Business rates
  
• TV licences
  
• Child maintenance arrears owed to the CSA or CMS
  

Even with these types of debt, prison is a last resort that’s normally only considered if you’ve ignored the debt or refused to pay.There are no other debts you could be sent to prison for not paying. However, it’s important that you get help with any debts you’re struggling with as soon as possible.



If I’m in debt when I die, will my family have to pay it off?


If a person dies and leaves behind unsecured debts that are in their name only, the unpaid balance will be settled with any money available in their estate. This is made up of items such as a house, savings and investments.Most unsecured creditors will normally only pursue a deceased person’s debt if they left behind a large estate, such as a house owned outright with lots of equity.If the person had no assets at the time of death, any debts they owed in their name only will be written off.If they leave behind a joint debt that needs to be paid, the surviving person will be liable for the full balance.

Hi all
Some really good news to share that @StepChange are up for continuing this thread to help anyone who's got any questions or concerns about debt and managing payments.
Given the uncertainty with Coronovirus at the moment, there may be some people who'd like to ask questions.
Hope it's helpful

StepChange;50289:


We're here to support you however we can. Be good to one another, and stay safe.

Best wishes

Rachel at StepChange

Lovely words

damiend;50351:
Hello @StepChange,
​​​​​​​I've just lost all sources of income because of the school closures for an unknown period of time. I can't afford my bills. What help us available please?

Hi @damiend thanks for getting in touch.

There are a number of things you can do if your income has been affected by measures taken to combat the coronavirus spread. You can:

Check your benefit entitlement on our website as you may be able to claim Statutory Sick Pay or Industrial Injuries Disablement Benefit

Get in touch with your council and make them aware of what’s happened. You may be entitled to council tax or housing benefit. Local authorities are getting an extra £500m for vulnerable people, and it's anticipated that most of this will be spent on council tax support schemes

If you’re a homeowner, you may be entitled to help from a government mortgage scheme

We have a coronavirus information hub that we'll be updating daily or as soon as new information is available. Please keep checking back in case there is more you can do to ease your situation. Please know that Pure Planet are also here to support you if you're worried about your energy bill. This post contains more information on the help available.


Best wishes

Rachel