Jill Glenn

Current financial help

These are uncertain times for us all. Whilst the main concern is health, many have growing money worries.  Various measures have been implemented to support individuals and provide financial help during the coronavirus outbreak, for example:

• Mortgage payment holidays
• Payment holidays for credit cards
• New overdraft rules 
• Restriction on eviction action 
• Withholding of many actions to chase outstanding debt
• Protecting individuals from action served by sheriff officers by applying for a moratorium (breathing space)
• Short term impact of current financial help

The support above stops demands for payments and formal action with the worry that a sheriff officer will appear – it does not reduce debt. The debt problem will still be there when these supports come to an end – so what will that mean? 

Mortgage payment holidays – you will still be charged interest for the time you are not making payments. The debt doesn’t reduce instead the interest charged increases the amount owed and will need to be repaid in the future. This will result in a higher monthly payment or a longer repayment period, or a lump sum being required to clear the remaining balance at the end of the term.

Credit card payment holidays – interest will still be charged during the payment holiday.  This means you will pay slightly more overall. It is likely to increase the minimum monthly payment you need to make and your debt may continue to rise despite not using any further credit.

Overdraft rules – with effect from 31 October 2020 the temporary measures which allowed customers to apply for interest free overdrafts up to the first £500 is due to be removed.  The Financial Conduct Authority has proposed that banks continue to support customers who have problems after this date and the bank will decide if you can continue with the overdraft or have it withdrawn.

Eviction action (forced removal from your residence) - eviction cases have now resumed in England and Wales, the Scottish Government has just agreed an extension to eviction action being taken until March 2021 giving more time to consider future options.
 
Withholding of many actions to chase outstanding debts – most formal action is currently not allowed and it is likely that larger institutions such as Councils and Banks won’t be chasing debts as vigorously as before. However it doesn’t remove any debt problems that exist.

Protecting individuals from action served by sheriff officers by applying for a moratorium (breathing space) – you can ensure all action is stopped by applying for a breathing space (Statutory Moratorium) – applied for through the government office (Accountant in Bankruptcy) which stops debt action against you for 6 months. During this time take advice and put a plan in place to resolve your debt problem.

Plan for the future now

Now is the time to plan for the future and consider what steps can be taken to resolve your financial concerns?
1. Work out your current budget and consider what can be paid
2. Make a list of all of your debts (the monies you owe to creditors)
3. Maintain communications with those you owe money to - ensure they are aware of your financial difficulties and that any support is provided to you
4. Consider whether you are entitled to any additional benefits
5. Consider whether you need to put in place the statutory moratorium (breathing space) giving you an additional 6 months to decide on your plan
6. Take advice from a qualified money advisor such as Dunedin Advisory to discuss the options available to you

Is now the time to act?
Reducing your debt gives you added peace of mind.  Whilst the measures put in place may have given you some breathing space, if you are worried you cannot continue to meet payments when the support finishes there are options available that can: 

• Reduce the weekly or monthly amount you pay
• Remove interest payable on some debt
• Enable you to pay a reduced amount in full settlement of your obligation
• Instead of worrying and not knowing what is best get Expert Help.

Expert Help

Dunedin Advisory are specialists in debt advice. Its team are qualified in money advice.