This month we thought rather than our usual blog we’ll try something a little different. With lots of people struggling with debts and the rising cost of living we wanted to let you know where you can go for help and advice.  

Now ScoresMatter doesn’t offer debt counseling or debt advice, but there are organisations that you can contact to get help- some are free others may charge.

Firstly, if you are struggling with debt or want some free and impartial advice you can always visit the MoneyHelper website at:  www.moneyhelper.org.uk (which replaced the Money Advice Service).  They have a host of information on help available if you have debts and generally about managing your money. 

You can also contact Citizens Advice or Step Change- these two organisations may be able to help you look into any support that you may be able to get, including from any additional benefits you may be entitled to.

Another good source is the gov.uk website, it has loads of useful and free advice too for paying off debts(Options for paying off your debts: Overview – GOV.UK (www.gov.uk).

We’ve set out a short summary of some of the information that we have found from these organisations that may help you to understand what help is out there:

1. Ways of Paying off Debts if you are Struggling

If you are struggling paying your debts, then there are a number of solutions available that could help you, and some will depend upon where you live in the UK.  

You can pay your debts in installments by setting up:

• a Debt Management Plan which is an informal agreement with your creditors and is managed by a financial company. 
• an Administration Order when you’ve had a county court judgment (CCJ) or a High Court judgment (HCJ) against you for debts under £5,000.
• an Individual Voluntary Arrangement (IVA) a legal agreement with your creditors which is managed by an insolvency practitioner.

You can also get temporary protection from your creditors through the ‘Breathing Space’ scheme (a bit more details on this below), while still making repayments, but you’ll need to apply through a debt advisor.

In Scotland you can arrange a Debt Payment Programme from the Debt Arrangement Scheme.

You may also have the option of reaching an informal agreement with your creditors by negotiating with them by yourself, or even getting a debt consolidation loan.

What type of solution is best for you will depend entirely on your personal circumstances- i.e. the types of debts you have and how much you can reasonably afford to pay towards your debts after all essential costs have been taken into account.

2. If you cannot pay off your debt

You can apply for a Debt Relief Order (DRO) or Bankruptcy Order if you cannot pay your debts because you do not have enough money or assets you can sell.  

A DRO has a set criteria that you have to meet,  in that your total debts must be less than £30,000, your assets must be less than £2000 (including a car), you can’t own a home and your disposable income (what you have left over after all living costs and expenses have been taken into account) must me no more than than £75. 

There are set up fees payable for both these solutions, but you can pay these in installments.

These are not suitable for everyone, and if you have an asset like a house then you should get advice before embarking on this route.

3. Breathing Space (Debt Respite Scheme)

If you live in England or Wales, you can get temporary protection from your creditors while you get debt advice and make a plan under the ‘Breathing Space Scheme’.

You can get temporary protection for up to 60 days. However you’ll still need to make your debt repayments.

If you get it, then during the period of protection:

• 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

If you’re getting mental health crisis treatment, your protection from creditors will be longer. It will last for the length of your treatment, plus another 30 days.

How to apply for the Breathing Space scheme

To apply for ‘Breathing Space’, you need to talk to a debt adviser. They will submit an application on your behalf if it’s the right thing to do.

You can find a free debt adviser on the MoneyHelper website. You can get confidential advice online, over the phone or in person.

If you’re receiving mental health treatment and cannot speak to a debt adviser, someone else can do so on your behalf.

Costs

It’s free to apply for ‘Breathing Space’, but some debt advisers may charge you a fee.

Eligibility

You must:

• not have a DRO, an IVA, an interim order, or be an undischarged bankrupt at the time you apply
• not already be using the ‘Breathing Space’ scheme
• not have used the ‘Breathing Space’ scheme in the last 12 months, unless it was for a mental health crisis

With any kind of debt solution be mindful that this could impact your credit score as you are not paying your full contractual amounts to your creditors. And some debt solutions (like bankruptcy/IVA) could, depending upon your profession, impact your job.  So it’s always best to seek advice from a Financial Conduct Authority authorised firm or one of the organizations we have listed above, so that they can carry out a full assessment of your personal circumstances and advise you on what is best for your situation.

If you are unsure about what debts you owe, one good way to look these up is by looking at your credit report and score. At ScoresMatter we provide you access to your credit report and score through our online membership, where once you have gone through the online verification process you can see your full credit report which will list the companies that you have debts with (i.e. credit cards, loans, BNPL, overdrafts, even any County Court Judgments you may have).  Remember though your credit report covers just 6 years of your credit history, anything older may not show up.

Don’t forget we offer a 10 day free* trial to new customers if you sign up directly on our website:  www.scoresmatter.co.uk.  And if you cancel your account within the first 10-days you pay nothing.

We hope that this blog is useful as a starting point if you are worried about your debts.

As always we will be back next month for our next blog, so stay tuned!

ScoresMatter

*£19.95/month fee applies after the trial ends.