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The Stigma of Debt

Depending on a person’s age or background they may have a very different view and opinion of debt, but it is apparent there is still a stigma attached to it.

At first glance it would appear that some members of older generations are opposed to taking out credit, whiles others believe it is ok to borrow but it must be paid back. Payplan have dealt with clients in the past who could have declared themselves bankrupt, as this was a suitable option for them, but chose not to because they felt the stigma was too great.

On the other hand, people from a younger generation appear to have a more laid back approach to debt. It may be that they see it as being a part of life and therefore accept it more easily.

We deal with over 100,000 clients each year who are in debt. These are people from all different walks of life, from different age groups, in different types of employment with different views on debt. One thing unites all of them, the phrase “I wish I had called you sooner.” Many people choose to bury their heads in the sand instead of getting the help that they need. By doing this, some clients find themselves in a worse situation because they worry about what people will think.

Whatever your feelings are towards debt – the facts show that the average UK household has £7,975* of unsecured debt.

It is important that you seek free debt advice as soon as you need it from Payplan or a charity such as Citizens Advice Bureau or National Debtline. You can call us on 0800 2945205 or fill out our online referral form and we will call you back.

We would like to hear your views on debt. Is it true there is still a stigma attached to being in debt?

*Credit Action Stats relating to January 2012

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How do I… apply for a DMP?

A Debt Management Plan, or DMP, is a solution to help people who are struggling with their creditor repayments. A DMP allows you to make one single monthly payment to your creditors. It is an informal agreement between you and your creditors where you commit to making a reduced payment to them. It can be set up by Payplan, free to the client, who will then distribute your payment to your creditors until the debt has been paid in full.

Many people delay seeking help with their debts as they are embarrassed, afraid or do not know who they can trust. We have therefore created a brief guide to provide some help with starting the DMP process so that you can get your finances in order.

When looking for a DMP company it is important to do your research…

  1. Contact your local Citizens Advice Bureau or contact National Debtline who will be able to provide you with a list of recommended free-to-client companies.
  2. Speak to friends, family or your employer as they might be able to recommend a reputable company to you.
  3. Visit forum or review sites to see what other people have done in a similar situation and find out about their experiences with different companies.

Once you have found a company that you are comfortable with you will need to gather the following information together in preparation…

  1. A list of all of your creditors, including account numbers and amounts that you owe.
  2. A list of your income and expenditure, as this will help to determine what surplus you have available to pay your creditors.
  3. Information relating to any legal action that your creditors have taken against you, such as a County Court Judgement.

Should a DMP be the right solution for you then this brief guide could help you.

If you would like to speak to one of our debt specialists, then please call 0800 2945205 or fill in our online referral form and we will call you back.

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Unemployed and in debt

Unemployment has been a big issue throughout the country since the last recession with the latest stats showing that 2.67 million* people over the age of 16 years are currently unemployed, the highest level since 1995. During Chancellor George Osborn’s Budget Speech in March, he stated that part of 2012′s agenda was to get people back into work.

In recent years as the unemployment level has risen, Payplan have seen a large number of clients coming to us for help and advice after finding themselves out of work and not knowing how they are going to keep up their repayments. It can be difficult dealing with situations like these as we need to make sure the client is able to maintain all of their priority payments, feed their family as well as trying to make an offer of payment to each of their creditors.

If you are unemployed and have debts that you aren’t sure how you will pay then try following these steps…

  1. Make sure you are receiving all of the benefits that you are entitled to, making sure that your income is as high as it can be.
  2. Write down all of your expenditure – rent/mortgage, council tax, utility bills, food, fuel and anything else that you have. Then see if there are any areas that you can cut back on – for example can you cancel your cable or satellite TV, mobile phone, gym membership or change your supermarket to make it cheaper?
  3. Work out how much you owe to each creditor and how much the contractual payments are. You can then look at how much you can reasonably afford to pay each of them.
  4. You can then either write to your creditors yourself or contact some for free debt advice such as Payplan or Citizens Advice Bureau or National Debtline.

Remember it is important that you keep your creditors up to date with your circumstances at all times so that they can do all that they can to help you too.

If you are unemployed and would like some advice then please call Payplan on 0800 2945205 or fill out our online referral form and someone will call you back.

*source http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/february-2012/index.html

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How long can my creditors chase me?

A question that I often come across from people struggling to pay their debts is “how long can my creditors chase me?” The answer is until you have paid them what you owe. However, if communication between the debtor and the creditor breaks down and enough time elapses, then the debt can be un-enforceable. Let me explain…

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You have not communicated to the creditor admitting you owe the debt during the last six years.

After six years if the creditor makes contact with the debtor and asks for a payment, the debtor does not have to pay them.

These instructions do not apply to debts in Scotland. Under Scottish law, if a lender allows time to pass without receiving any payment an action for recovery may become barred under the Prescription and Limitation (Scotland) Act 1973. (For details of this Act see Gloag and Henderson 12th edition at Chapter4.). These debts are completely extinguished and cannot be enforced. Once the prescriptive period expires the debt cannot be allowed as a deduction.

To explain it further here is a possible scenario…

You take out a credit card, after a period of time you lose contact with your credit card provider and stop payments. You then receive a letter from them to say they want you to resume payments and clear the debt. The time period between your last contact with the creditor – whether it was a payment made, a letter or a telephone conversation – has been six years, this means that the debt has become “statue barred” and the creditor is no longer allowed to pursue you for payment or take any further legal action against you.

If a creditor continues to contact you once the debt becomes “statue barred” then you are entitled to report them for harassment, as well as making a complain to the Office of Fair Trading.

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