What about my Debts during Coronavirus?
If you can't pay your debts or bills...
You could get a Budgeting Loan if you have been on certain benefits for 6+ months, such as Income Support here
If you have been on Universal Credit for 6+ months, you can ask for a Budgeting Advance here
Consumer credit debts
These include loans, credit cards, catalogues, hire purchase, buy-now-pay-later, insurance, guarantor loans, weekly payment arrangements and car finance debts.
These debts appear on your credit report. Learn more about them here
Help for these debts is available to those affected temporarily by Coronavirus. If you were already in financial difficulties, the Financial Conduct Authority has existing forbearance rules which apply. These will include, for example, the firm considering suspending, reducing, waiving or cancelling any further interest or charges, deferring payment of arrears or accepting token payments for a reasonable period of time.
Personal loans, credit cards and overdrafts help here
- 3 month payment holidays on most consumer credit debts, but the interest will still increase.
- You may have to make higher payments afterwards or extend the term of the agreement.
- You can ask the provider of your main current account for up to £500 of overdraft borrowing with no interest for 3 months, though not all of them will offer it.
- No interest if your current arranged overdraft is below £500
- You can request an overdraft if you don’t have one, as normal
- Under new overdraft rules from April 2020, banks can charge more overall, but not for the first 3 months.
Car finance and high cost credit (payday loans and similar) help here
These proposals are expected to be accepted by 22 April.
Car finance
- 3-month payment freeze for those having temporary difficulties
- No unfair changes to contracts
- Help with finding a solution to problems with balloon payments
High cost credit (including payday loans)
- 1 month interest-free payment freeze
- After that, an affordable way to catch up
Other Consumer credit debts (Rent-to-own, buy-now-pay-later or pawnbroking agreements)
- pawnbrokers should extend the redemption period for the 3-month freeze period or, if the redemption period has already ended, agree not to serve notice to sell an item that has been pawned for that period. If the firm has already informed the consumer they intend to sell the item, they should suspend the sale during the payment freeze
- if a buy-now-pay-later customer is within the promotional period, firms should extend this by the length of the payment freeze
- rent-to-own firms should provide a 3-month payment freeze. In addition, if a customer needs the goods during the guidance period, repossession should not take place
- if social distancing means that pawnbrokers and rent-to-own firms are unable to redeem, collect or repossess goods, they should not pass on any additional charges or fees to the consumer
- As for most loan freeze arrangements, firms will be able to continue to charge interest during the payment freeze (except in the case of high-cost short-term credit). However, in the event that a customer requires full forbearance that interest should be waived
Other types of debt
MortgagesYour mortgage is your loan for buying your house. Sometimes people have charges against their house as well, which could be a second mortgage, or a charge for a debt. Mortgages and second mortages appear on your credit report, but charges agreed by a court for debts don’t usually appear.
These debts are secured on your house: if you can’t keep up with payments then your home could be at risk.
Measures to help those affected by Coronavirus here
- You can apply for a payment holiday, but don’t cancel your DD until it has been agreed.
- You will still be charged interest, to be paid back later either by higher payments or by extending the term of the mortgage.
- Payment holidays should not have an impact on your credit file.
- You should apply plenty of tiem before your next payment is due.
- Lenders are stopping repossession action (unless you want them to repossess).
- You’ll still be charged interest.
- Your house may be sold soon after the current crisis ends, which may mean a price lower than normal market prices.
Energy Bills
If you can't pay your energy bills, see here
If you can't afford to top up your prepayment meter, see here
Council Tax
Council Tax and Housing Benefits are handled by your Council.
Details for Leicester here
Blaby is likely to be similar.
- Leicester City Mayor Peter Soulsby said ‘There will be no pursuit of council tax arrears and no evictions from our council properties due to a lack of income clearly caused by the Coronavirus crisis.’ here
- Council Tax reduction in bill - The government has announced that every working age household who receives council tax support will receive an additional £150 credit, towards their council tax bill for this year (2020-2021). This will be given to you as a reduction in your Council Tax bill. LCC will be issuing revised bills ‘as soon as possible’
- The Civil Enforcement Association (CIEA) has annouced suspension of bailiff activity during Covid-19 outbreak here
Housing Benefit
Housing Benefit debt may continue to be deducted from ongoing awards, depending on your Council's policy. If you are experiencing hardship, you can apply for a Discretionary Housing Payment, and Discretionary Council Tax Support on the same form. In either case, it’s best to get a debt adviser or someone else to help you fill in the form properly. You will need to provide payslips, benefit letters and bank statements.
Before you start, you will need to register for the online service. This means that in future you will be able to see all your Council Tax and Housing Benefit in one place.
Leicester here
Blaby here
Benefits Overpayments
DWP Recovery has been suspended for 3 months here
The recovery of Advances by deduction from Universal Credit payments will continue.
Local Authorities will suspend referral of Housing Benefit overpayments.
The transfer of Tax Credit debt from HMRC has already been suspended.
For citizens who are not on benefits, we have directed private sector debt collection agencies to stop their activity for Debt Management customers.
We are also suspending voluntary debt repayments and recovery by Direct Earnings Attachments.
Court Proceedings
Leicester Courts are officially open, but some cases are being put on hold and some buildings are closed here
If you have a hearing, you should have received a letter about it.
Rent arrears and Evictions
There’s a ban on new eviction proceedings and hold on existing proceedings for three months here
The Government is also looking at other measures to ensure that no renter, in either social or private accommodation, will be forced out of their home during this difficult time.
HM Courts and Tribunal Service (HMCTS) has instructed county court bailiffs with the following instruction:
- Bailiffs should stop making any new eviction appointments
- Bailiff Managers should review all upcoming evictions and use their judgement and discretion to decide whether the eviction should proceed, taking the current coronavirus public health guidance into account. To assist in making their decision the bailiff manager/bailiff should contact the claimant to confirm whether they still want the eviction to proceed e.g. with social housing cases they should contact the housing agency to ascertain their policy in respect of evictions.
- Some evictions should continue, for example where the bailiff knows that the property has already been vacated by the tenants.
More info about what to do about your debts here
