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Coronavirus and your debts (Scotland)

Credit cards, store cards, personal loans, overdrafts and catalogues

The FCA has issued several pieces of guidance for requesting a payment holiday if you are affected by coronavirus and struggling to pay your credit debts. The most recent guidance applies from 25 November 2020.

Personal loans, credit cards, store cards, catalogues

Personal loans, credit cards, store cards, catalogues

  • If you have been affected by coronavirus and have not yet had a payment holiday, you are entitled to a six-month payment holiday.
  • If you’ve had a payment holiday previously or are currently on a payment holiday, you will be able to extend up to a total of six months.

You have until 31 March 2021 to ask your lender for a payment holiday. After this date, you may also be able to extend your existing payment holiday up to 31 July 2021. However, you cannot go over the six-month limit that the FCA guidance allows.

The payment holiday will not be recorded on your credit file; However potential lenders may still be able to find out that you didn’t make these payments as originally agreed in other ways, for example, by looking at your bank statements.

If your payment holiday has ended and you can afford to make your regular payments again, do so. You may also need to discuss how you are going to repay any missed payments with your lender.

If you have already had a total of six months payment holidays and you are still unable to afford the payments, contact your lender as soon as possible. Discuss your situation and ask what options are available. Ask you lender how this will affect your credit file.

FCA guidance says that your lender:

  • ​should take your circumstances into account when discussing a repayment arrangement;
  • should not pressurise you into repaying your debt in an unreasonably short time; and
  • should not reduce the credit limit.

​For more information, see the FCA’s Consumer Credit and coronavirus: Tailored support for clients.

Step Change Covid Payment Plan (CVPP)

If you have already had six months of payment holidays but still can’t afford your full payments, a CVPP may be an option. Contact us for advice.

Overdafts

The FCA has confirmed that it expects banks to contact overdraft customers who have received temporary support to determine if they still require assistance. If you need further support or if you ask your bank for help for the first time, the bank should:

  • ​provide tailored support such as reducing or waiving interest;
  • agree a programme of staged reductions in the overdraft limit; or
  • support you to reduce your overdraft usage by transferring the debt.

Your bank should not reduce your credit limit or suspend or remove an overdraft facility if that reduction, suspension or removal will cause you financial hardship.

Other bank debts

If you are struggling to pay unsecured bank debts that are not covered by the new FCA measures, you can still contact your bank to explain your situation. Each bank will consider what help it may give on a case by case basis. Go to their website to see what help is available. You can also call your bank, but be aware that you may have to wait some time. 

Ask you lender how any arrangement that you agree will affect your credit file.​

Avoid taking out more credit unless you know that you can afford to pay it back. 

If you have debts which are now unaffordable contact us for advice. Whilst you are waiting to receive the advice you need you can send your creditors a letter asking them to hold action on your acc​ount​ due to coronavirus​.

Payday loans, Buy now pay later, rent-to-own, pawnbrokers and motor finance

The FCA has announced measures, such as a payment freeze, to help customers in temporary financial difficulty because of coronavirus. You can apply for support outlined below from 25 November 2020.

If you have already had the payment freezes detailed below, or if you expect your financial difficulties to be long term, you should contact your lender now to discuss your situation and what support is available. Under current FCA guidance, lenders are expected to:

  • ​provide tailored support which reflects your individual circumstances. This includes providing support before you miss a payment if you are approaching the end of a payment holiday;
  • offer a range of shorter and longer-term options;
  • not pressurise you into repaying your debt in an unreasonably short period of time;
  • put in place an affordable repayment arrangement which takes into account your wider financial situation, including other debts and essential living expenses; and
  • suspend, reduce , waive or cancel any interest, fees or charges to prevent your balance escalating after a repayment arrangement has been agreed. 

If you require support after a payment freeze has ended, this will be reflected on your credit reference file. Lenders should be clear on how any repayment arrangements will be recorded on your credit reference file.​

Payday loans

If you have a payday loan, the availability of a payment freeze has been extended, however you must apply before 31 March 2021.

  • If you have not yet benefited from one, your lender should allow you a one-month payment freeze.
  • No interest will be added during this payment freeze.
  • The payment freeze will not affect your credit file.

If you have already had a payment freeze and are unable to make up the deferred payment please see our Payday loans​ fact sheet and contact us for advice​.​

Buy-now-pay-later, rent-to-own and pawnbroker debts

If you have any of these types of lending, the availability of a payment holiday has been extended until 31 July 2021, however you must apply before 31 March 2021.

  • If eligible you can ask for payment holidays of up to six months in total. Payment holidays can be requested up to three months at a time.
  • If you have already benefited from a payment holiday, you can request a further holiday up to a maximum of six months.
  • The payment freeze will not affect your credit file.
  • Interest will continue to be added during the payment holiday.

After the payment holiday ends, you should be allowed to repay the deferred payment in an affordable way.

Pawnbroker agreements

If you have been granted a payment holiday, the firm should extend the redemption period for that item. If the redemption period has already ended, the firm should agree not to sell the item and suspend any sale for the payment deferral period.

Buy now pay later

If you have been granted a payment holiday and your agreement is within its promotional period, this should be extended to cover the period of the payment holiday.

Rent to own

If you have been granted a payment holiday, firms should continue to allow you to rely on insurance and warranties during the payment holiday or extended agreement.

Motor finance ​- FCA guidance to 31 October 2020

If you have motor finance, the availability of a payment holiday has been extended until 31 July 2021, however you must apply before 31 March 2021.

  • If you were up to date until coronavirus caused you temporary difficulty in paying, you should be given a three-month payment break if this is the best option for you. You may still be asked to make a token payment of £1.
  • If you have already been given a three-month payment break, you can ask for another payment break of up to three months. You can still ask for your second payment deferral after 31 March 2021, but your payments cannot be deferred beyond 31 July 2021.
  • This should not affect your credit files unless you need more help, for example, if interest on the payments needs to be frozen. Potential lenders may still be able to find out that you didn’t make these payments as originally agreed in other ways though, for example, by looking at your bank statements.
  • Your lender should not normally repossess goods if they know that you need to use them and are only experiencing temporary financial difficulty because of coronavirus. This guidance about repossessing goods is currently in place until 31 January 2021.

Sheriff court fines and hearings

As the courts have temporarily suspended their counter facilities for the payment of fines, you may need to choose another way of paying. For most fines you can use the court online payment system or automated phone system. However, for penalties that need your driving licence to be endorsed, you will need to send your payment and driving licence by post. For more information, see the Scottish Courts and Tribunals website.

If you have been told to attend a court hearing, it is important that you attend. However, to avoid an unnecessary journey, we suggest that you contact the court that is dealing with your case to check whether your hearing is going ahead.

Benefit overpayments

The Department for Work and Pensions (DWP)  temporarily stopped taking action to recover the following benefits for three months:

  • DWP benefit overpayments;
  • tax credit debts being managed by the DWP; and
  • ​social fund loans.

These overpayments will start to be collected again from July 2020.

If you previously repaid by direct debit, you will receive a letter from the DWP before repayments start again. If you stopped the repayment with your bank, you may need to set up the repayments again from July 2020. Speak to the DWP Debt Management line on 0800 916 0647 if you are unsure.

If you previously repaid through your wages, the DWP will write to you to see if an alternative repayment plan can be set up. If you previously repaid through your benefits, you will be notified of repayments starting again by a letter or Universal Credit journal entries.

The DWP will also restart other methods of recovery such as using debt collectors.

If you are experiencing financial hardship and think you will struggle to afford the repayments you were previously making, speak to the DWP Debt Management line on 0800 916 0647.

Eligible Loan Reduction Scheme​

Repayments to the Eligible Loan Reduction Scheme will also start again in July 2020, you’ll be notified by letter and don’t need to do anything. These loans are usually through credit unions or other not-for-profit organisations.