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Coming off the back of Christmas is tough for everybody, financially. The festive season may be ‘the most wonderful time of the year’, but it’s also the most expensive. Children are constantly bombarded with images of the latest must-have toys and for months before the big day and the pressure put upon parents to buy them is overwhelming. Many people turn to home shopping catalogues to help finance this. Paying items off weekly rather than in a lump sum seems like a practical solution, but this can also get out of hand. Rather than see disappointed faces or have children being bullied at school because they didn’t get the latest toys, gadgets or clothes, people willingly put themselves into a financial situation they cannot control. If this sounds all-too familiar and you can’t afford your catalogue repayments then don’t worry, you are not alone. Millions of people are in the same situation - what matters is how you handle it. Here are a few pointers and tips to help you decide on what to do if your catalogue repayments have gotten out of hand.
For catalogue debt advice there are non-profit charities that can point you in the right direction free of charge. As with any financial endeavour, it is essential that you read the terms and conditions before you sign for something.
Whether you choose an informal agreement with your creditors, take out a debt consolidation loan, or if you have to look at insolvency through something like Credit Fix Glasgow Insolvency, make sure you know what you are signing up for. Although they will help you to manage your debts more effectively, some of these options can adversely affect your credit rating.
Simplicity is the key; do your homework. Check your credit score and see what other credit options may be available. Once you know what you are most likely to be accepted for, check the APR rates to see which package will give you the best value for money.
Finally and most crucially, make sure you can afford the new figure, otherwise you will be stuck with another debt.
Here is a list of UK catalogue companies that offer credit terms and the products that they sell. Each catalogue has different terms and conditions, APR rates and products:
Known as Nextpay, the Next credit account is one of the most popular ways to shop for clothes and homeware in the UK. They entice you in with a three month interest free period and the promise of an exclusive first look at the famous Next Sale. However, if you have money owed with Next catalogue they are notorious for being somewhat unforgiving to say the least.
There are a few options that you can take to try and resolve any monetary issues with them. You could try to explain your situation to them and hope for leniency. They may put you onto a repayment program with them and this would eliminate the need for external action.
You could also try to reconfigure your finances by taking out a loan with a smaller APR that would pay off your Next balance. You would still have the same balance but should benefit enormously from much smaller interest charges. We can offer plenty of advice on consolidating your debts if this is something you are interested in.
If you can’t afford Very’s Take 3 (3 payments over 3 months, interest free) or their Buy Now Pay Later (interest free) options, then you are going to be paying a substantial amount of interest. With a current interest rate of 39.9% APR, Very are making a huge profit by letting you have a credit account.
To avoid paying this kind of interest, you can look into different ways of financing your payments. A consolidation loan or a balance transfer credit card can be much kinder to your pocket than the high APR added on by Very.
You can also try to reason with them to see if they would accept a smaller payment from them indefinitely but they are under no legal obligation to do this.
If the amount you owe your Studio Catalogue credit account has shot up and you can’t afford the catalogue repayments then help is at hand. Studio may offer great prices but it’s all too easy to order items online and it get out of control.
The best thing to do is to work out your household budget to see what you can realistically afford. Find out what you bring home each month after taxes and then deduct all your bills from that figure. Whatever you have left after everything is paid is known as your budget surplus. It's also referred to as UK disposable income by many people. Can you afford to cut back on anything? If not, is restructuring your debt via a loan a feasible option?
There is always something you can do to sort out your debts. You just need the right advice for your unique situation. Don’t panic - take a deep breath and take one step at a time. You’ve got this!
If you apply for Littlewoods credit and get rejected, there are other options available. You could apply for credit with a different catalogue. Very are a part of the same group as Littlewoods so you are unlikely to pass for credit with them. There are other catalogues that specialise in accepting people that have been rejected for credit elsewhere, although you are likely to pay a premium interest rate for the privilege.
It would be a good idea to get hold of a copy of your credit report. You are entitled to one free copy of your credit report every 12 months from Equifax, Experian or Clear Score. After that they cost just £2. Check the credit report to see if everything is accurate. If it’s not it could be affecting your credit score and stopping you from getting credit. Once any mistakes have been rectified you could try with Littlewoods again.
Alternatively, you could apply for a credit card with the same credit limit as a Littlewoods account would have offered you. This way you can order from Littlewoods and pay for your items on your card straight away and then pay the credit card when your bill comes through.
To get your catalogue debts written off you will have to think about insolvency proceedings. There are two options for this; an Individual Voluntary Action or bankruptcy.
An Individual Voluntary Action, or an IVA as it is more commonly known, becomes an option when you have debts of £5,000 and have two or more creditors. If you are unable to pay your various creditors you would seek the help of an Insolvency Practitioner. The Insolvency Practitioner (IP) would go through your finances with you and work out what you can realistically afford after all your monthly expenses have been taken into account.
The IP would then call a meeting with your various creditors and make them an offer of payment based on these figures. If 75% of your creditors accept, then the IVA will be approved. After this you will pay one payment to your IP who will take a monthly fee for themselves and distribute the rest of the payment accordingly between your creditors.
An IVA will last for five years and will affect your credit rating. During this time the interest on your debts will be frozen, and if there is any outstanding debt left at the end of the five year it is written off.
The major downside to applying for an IVA is that you are not allowed to apply for credit while it is in place unless your IP specifically authorises it. After the five years are up, the IVA stays on your credit file for a further year so in effect your credit rating is affected for six years rather than five.
The other option is bankruptcy. Bankruptcy is when you do not have enough income leftover after all your expenses have been paid out, so cannot contribute to an IVA. Once you have been declared bankrupt you are normally discharged after a year and all your debts are written off. The equivalent to this in Scotland is known as filing for sequestration which follows the same process.
However, bankruptcy stays on your credit file for a further five years and you will find it extremely difficult to apply for credit during this time.
If you were wondering what are our various solutions as you can’t pay your catalogue bills then you should write out an expenditure list first. Work out how much you earn per month and then subtract anything that is a drain on that income. This is everything from your mortgage and travel expenses to groceries and phone bills.
Once you have a figure of how much is remaining then you see about looking at refinancing solutions:
Anything you can do to try and rectify the situation is better than leaving the problem to build and build. Save yourself a whole lot of stress and look into these options to see which solution would be better for you.
A common concern if you can’t afford your catalogue repayments is can catalogues send bailiffs? The simple answer to this is ‘no’. A catalogue is known as a non-priority debt, much like a credit card or loan, and as such they have the same powers as these other companies. They can send you intimidating letters and phone calls but they do not have the power to send bailiffs to your home. Only the courts have the power to do this.
Your catalogue can apply for a County Court Judgement (CCJ) to be brought against you to retrieve their money but only the court can implement it. If you do not keep up with payments to your CCJ then and only then will the court, not the catalogue, have the authority to send in bailiffs.
If you have tried the alternatives but you are not in a position to refinance you may wish to know how to write off your catalogue debt.
This option should not be taken lightly as it involves going insolvent. Insolvency means you are unable to pay for the debts that you have acquired and have ceased making payments as a consequence. This involves you entering into a legal contract whereby you use an Insolvency Practitioner to act on your behalf to come to some arrangement with your creditors.
This can be done either through an IVA or a bankruptcy if your situation is perilous. You may succeed in getting some or all of your debts written off but both options will involve your credit rating being damaged. This will last for at least six years and it is highly unlikely you will pass for any credit during this time.
Insolvency should be a last resort, but if you can’t afford your catalogue repayments and have tried everything else then the option is there.
If you are struggling to pay your catalogues monthly balance then you should seek some financial advice. If your credit score is particularly poor then your options may be limited but don’t less this deter you. If you choose to ignore it then it will just get worse, both financially and in the amount of stress it will cause you. There is no shame in seeking help.
Your first call should be to your catalogue company. Explain the situation and ask to be put on an informal agreement with them. If they agree to it then this will allow you to make a reduced payment to them over an agreed length of time. This will hopefully give you enough time to get back on your feet without the need to get debt recovery agencies or the courts involved.
You could try to restructure your debts by applying for a loan with a lower APR that will pay off your catalogue balance. Do not apply for a payday loan - the APR is phenomenal and it will reflect badly on your credit file.
Insolvency is an option if no other avenue of credit restructuring is available to you. However, this will have serious implications for your credit file for a long time.
If you are able to cut back on a few things this will also help. Can you cancel your gym membership and work out at home? Can you make your lunch at home instead of buying it everyday? Is it essential that you have an expensive car when a cheaper one will do the same job? Any little savings like this that you can make will help to clear that catalogue debt. Many people can struggle with these debts after Christmas so maybe see where you can cut down your seasonal spending.
There are a few catalogues in the UK that either don’t carry out a credit check at all, or are more lenient than their counterparts. Please remember that approval is still not guaranteed.The best catalogues for bad credit are:
Catalogue interest rates are the reason that so many people can’t afford their catalogue repayments. They draw you in with opening offers such as 25% off your first order and the lure of being able to pay over an extended period of time interest free.
The real trouble begins once you don’t pay for your goods within that time period and the interest kicks in. Most catalogues have an interest rate from anywhere between 20% and 40% and it is this added balance that causes problems.
The main thing with catalogues is to only put items on your account that you can realistically pay back. Christmas is the busiest time of the year for catalogues as their customers scramble to get their presents, but make sure you can pay for them within the allotted time scale.
If you can’t pay for them within the interest free timeframe, at least make sure you can afford the extra that the interest will add onto your balance.