What if I can’t pay my debts because of coronavirus?
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Turn an unmanageable situation into one you can cope with. See if one of our 3 tips can help you.
In part one we looked at how you could get the interest frozen on your debts simply by asking your lenders if they’re willing to do it. In this part we’ll look at two further ways of getting the interest frozen on your debts, so let’s crack on with solution number 2.
1. Think about a debt solution
If you think you’re not going to be able to manage your debts, even with a freeze on interest, it might be time to start thinking about a debt solution. This is because most debt solutions will involve the interest on your balances being frozen and can also mean that your monthly repayments as reduced as well. For example, a Trust Deed, IVA or DRO would freeze interest on your debts while you're repaying them at a manageable rate.
Entering a debt solution is a big commitment, though – and it's only an option if you really can't afford to repay your debts as you originally agreed. It'll also come with downsides, like the effect on your credit rating.
2. Get a 0% credit card
You may have heard about balance transfer credit cards that let you move all your credit card debts onto them, and won't charge any interest on that balance for an agreed period of time. This can be from as little as 6 months, right up to over two years. If you do this, make sure you make a note of when the interest-free period ends, so that you can prepare for the added amount each month, or find an alternative solution to use. Do bear in mind that there may be fees for transferring your balance onto a balance transfer card.
However, if you’ve already started to default on your payments, and that’s been noted on your credit file, it’s likely that this won't be an option as your credit rating is likely to be poor. Lenders are very careful about who they lend to these days, and if you've had problems repaying debts in the past, you might find that you can only get a card with a high interest rate – which defeats the object – or that you can't get one at all.
So, there you have it, three potential ways to try to get the interest frozen on your account. If these fail, or you’re not comfortable speaking to your lenders, why not get in touch with one of our debt advisors. Talking to an expert about your situation can make it all a lot less frightening – and help you figure out the best way to tackle your problems. Use the ‘contact us’ buttons on the left to get in touch.
by Shelley BowersBack to blog home