Credit Card Debt Help & Advice

Debt can feel like a heavy burden but is important to remember there are always options for dealing with your credit cards.

What happens if I can’t afford to pay my credit card debts any more?

Credit card debt is the most common debt in the UK alongside mortgages but that’s where the similarity ends. A mortgage is a priority debt because your home is at risk if you do not maintain repayments, but credit cards are unsecured non-priority debts and this gives you more room to negotiate if you are struggling to make payments. Your lenders know this and will be keen to see you manage all your priority and non-priority debts affordably so they continue to receive regular payments from you.

As an unsecured non-priority debt, if your lender wants more powers to recover what they are owed, they have to pay upfront for time-consuming County Court proceedings to obtain status. They might actually do so because ultimately they can recover the costs and interest from you, but they weigh up each person’s circumstances to decide if it is worth the outgoings and involvement first. If you offer them a regular manageable monthly repayment that they can see is fair in relation to your other debts then that is usually easier for them than court proceedings.

Am I liable for my spouse or partner’s credit card debts?

The main cardholder is fully responsible for any debt on a card in their name including spending by an additional cardholder on the account. So any credit cards taken out by your spouse or partner are not your responsibility. This is the case even if you were a secondary cardholder on their account.

This does mean that the reverse is also true though. If you made your spouse or partner a secondary cardholder on your credit card then you are unfortunately liable for everything that they spent on that account, not them.

Can I take a payment holiday on my repayments if I’m in financial difficulty?

Lenders are required by the Financial Conduct Authority (FCA) to respond sympathetically when a borrower tells them they are in financial difficulty and one of the ways they often do this is by offering a payment holiday.

Whilst these payment holidays can offer a solution to short term difficulties, like when you unexpectedly need to replace your washing machine, even lenders themselves will tell you they are not a long term solution. Often interest is not frozen and, depending upon what is agreed, it could still show as a missed payment on your credit reference file which could impact on your ability to borrow again in the future (see below). If you don’t think you can repay that missed payment quickly then consider your other options.

How long until credit card debt can be written off or forgotten about?

If you do not communicate with your lenders and make reasonable attempts to pay then your debt won’t simply go away and they are within their rights to keep adding interest and charges.
Lenders that aren’t paid often pass debts on to recovery agents known as debt collectors. These debt collectors have the same powers as the lender but not the same public image to maintain, so can be much more aggressive and persistent.

The Limitation Act 1980 only gives a creditor six years to chase an outstanding unsecured debt but working out when this ‘limitation period’ starts is not as simple as counting back to when you last made a payment. The ‘limitation period’ is also affected by the last time you acknowledged a debt. Before you contact your creditors, consider if speaking to a fully regulated debt counsellor or insolvency practitioner could help identify your ‘limitation period’.

How can I pay off thousands in credit card debt?

As it says on your credit card statements, even if you make every minimum repayment each month, it can take a long time to repay thousands in credit card debt. 26 years & 8 months is the time it’ll take someone to pay off the average UK credit card debt, by making minimum repayments. Any balance left is rolled over each month and interest is accrued. In addition, any missed payments add charges making it feel like an impossible hole to dig yourself out of.

There are many ways out of that hole and the steps are simpler than you would think. Use the DebtBuffer AI chatbot to help you identify the most suitable way to approach your lenders with a fair, manageable monthly repayment. It can create personalised letters for you to send to your creditors or connect you with a fully regulated debt counsellor or insolvency practitioner to help you make an informed choice about how to start reducing your credit card debt.

Will credit card debts affect my credit rating?

Any credit you take out is recorded on your credit reference file, commonly known as your credit rating. Your lenders record how much you owe, whether you have paid off a debt and whether you are making payments on time.

The next lender you ask to borrow money from will use this information along with your income, living costs and other factors to make a decision about whether you’re an acceptable risk. Every lender has a different definition of what’s acceptable and that definition can even vary between their various products. The level of risk you represent, based on your credit rating, will affect how much they will lend and the interest rate you pay.

Can I get a mortgage with credit card debt?

If a bank or building society lends money for a mortgage they have the comfort of knowing that their debt is secured against an asset, i.e. the house, but they still want reassurance that lending to that person will be a safe investment. They want to know they will receive regular payments without the added expense of having to employ debt collectors, solicitors or bailiffs to repossess the house to be repaid.

A mortgage lender will look at a person’s credit rating when making that decision to lend, alongside other factors. If there are credit card debts outstanding and they can see you are not reducing the balance or making payments, then this will make them reluctant to lend. If they do decide to lend then you are likely to pay a significantly higher interest rate and be asked for a much larger deposit. Coming to agreements with your lenders about your repayments and sticking to them can help show future lenders, including mortgage companies, that you take your responsibilities seriously.

Can I remortgage and consolidate my credit card debts?

When you consolidate debts into your mortgage you may benefit from your overall minimum monthly repayments going down but there are other factors to consider too. There can be upfront costs involved, such as revaluing your home, administration fees and land registry searches. Your lender may add these to the mortgage so you don’t have to pay upfront but that increases the amount of debt and therefore the total amount of interest paid over the life of the mortgage.

The value of your home can rise but it can fall too. By consolidating more debt than you used to buy the house initially, you could find yourself in a position where the debt secured against your home is more than the value of the property itself. This is known as being in negative equity and can leave you unable to sell your home.

It is very important to remember credit card debt is unsecured. There is no asset, such as your home or your car, tied directly to it and your lender has no power to simply take something away from you if you cannot afford your minimum repayments. This makes it easier to negotiate affordable monthly repayments with your credit card company.

As soon as you consolidate your credit card debt with your mortgage and secure it against your property your home is at risk if you cannot afford the new repayments on the mortgage. Many mortgages payments are calculated on a variable interest rate and can go up as well as down. If you feel that consolidating your credit cards into your mortgage is a step you are not comfortable to take then you can look at the other options available to you.

How can I get out of credit card debt?

As credit card debts are unsecured non-priority debts you can negotiate with your lender. Your lenders realise this and most will want to come to a sustainable and regular repayment plan with you wherever possible.

There are informal arrangements you can make with your lenders using a budget showing what you can afford and cover letters to all your creditors. These are known as Debt Management Plans (DMPs). DebtBuffer can help create free personalised letters for you to send explaining your circumstances, asking for more time to pay and making an affordable offer of repayment. Remember to make sure you have budgeted enough for your living costs and made arrangements for all your priority debts before allocating any remaining funds to your unsecured creditors in a DMP.

A priority debt is one where something can be taken from you if you do not pay like a mortgage, rent, gas or electricity. Less obvious are those where you could have bailiffs remove belongs or even your liberty. These include council tax, parking penalties and magistrate court fines. This is not a complete list of priority debts, be sure to double-check all your debts carefully.

How can I legally write off my credit card debts?

The AI chatbot can help identify if you might qualify to have some or all of your debt written off through insolvency. There are various forms of insolvency available depending on your circumstances.

Debt Relief Orders (DRO’s) and Bankruptcy write off all of your debt in full for a fixed fee. There are qualifying criteria for these options and your assets are a deciding factor. A regulated debt counsellor or insolvency practitioner can help you make an informed choice whether these options are right for you and the impact they can have on your credit rating.

Between the options of a DMP to repay your whole debt at an affordable rate or a DRO/Bankruptcy to have your full debt written off, there’s an Individual Voluntary Arrangement or IVA.

Through an IVA an insolvency practitioner can help you explain to your lenders that your income does not give you enough to pay what they want and demonstrate what you can afford instead. In return for you agreeing to pay your creditors as much as you realistically can each month for a period of 5 or 6 years, they agree to write off any debt remaining at the end of the term. They also agree to stop debt collectors, court action and freeze interest and charges.

Your lenders get the satisfaction of knowing they are being treated fairly and will be repaid a chunk of the debt. You get an affordable plan that allows you to go back to living your day to day life without worrying that your debt is continuing to go up and a ‘light at the end of the tunnel’ mindset because there is a set date for your payments to end.

If your debt feels like it will never end then why not use the DebtBuffer chatbot now to take control of your debts with personalised contact letters or be connected to a fully regulated debt counsellor or insolvency practitioner who can help you make an informed choice about how to start reducing your credit card debt today.