Credit cards and loans
Struggling with card or loan payments is common. Here’s what you could do now.
What this kind of debt is
Credit cards, personal loans and overdrafts are unsecured debts, not tied to something you own like your home. They’re usually non-priority debts, because falling behind has less immediate consequences than with council tax or rent.
Non-priority doesn’t mean unimportant: missed payments are recorded and lenders can take further action.
What can happen if you fall behind
Lenders usually follow a set order, and talking to them early may give you more options.
Missed payment marks
A missed payment may be recorded on your credit file. Several in a row may lead to a default notice.
Charges and interest
Interest and fees may keep adding up, so the balance can grow even while you pay.
Calls and letters
The lender may pass the debt to a collection firm or sell it. You still have the same rights, and the firm must treat you fairly.
Court action
In England and Wales a lender can apply for a county court judgment (Scotland and Northern Ireland use different orders). If it isn’t paid, further steps may follow, such as taking money from your earnings.
What you can do now
List what you owe
Write down each lender, the balance, the rate and the minimum payment. Seeing it together makes the next step clearer.
Work out your budget
Add up your income and essential costs. Our budget planner can show you what’s left, if anything.
Pay priority debts first
Rent, mortgage, council tax and energy usually come before cards and loans, because the consequences are more serious.
Tell your lender you’re struggling
Lenders are expected to treat people in difficulty fairly. You could ask them to pause or reduce payments or interest for a time, though they don’t have to agree.
Answer court papers
If you receive a claim form, reply by the date on it. Ignoring it can lead to a judgment against you without your side being heard.
When to get help
Talk to an adviser if minimum payments take most of your income, you’re borrowing to repay other borrowing, or you’ve had a default notice or court papers.
Signs it may be time to talk to someone
- You are using one card or loan to pay another.
- The minimum payments are more than you can afford.
- A default notice, collection letter or claim form has arrived.
- You are losing sleep over the amount you owe.
Free, impartial advice is available from MoneyHelper, StepChange and National Debtline. MoneyHelper
General information, not advice. Rules can differ in Scotland and Northern Ireland.
Want to talk it through?
Answer a few questions and an adviser from one of our partner debt firms can call you. You don’t have to go ahead.