Your questions about debt during coronavirus, answered by StepChange debt charity

Struggling to keep up with repayments because of coronavirus?

StepChange is the largest debt advice charity in the UK, helping over 650,000 people every year to deal with their financial worries. We provide free, impartial debt advice and a wide range of solutions, as well as budgeting support and coronavirus-specific help. 

Over the past year, we’ve seen just how enormous the impact of the pandemic has been on the nation’s wallets. For some, lockdown has been a great opportunity to cut costs and boost savings, but for others, working reduced hours, being on furlough or being made redundant have led to a loss of income and a worsening debt problem. 

If that sounds familiar, it’s important to know that you’re not on your own, and that help is available. Over six million people visited our website in 2020 to find help and information on dealing with debts. Here are the answers to some of the questions our clients have been asking. 

Whether you’ve lost your job, been on furlough or had clients cancel work, you might be living on much less money than usual. And even if you’re still getting your normal income, it’s natural to worry about the longer term impact of coronavirus on your cash, particularly if you were already dealing with debts. 

If you’re worried about debt and you’re on a reduced income, it’s important to tell your creditors that your situation has changed. It can be daunting, but most are willing to be flexible and will try to support you where they can.

We’d also recommend putting together a budget if your situation has changed. This will help you understand where your money is going, and spot any opportunities to cut back.  

Our guide to living on a reduced income can help you deal with any immediate worries, take control of your finances and feel more confident about your financial future. You can find it here.

This all depends on your lenders, but throughout the coronavirus pandemic many have agreed to:

There may be other options depending on your circumstances, but the most important thing is starting the conversation with your lenders and letting them know about your situation. 

Coronavirus hasn’t just hit the nation’s finances hard – it’s had a huge mental health impact too. In 2020, over 60% of new clients contacting us reported experiencing anxiety or depression. If you’re struggling with your mental health, or any other circumstance that makes dealing with money more difficult, your creditors may be able to offer some additional support. 

If you use Monzo, we've explained how we could help on our website.

If you’re struggling financially you should make sure you’re getting all the income you’re entitled to. Our free benefits checker tool can help you find out if you’re entitled to any extra benefits.

You may be eligible for SSP if you’ve been affected by coronavirus and have to self-isolate, or if you’re caring for someone you live with who’s showing coronavirus symptoms and has been told to self-isolate. 

SSP is £95.85 per week and it can be paid for up to 28 weeks, but you have to earn at least £120 a week to qualify. If you’re not eligible for SSP, there are other options like Contributory Employment and Support Allowance and Universal Credit that you might be eligible for.

Find out what benefits you might be entitled to on our website.

If you’ve completely lost your income and you don’t have money to feed yourself or pay for basic essentials for you and your family, there’s advice on how you can get support on our website, like accessing food banks, grants, and getting emergency funding from your council.

Arrears

Arrears are another term for missed payments. If you miss one month’s payment for a bill or debt, you’ll be in arrears by one month.

Consolidation

A consolidation loan is when you replace two or more loans with a new single loan, often with a lower monthly payment and a longer repayment period. It’s also known as debt consolidation.

Creditors

A creditor is a person or a company (like a bank) who lends you money.

Debt solution

There are various options that can help you deal with debt, including solutions to help you repay your debts like a debt management plan or debt consolidation, and insolvency solutions such as bankruptcy. 

There are many different debt solutions and a certain solution may not help with your particular situation. You can find out about the different debt solutions available on our website.

Default notice

A creditor issues a default notice when the terms and conditions of a credit agreement are broken, for example, if you can’t pay your contractual payments.

Forbearance

This is when a lender agrees to let a borrower temporarily postpone payments.

Interest

A charge for borrowing money, or a reward for saving money.

Insolvency

A legal process to get your debts written off. Insolvency solutions include bankruptcy, protected trust deeds and debt relief orders.

Secured loan

A secured loan is a loan that’s attached to something, for example a mortgage. If you miss payments to a secured loan, then your lender could try to take ownership of the thing it’s secured against, in this example, your property.

Unsecured loan

An unsecured loan isn’t attached to anything. These are normally called ‘personal loans’. 

If you’ve never been in debt before, there’s a good chance you won’t have heard of StepChange. 

Right now, we know people searching online for help on how to deal with money problems. But unfortunately, there are imposters out there pretending to be StepChange. They’re trying to hoodwink people into thinking they’re dealing with a legitimate debt charity, when in fact they’re looking to make money out of people in debt.

So we’d ask everyone to spread the word that we're here to help, and it’s important to go straight to our website, www.stepchange.org. Watch out for advertisers with similar names who might be trying to take advantage of you.

You can call us on 0800 138 1111 Monday-Friday, 8am-8pm and Saturday 9am-5pm.