How do I write off catalogue debt?
Catalogue shopping has become increasingly popular in recent years. The convenience of buying now and paying later makes it easy to make purchases without the upfront costs.
However, this type of consumer credit also comes with the risk of debt accumulation. If you’ve fallen behind on catalogue debt and are struggling with repayments, you may be wondering: how do I write off catalogue debt?
In some circumstances, it may be possible to have catalogue debt written off, but there are potential consequences to consider. Read on to learn everything you need to know about writing off catalogue debt in the UK.
How does catalogue debt work?
Catalogue debt refers to balances owed on items purchased through “buy now, pay later” shopping catalogues. This type of revolving credit allows you to receive goods upfront without paying the full amount straight away. Instead, you spread the costs over a set period, often 12 months.
Many catalogues offer interest-free introductory deals as an incentive, meaning you can make payments over several months with zero interest. However, if the balance isn’t fully cleared by the end of the promotion, hefty interest rates are likely to kick in. Any outstanding balance left after the 0% period ends can rapidly accumulate interest each month.
It’s easy to fall into negative spirals where you keep spending, or only make the minimum payments, causing debt to snowball out of control. Struggling to keep up with repayments is a clear sign that your catalogue debts are becoming unmanageable.
Can catalogue debt be written off?
When debts are written off, it means that you are no longer legally responsible for repaying the outstanding balance. Your creditors cannot continue chasing you for the sums owed.
Catalogue debts are not written off automatically if you can’t pay, though the debt may become statute-barred if your creditor waits too long to take action to recover it. In England, Wales, and Northern Ireland, this can happen if 6 years have passed since:
- You last wrote to your creditor acknowledging the debt.
- You last made a payment towards the debt.
- The earliest date the creditor could have taken court action.
If your catalogue debt becomes statute-barred, your creditor can no longer pursue the debt through legal action. However, it is not written off – you still owe the money, and your creditor can still contact you to ask you to pay.
The only way to write off catalogue debt completely is through a formal insolvency solution. This may be an option if your debts have become completely unaffordable, and you have no way to repay what you owe.
There are three main methods for writing off catalogue debt: IVAs, DROs and bankruptcy.
01. Individual Voluntary Arrangements (IVAs)
An IVA is a contractual agreement between you and your creditors, arranged through a licensed Insolvency Practitioner. It allows you to repay only a portion of debts based on what you can realistically afford.
Repayments are usually made monthly over a set period of 5-6 years. Following this, any remaining catalogue debts and other borrowing included in the IVA are legally written off.
To be eligible for an IVA, you’ll generally need to owe at least £6,000 in unsecured debt to two or more creditors and have a regular income allowing you to make monthly contributions.
IVAs allow debt write-offs without needing to pursue bankruptcy. However, it will be recorded on your credit file for 6 years, starting from the date it is approved.
02. Debt Relief Orders (DROs)
DROs provide debt relief if you have low income and little assets and owe less than £30,000 in qualifying debt. If approved, none of your creditors can chase you for payment over the 12-month DRO term, after which outstanding debts like catalogues are written off.
To qualify for a DRO, you must have no more than £75 left each month after priority living costs, less than £2000 in savings and assets, and cannot own your home. DROs also are recorded on your credit file for 6 years from commencement.
Filing for bankruptcy releases you from having to repay unsecured debt, including catalogue debts. However, it can have serious consequences.
To be eligible for bankruptcy, you must be unable to repay your debts, and you must owe more than the total value of your belongings.
Bankruptcy can clear your slate entirely, but any non-essential assets you own – including your home – may be sold to repay your creditors. Details of your bankruptcy are publicly available. Bankruptcy will also show on your credit credit file for 6 years from the date you became bankrupt.
Alternatives to writing off catalogue debt
Although completing an IVA, DRO or bankruptcy means that outstanding catalogue debts can be written off,, the impact of formal insolvency processes on your credit file and financial life should be considered.
It’s advisable to explore all other debt repayment and relief options before pursuing full debt write-offs. Potential alternatives include:
- Speaking to your creditors - Explain your financial situation openly and request reduced or paused repayments until you can get back on track. They’re not obligated to accommodate you but may do so if you show a willingness to repay.
- Full and final settlement offers - Your creditors may accept part payment of the total debt as a lump sum in order to have the remainder cancelled. However, they are unlikely to write off everything.
- Consolidation loans - If you owe multiple catalogue debts, you could combine them into one new loan at a lower interest rate. This leaves you with only one monthly payment, but it does require further financing. Those with poor credit scores may struggle to be approved for favourable rates.
- Debt management plans (DMPs) - This is an informal agreement which allows you to make reduced payments to your creditors without resorting to legal insolvency processes.
The right choice for you will depend on your unique financial circumstances, so it’s important to explore your options and consider the pros and cons carefully.
Could a DMP help me pay off my catalogue debt?
If you’re struggling with multiple debts, including catalogue balances, credit cards and loans, a debt management plan (DMP) could help. Your DMP provider will work with you and your creditors to create an affordable repayment plan, typically with reduced interest rates. You’ll make one consolidated monthly payment to the DMP provider, allowing you to repay your debts in full over an extended period.
DMPs are most suitable if you have regular income to maintain monthly repayments and want to avoid formal insolvency solutions. However, they aren’t right for everyone. Bear in mind that they are not legally binding, and you could end up paying more in total interest over the duration of the plan. Seeking professional debt help is advisable to assess if a DMP could benefit you.
Take control of catalogue debt with DFH
If you’re ready to take control of your catalogue debts and other financial obligations, the team at DFH Financial Solutions may be able to help. Our experts have years of experience providing debt advice to people across the UK. We can advise you on the best debt solution for your unique situation.
To find out if a DMP could help you, apply online today. Let DFH Financial Solutions guide you.Apply For Debt Help