Step 4 Dealing with your non-priority debts

Interest and bank charges

If you are trying to make an arrangement to repay an overdraft, you should ask the bank or building society to stop the charges and interest, so that the amount you pay reduces the debt. If the staff at your local branch are not able to agree to this, contact the regional or head office of the bank or building society and ask them to agree to do so. 

The Standards of Lending Practice - Business Customers

The Standards of Lending Practice – Business Customers sets out how banks, building societies, credit card providers, charge card providers and their agents should treat business account customers when they have financial difficulties. Under the standards, your lender should:

  • give you support and fair treatment;
  • not harass you or put you under undue pressure when discussing your problems;
  • consider any information that you provide when looking at solutions for the debt;
  • offer solutions that do not make your situation worse; and
  • support your plan to turnaround your business if they believe it has a good chance of working.

For more information, contact us for advice.

The Standards of Lending Practice - Personal Customers

The Standards of Lending Practice - Personal Customers sets out how banks, building societies and credit card providers and their agents should treat personal account customers when they have financial difficulties. Under the standards, your lender should:

  • give you support and fair treatment;
  • not harass you or put you under undue pressure when discussing your problems;
  • show that they have an understanding and an awareness of your issues;
  • help you to develop an affordable and appropriate plan to manage your situation;
  • give you time to assess your options and refer you for free debt advice when it is clear that this would help you to sort things out; and
  • consider freezing or reducing interest and charges.

For more information, contact us for advice.

Voluntary charges on your home

Warning:

before you agree to a voluntary charge

If you are asked to agree to a voluntary legal charge either by one of your creditors, or if your partner asks you to sign an agreement to a legal charge on your home, you must get legal advice first. Contact us for advice.

If you have a large overdraft or a personal or business loan, you may be asked to agree a voluntary legal charge on your home in return for reduced payments. This would mean that the debt would be secured on your home and you could then lose your home if you didn’t keep up the payments. Banks will sometimes ask you to agree to a legal charge, which means any future borrowing or overdraft you have with the bank is also secured on your home.

Secured overdrafts

Warning:

consolidation loans

Beware of adverts in newspapers and on television offering loans to clear all your debts (often called ‘consolidation loans’). They can be very expensive and will put your home at risk. Contact us for advice.

You may have a bank overdraft secured on your home. The interest charges can be high, with no fixed monthly instalment to pay. Sometimes, the bank will secure all the money you owe them now, and all the money you may borrow from them in the future, on your home. This is called an ‘all monies charge’. This usually applies to business lending such as business loans and overdrafts. If the bank takes you to court, it may be difficult to suspend a possession order to pay off the overdraft or an all monies charge in instalments. If you have an overdraft secured on your home, contact us for advice.

If your bank is asking you to agree to secure an overdraft on your home or wants you to sign an all monies charge, contact us for advice.

Complaints

See our fact sheet:

Complaining about your lender

Banks should have a complaints procedure under the Standards of Lending Practice - Business Customers and the Standards of Lending Practice - Personal Customers and they should make the procedure public. If you have a complaint, you need to follow your bank’s complaints procedure. If you are not satisfied with how they have dealt with your complaint, you may be able to complain to the Financial Ombudsman Service. They can only deal with certain types of complaints. For information, contact the Financial Ombudsman Service directly.