How to Pay Off Catalogue Debt? 

Are you unsure about how to handle your catalogue debt? Don’t worry; we’ve got you covered. This guide is here to help you understand:

•  The different ways to pay off catalogue debt
•  The impact of catalogue debt on your credit score
•  What happens if you can’t pay your catalogue debt
•  How to deal with debt collectors and bailiffs
•  Where to seek professional advice on debt

We know that having a catalogue debt can be hard – it might keep you up at night, thinking about how to sort it out. This happens to many people. In fact, over 170,000 people visit our website each month to get guidance on debt solutions.

Citizens Advice says that catalogue shoppers who miss payment deadlines get charged very high fees, sometimes more than twice what they borrowed.¹

But you’re not alone in this. There are many ways to tackle your debt, and we’re here to help you find the best one.

How to Get Rid of your Debt

So, you’ve got a catalogue debt that you can’t pay – what now? 

Firstly, don’t panic. You’re not the first person to realise they can’t pay their catalogue debt, and you won’t be the last. There are a number of options you can consider. The crucial thing is that you do something, even if that’s just to let your catalogue know that you can’t meet the repayments in full at the moment. 

You might need to make an order of priority for your debts if you have more than one.

If you are in a similar position to this forum user, you might benefit from speaking to a debt charity. Their advisors will be able to walk you through your options in detail and find the best course of action for you.

Informal agreement

In many cases, it’s possible to get an informal agreement in place with your catalogue which reduces the monthly cost. They may be willing to freeze the interest charges and suspend late payment fees to help you clear what you owe. 

Your account will be suspended if you’re on a repayment plan so you won’t be able to carry on ordering from the catalogue. But you will be clearing the debt that you owe, and that’s the most important thing. 

One word of caution: don’t be pushed into agreeing to make repayments that you can’t really afford. If the catalogue won’t accept what you’re able to offer, there are alternatives you can consider.

Debt consolidation

Having lots of small debts can be harder to keep track of than one single payment. It can also work out to be more expensive with multiple charges and fees. 

If your credit rating is reasonable, you may be able to consolidate all your unsecured debts, including your catalogue. This means that you clear everything you owe leaving one repayment every month which should be lower than all of the individual payments together. 

Debt consolidation loans can work well providing you don’t run up the same debts again. The risk is that you consolidate your debts, and then order more from the catalogue leaving you with both the loan payment and the new catalogue debt to repay.

If you go down this route, you’ll either need to be disciplined enough to not order any more, or close your account.                                                                                                                                                            

Balance transfer

It’s not as easy to find 0% balance transfer credit cards as before, but there are still some offers out there. If you qualify, a balance transfer can be an easy way to reduce your monthly commitment. With no interest to pay, it’s much quicker to clear the balance and avoid the problem of persistent debt. 

For this solution to work, you’ll need to be able to repay the debt during the 0% interest period. Before taking the plunge, add up your income and outgoings so you’re sure you can afford to clear the debt in time. 

Similar to a debt consolidation loan, you’ll also need to be disciplined enough to avoid racking up the catalogue debt again.  

Reduced lump sum settlement

Your catalogue company will be keen to resolve the debt. If it’s been a while, they may be willing to consider a reduced lump sum settlement. Your account will still be suspended but the payment will make the debt go away for good. 

IVA/Bankruptcy

If you’re unable to come to an agreement with your catalogue in an informal way, you might want to consider whether an IVA or bankruptcy would be a potential solution. These are formal debt solutions and won’t suit everyone’s circumstances. 

You can read more about IVAs and bankruptcy here. 

We can’t emphasise enough that there’s not a single solution which will fit everyone’s situation perfectly. Getting advice from a debt charity such as Step Change might help you to decide which option would be best for you. 

What Happens If I Can’t Pay?

If you miss any of your payments, the catalogue will initially just ask you to clear the arrears and catch up. 

If you’re not able to do this, your account will be closed which means you won’t be able to buy anything else. The catalogue will mark your account as in default, and this will be reflected in your credit record. 

What happens next depends on the amount you owe and the internal procedures of the specific catalogue. Typically the debt will be passed to a debt collection agency but if the amount is significant, court action may ultimately be taken against you. 

Can I Get a Debt Solution?

If you have catalogue debts that you are struggling to pay, you might want to consider a debt solution. 

There are several different debt solutions available in the UK, so I recommend speaking to a debt charity as soon as possible. Their advisors will be able to look at your finances in detail and help you work out which debt solution will work best for you.

I have linked a few charities that offer these advisory services for free below.

Debt Management Plan (DMP)

A DMP is an informal debt solution that lets you pay off your debts via a single monthly payment.

Because it is informal, it is not legally binding so you are not tied into a DMP for a minimum number of payments.

Individual Voluntary Arrangement (IVA)

An IVA is a formal agreement between you and your creditors. You agree to pay a monthly sum that is distributed amongst your debts, and your creditors agree not to contact you during your IVA.

IVAs typically last for 5 or 6 years, and any outstanding debt is wiped off when it ends.

Keep in mind that IVAs are not suitable for everyone. You need to owe several thousand pounds to more than one creditor to be eligible. You also need to demonstrate that you have some disposable income every month.

Trust Deed

IVAs are not available in Scotland. Instead, you will need to opt for a Trust Deed.

Trust Deeds work in the same way as an IVA – you pay an agreed sum each month that is shared amongst your creditors, they can’t contact you, and any leftover debt at the end of your Trust Deed term is written off.

Debt Relief Order (DRO)

A DRO is a good option for those facing financial hardship with no assets and little income.

For 12 months, you make no payments, but your creditors freeze your interest and don’t contact you.

If your finances haven’t improved during this year, you may be able to write off your unsecured debts.

Bankruptcy

If you have debts but no realistic possibility of ever paying them off, you may need to declare bankruptcy.

Bankruptcy has an unfair stigma attached to it as it may be your only way of getting a financial fresh start. That said, it is a serious financial situation that should not be taken lightly.

Sequestration

Sequestration is the Scottish version of bankruptcy.

If you have little income and no valuable assets, you may be able to apply for a minimal asset process bankruptcy (MAP). A MAP is a quicker, cheaper, and more straightforward version of sequestration, so worth considering.

Can You Get It Written Off?

To get any kind of debt written off, you’ll have to think seriously about your debts and whether you’re able to reasonably come to an agreement to repay what you owe. 

If it’s not practical for you to be able to repay your debts, insolvency proceedings might be the answer. This could come in the form of either an IVA (Individual Voluntary Action) or bankruptcy. 

Going through the formal process of an IVA or bankruptcy will ultimately write off your catalogue debts. However, this shouldn’t be seen as an easy option as both will have a significant impact on your credit rating for a six year period. 

You can write to your creditor and explain your situation and see if they are willing to write off your debt. I have several free letter templates that you can use – including a request to pause action on your account, negotiate about your debt, and make a settlement offer.

Keeping in regular contact with your creditor might be enough to prevent them from selling your debt to a collection agency.

» TAKE ACTION NOW: Fill out the short debt form

Can You Receive a CCJ?

It is possible for a catalogue debt to result in a CCJ but there are lots of stages before it reaches that point. If you are proactive in managing your debt, there’s a very good chance that you’ll be able to avoid a CCJ.

Catalogues prefer to avoid legal action wherever possible. It involves extra work, extra expense and it doesn’t guarantee they’ll get their money back without further enforcement action. Therefore, if you talk to your catalogue about what you can afford to pay, there’s a very good chance they’ll be willing to set aside debt collection and formal action. 

However, if you don’t get an agreement in place for your catalogue debt, they may apply for a CCJ.

A County Court Judgement (CCJ) is an order from a judge that states you have to pay the debt. This means that the court agrees with your creditor, and you owe the money.

Your judgement will include the following:

• How much you owe
• How you should pay
• Who you should pay
• Your deadline to pay.

Unless you pay within one month of the CCJ being issued, it will be recorded in the Register of Judgements, Orders and Fines for 6 years. If you pay off your debt within these 6 years, you can request that your judgement is marked as ‘satisfied’ on the register.

To do this, write to the court with proof that you have paid off the debt in full.

If you manage to pay within one month of the CCJ being issued, the judgement will not be recorded in the register. You will need to write to the court explaining that you have paid and provide proof.

CCJs are also visible on your credit file for 6 years. This will make it almost impossible for you to get credit during this time.

This is because companies use your credit file to see if you are a ‘high-risk’ customer – someone who might have difficulty paying their bills on time. If you have a CCJ, you have had such trouble paying back your debt that someone had to go to court about it.

Understandably, companies are going to be reluctant to give you credit!

After 6 years, it is no longer visible on your credit report and you should find it easier to get credit again.

Will Bailiffs Come?

If you’re struggling with catalogue debts, your first concern may be whether a bailiff is going to be knocking on your door. While catalogue debt needs to be dealt with, it’s not classed as a priority debt. This means the catalogue can’t arrange for bailiffs to pay you a visit. 

However, this doesn’t mean that catalogue debt can’t eventually end with enforcement action, and this could include a bailiff. If you don’t arrange a repayment plan with the catalogue, and stick to the agreement, they may apply for a CCJ. Failure to repay a CCJ can lead to bailiffs visiting. 

You don’t need to worry about bailiffs right away but it is important to deal with the debt to prevent a potential visit further down the line.

Can You Go to Prison for an Unpaid Debt?

No, don’t worry. It’s not nice having unpaid debts hanging over you, but you won’t end up in prison due to an unpaid catalogue bill. 

This type of debt is known as non-priority which means it’s not a criminal offence to default. Agreeing a repayment plan can help you to clear your catalogue debt, but you should only do this if you’re able to meet your priority debts first.

Examples of priority debts that should be paid first include:

• Mortgage or rent
• Utility bills
• Council tax
• Secured loans
• Court fines
• Taxes 

You should make sure you’re able to pay all of the above before beginning to think about how much you can pay towards your catalogue debt. 

References

1. Citizens Advice – Catalogue customers hit hard for missing interest free deadlines