If you have received a strongly-worded letter from a debt collection agency and you aren’t sure what to do, don’t worry. Some reports say that over 27 million people in the UK are dealing with some sort of debt problem, so you’re far from alone.

One of the most common kinds of debt in the UK is what is known as a catalogue debt. Debt charity and financial information resource Citizens Advice reported that they receive a huge amount of calls from customers about dealing with catalogue debt. 

We’ll take you through what to do if you have a catalogue debt, and offer up a step-by-step solution.

An introduction to catalogue debt

One method of paying for items from large companies and shops is via what is known as home shopping catalogues. These effectively permit you to purchase lots of different items but not have to pay the big lump sum that you’d inevitably have to pay.

Instead, you enter into an agreement where you pay off the items in small amounts. Sounds like a great system, doesn’t it? Well, it can lead to a financial situation that you may not actually be able to control. 

One seemingly small purchase can quickly balloon into a large expense, as catalogue debt often comes with really high interest rates. Catalogue debts come hand-in-hand with what is commonly known as ‘have now, pay later’ schemes. 

Owing to the fact that you pay back these debts over an extended period of time, they can often come back to bite you during times of hardship.

Payments towards catalogue debt

You’ll usually enter into a monthly payment schedule, paying off your catalogue debt in instalments. Paying this will help you clear the balance, however usually you will get asked to only make a minimum payment every month. 

Paying this minimum amount often won’t cover the interest they add onto your payments though, and dealing with this debt can be tricky and hard to manage. There’s also the risk of your account going into what is known as ‘persistent debt’ as well.

Persistent Debt

Persistent debt is when you’ve been paying more in interest, fees and charges than you have to paying off your catalogue debt. The original creditor will send you a letter about this in regards to your catalogue debt.

Often, the best way to get out of persistent debt is to pay a larger amount to try and reduce the balance. A one-off payment won’t take you out of the red, unfortunately. You’ll want to try and arrange to have larger regular monthly payments or at least an amount that is greater than the minimum payment. 

Sometimes, often after 36 months of payments towards your catalogue debt, the company may offer a more affordable payment plan, and could even suspend the interest and charges on your account. 

This might involve your account being suspended though, which could seriously affect your credit rating.

Cancelling catalogue purchases

If you’ve ordered any goods from home shopping catalogues, and you’ve had second thoughts about things, or maybe you’ve realised that it’s not worth falling into catalogue debt, you have a right to return your items.

You can also cancel your order at any time, but you’ll have to return your items and potentially cover the postage. This will be much cheaper than having to grapple with catalogue debt, however. 

Settling your catalogue debt

So now you have the basics about catalogue debt, you may be wondering how you might go about paying it off. If you can’t afford to pay off your catalogue debt, you might want to consider some of the following options.

Informal agreement

This is when you inform the company who you owe the catalogue debt to about your inability to meet the required payments. They may agree to a low but regular payment while you figure out what to do next. 

This isn’t a legally binding contract, however, and the creditor who supplied the catalogue debt doesn’t have to agree, and they can opt-out at any time.

Consolidation Loan

This is when you apply for a loan elsewhere that is large enough to cover your catalogue debt and any other debt you might have, all into one manageable monthly sum. 

This is only a good idea if you have lots of small debts, as it can bring your monthly payments down significantly. It may extend the time you pay the debts back though, so think carefully before signing up to a consolidation loan.

Balance transfer

Lots of credit cards out there today offer 0% APR for a fixed period of time. By switching creditors to pay your catalogue debt, you could end up saving a small fortune, as most catalogue APR’s vary between 20% and 40%. 

Before doing this, it’s worth thinking really carefully about your incomings and outgoings, as you’ll also eventually have to pay off this credit card too.

Paying a larger amount in one go

While this may not be a viable option for everyone, it can really help you out and get you out of the red quite quickly. Contact your original creditor and see if they would be willing to accept a one-off lump sum in order to clear your account and pay off a wedge of your catalogue debt. 

FAQs

Below, we’ll go through some of the more commonly asked questions about catalogue debts.

Will I have to deal with bailiffs?

This is a common concern with any sort of debt, but as a catalogue debt is only classed as a non-priority debt, the original creditor cannot involve bailiffs. 

Can the creditor take me to court over my catalogue debt?

Yes. The original creditor could apply for a County Court Judgment (CCJ) to be used against you in order to try and get their money. While the original creditors may not have the power to use bailiffs, the CCJ do, so make sure that you keep up with your payments.

Where can I get advice?

There are many different websites that offer free, confidential financial advice, with experts available around the clock to answer any questions you might have about your catalogue debt, and offer advice in how to manage your finances successfully and hopefully pay off your catalogue debt. The three most recognised websites for advice are:

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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