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Morses Club in Administration – What does this mean for you?

Scott Nelson MoneyNerd Janine Marsh MoneyNerd
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Scott
Scott Nelson MoneyNerd

Scott Nelson

Debt Expert

Scott Nelson is a renowned debt expert who supports people in debt with debt management and debt solution resources.

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&
Janine
Janine Marsh MoneyNerd

Janine Marsh

Financial Expert

Janine is a financial expert who supports individuals with debt management, cost-saving resources, and navigating parking tickets.

Learn more about Janine
· May 23rd, 2024
Could you legally write off some debt? Answer below to get started.

Total amount of debt?

For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.

For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.

Featured in...

For free & impartial money advice you can visit MoneyHelper. We work with The Debt Advice Service who provide information about your options. This isn’t a full fact-find, some debt solutions may not be suitable in all circumstances, ongoing fees might apply & your credit rating may be affected.

Are you wondering why Morses Club has gone into administration? You’ve come to the right place! Every month, over 170,000 people visit this site seeking advice on debt solutions.

In this article, we’ll address the following questions:

  1. Why has Morses Club gone into administration?
  2. What does Morses Club closing down mean for you?
  3. What is the impact on Morses Club customers’ credit scores?
  4. What should you do next?

Dealing with debt can be quite concerning, and it’s common to feel unsure about seeking help. In fact, Citizens Advice revealed that 60% of adults facing financial difficulties hesitate to seek assistance.1

If that’s your case, don’t worry — you’re not alone. We’re here to help you figure things out.

Could you legally write off some debt?

There are several debt solutions in the UK, choosing the right one for you could write off some of your unaffordable debt, but the wrong one may be expensive and drawn out.

Answer below to get started.

How much debt do you have?

This isn’t a full fact find. MoneyNerd doesn’t give advice. We work with The Debt Advice Service who provide information about your options.

Why has Morses Club closed?

Morses Club was closed down, along with its subsidiary (Dot Dot Loans), on the 17th of November, 2023. 

Morses Club and its subsidiary, Dot Dot Loans (also known as Shelby Finance Ltd.), were the leaders in the lending industry, providing thousands of people around the UK with ‘quick’ doorstep loans.

Many saw the company as a solution to the debt during the cost-of-living crisis as these loans could help tide over any outstanding payment .

But these doorstep loans came with very high-interest rates and a huge risk for both the borrower and, ultimately, the lender. 

Affordability Claims Causing Morses Club’s Downfall:

With the ridiculously high-interest rate of 343% APR on a one-year loan and an average of 1590.93% interest rate for a 26-week loan, Morses Club and its subsidiary relied on people who were already in a vulnerable situation to take on these interest rates to pay off upcoming bills they were struggling with. 

However, Morses Club didn’t take into account that when people took on more than one of these loans, they could also make claims to get out of their debt with their company – known as an affordability claim

» TAKE ACTION NOW: Fill out the short debt form

According to StepChange, a loan company should ‘take steps’ to ensure that you can pay any borrowed money back through an affordability check.

They go on to say, ‘If they lend you more than you can afford to repay, you can make a complaint against them for irresponsible lending’. 

Customers who repeatedly borrowed money from Morses Club were more likely to win these affordability claims because the necessary checks weren’t taken to ensure that these borrowers could realistically pay the money back.

This eventually led to the downfall of the lender giant. 

How a debt solution could help

Some debt solutions can:

  1. Stop nasty calls from creditors
  2. Freeze interest and charges
  3. Reduce your monthly payments

A few debt solutions can even result in writing off some of your debt.

Here’s an example:


Situation

Monthly income £2,504
Monthly expenses £2,345
Total debt £32,049

Monthly debt repayments

Before £587
After £158

£429 reduction in monthly payments

If you want to learn what debt solutions are available to you, click the button below to get started.

Get started

What does it mean for you? 

There are many people who have found themselves struggling with overwhelming amounts of debt from excessive use of payday loans with high-interest rates, and they need all the help they can get.

How can Morses Club closing down help with this?

Compensation for Morses Club Customers: 

While there is a chance for Morses Club customers to receive compensation for the lender’s closure, it will, unfortunately, be a very small amount of money. 

The claims placed against Morses Club exceed £130 million, but they have only allocated £1.2 million for compensation for those who have been wronged by the company.

This equates to only 0.9p per pound in compensation.

Thousands have already tackled their debt

Every day our partners, The Debt Advice Service, help people find out whether they can lower their repayments and finally tackle or write off some of their debt.

Natasha

I’d recommend this firm to anyone struggling with debt – my mind has been put to rest, all is getting sorted.

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Reviews shown are for The Debt Advice Service.

Impact on Morses Club Customers’ Credit Scores:

There is a bonus for those who have already paid off their Morses Club loans, and are now wondering what will happen to their credit history. 

If you’ve already paid off the loan, then the evidence could be removed from your credit report now that Morses Club has gone into administration.

This means that there would be no remnants of your doorstep loan, and your credit score may improve because of this!

Reduced Debt Payments for Morses Club Customers:

If you are a Morses Club customer who has not yet repaid your loan, then there is still the potential bonus that your outstanding debt could be reduced.

This may apply to those who have submitted affordability complaints against the company and may be owed compensation for the trouble you have experienced.

Instead of being paid out money from the closure, you may receive a reduction in your current debts. 

What should you do next?

  1. First of all, don’t stop paying back the money – you still owe the funds! Stopping payments will negatively impact your credit score. 
  1. Additionally, it is highly likely that a debt collector (Lantern or Lowell Financial) will have bought your debt, and this will still need to be paid back. You should be notified of this by a letter from the new debt owner. 
  1. You can make an affordability claim if you believe you have been wrongly impacted by Morses Club, even though they are in administration. The complaint will still be registered, and you haven’t lost the right to complain about the shutdown company. 

With this complaint, you may be able to either get a reduced debt (if you still owe money), or the mention of Morses Club removed from your credit report.  

Debt Solutions Comparison

As mentioned earlier, it’s likely that a debt collector bought your debt, and you still need to repay it. Therefore, if you’re facing difficulties with the payments, it’s worth considering a debt solution.

I’ve put together this table to help you understand the different debt solutions available and their effects on your credit score and assets.

Debt Solution Description Formality Debt Type Debt Range Legally Binding Impact on Credit Score Asset Risk Monthly Payment Duration Creditor Agreement Required
Debt Management Plan (DMP) Agreement to pay back non-priority debts in one monthly payment. Informal Non-priority debts Any amount
No Yes No Varies Varies (until debt is paid) No (but creditors must be informed)
Individual Voluntary Arrangement (IVA) Agreement to pay back all or part of your debts over a set period. Formal All or part of debts Usually over £10,000 Yes Yes Possible Fixed Fixed period, usually 5-6 years Yes (75% by debt value must agree)
Debt Relief Order (DRO) Freezes debt for a year and be potentially written off. Formal Non-priority debts <£20,000 debt Yes Yes No None during freeze 12 months No (court approval needed)
Bankruptcy Legal status for those who cannot repay debts, potentially writes off debts. Formal Unmanageable debts Any amount, typically high debt Yes Yes High None during bankruptcy Usually 12 months, then discharge No (court process)
Consolidation Loan Taking out a new loan to pay off all existing debts. Multiple debts Based on loan amount Varies Yes Depends on loan type Fixed Depends on loan terms No
Payment Holiday Temporary relief or reduced payments offered by creditors.
short-term financial difficulties Any No Yes Low Reduced or paused payments Break of up to 6 or 12 months, depending on circumstances, payment history, and creditor’s policy. No
Informal Negotiation Direct negotiation with creditors for reduced payments or extended terms. All debts Any No Possible No Negotiable Until agreement terms are met No
Statutory Debt Repayment Plan (SDRP) Plan to repay debts over a reasonable time, with protections from creditor action. Formal All debts Varies Yes Yes No Fixed Varies, based on ability to pay Yes
Equity Release Homeowners release equity from their home to pay off debts.
Debts of homeowners, typically older individuals aged 55+ Varies and depends on property value Yes Yes Asset (home) is used as collateral Varies 8-10 weeks timeframe from application to fund disbursement. Lifetime; repaid on house sale/death. No

A look to the future of loans…

With this continued awareness around the negative impacts of fast loans on the UK population, particularly with unaffordable debt, there is now an increasing possibility of the government reviewing and cracking down on all types of quick unsecured loans – especially the modernised structure of the Buy-Now-Pay-Later loan. 

It is important that affordability checks are used on all types of loans and that people aren’t able to or encouraged to, seek out these dangerous loans with incredibly high interest rates. 

  • Are Morses refunding customers?

Those who submitted affordability complaints to Morses Club before they went into administration may receive small amounts of compensation for the company’s involvement in the UK population’s unfathomable debt. 

However, people are no longer allowed to ask for compensation. You may still submit affordability claims, and either potentially have the Morses Club history removed from your credit report or your debt slightly reduced/cleared, depending on your circumstances. 

  • What is a doorstep loan?

Doorstep loans are a type of personal loan used in emergency situations for small amounts of money. They are a short-term loan. They are expected to be paid back weekly, and the repayments can be collected from your home by a company representative, or many companies are now moving their repayment systems online. 

  • What will happen to the Morses Club app?

As far as we are aware, the Morses Club app is still accessible for existing customers who wish to manage their repayments and check their outstanding balances. You will still need your Morses Club login. 

  • What will happen to the Morses Club Scheme?

The Morses Club Scheme, which was set up at the end of May 2023 to compensate customers with unaffordable loans (who made affordability claims), is over now.

The official closing date for claims was originally the 30th of November, and according to Morses Club, they contacted all of their customers about the scheme. 

With only a few days left of what would have been the complete scheme, most of the claims have already been decided.

However, this does mean that those who left their claims until the last minute will have missed out on the chance for compensation. 

Could you legally write off some debt?

Answer below to get started.

How much debt do you have?

This isn’t a full fact find. MoneyNerd doesn’t give advice. We work with The Debt Advice Service who provide information about your options.

References

  1. StepChange – Credit safety net report
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The authors
Scott Nelson MoneyNerd
Author
Scott Nelson is a renowned debt expert who supports people in debt with debt management and debt solution resources.
Janine Marsh MoneyNerd
Debt Expert
Janine is a financial expert who supports individuals with debt management, cost-saving resources, and navigating parking tickets.