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Payment Break Plan – In-depth Guide, Tips & More

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Scott
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Scott Nelson

Managing Director

MoneyNerd’s founder, Scott Nelson, has a decade of financial industry experience, including 6 years in FCA regulated loan and credit card companies. Troubled by a lack of conscience in the industry, he founded MoneyNerd to give genuine advice to those in debt and struggling financially.

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Janine
Janine Marsh Profile Picture

Janine Marsh

Financial Expert

Janine Marsh is an award-winning presenter and a valuable member of the MoneyNerd team. With a wealth of experience as a financial expert, she's been featured on BBC Radio 4, BBC Local Radio, and BBC Five Live, and is a regular on Co-op Radio.

Learn more about Janine
· Feb 21st, 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.

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Payment Break Plan

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.

Struggling to pay off your debts and need a break? You’ve come to the right place. We know it’s tough, especially when you’re worried about the impact of not paying your debts on time. Each month, over 170,000 people visit our site for advice on debt solutions, so you’re not alone.

In this article, we’ll cover:

  • What a payment break plan is and how it can help you.
  • If you can take a break from your credit card payments.
  • How long a payment break plan can last.
  • The difference between a payment break and a payment holiday.
  • The impact on your credit record and what to do if your request is rejected.

Our team understands your worry, as some of us have faced the same situation. We know how important a little break can be when managing debts. Let’s get started and learn more about payment break plans, a lifeline that could help you get your finances in order.

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.

What is a payment break plan?

A payment break plan is an agreement with your creditor to freeze repayments for a set period of time.

It is a short-term solution to give you temporary breathing space and avoid you from getting into bigger debt that can have more severe consequences. 

You may decide to do this because of unforeseen financial hardship. The most common reason to ask for a break plan is due to unexpected unemployment.

Other reasons may be due to an unforeseen large expense or the death of a partner, causing your household income to reduce.

During the repayment break, you may or may not have to keep paying interest on your outstanding balance. Always consult the exact terms and details of your repayment break directly with your lender. Your terms can be different to another person’s with the same lender. 

There was also a scheme offered many years ago by Monument and SkyCard credit card users with the same name but often shortened to PBP.

This scheme allowed consumers to freeze their credit card for two to two-and-a-half years for serious hardship, such as a partner passing away or long-term unemployment.

However, customers still had to pay monthly fees included, and it wasn’t well-received in the news or by industry experts. 

Am I entitled to a payment break plan?

Your lender is not forced to give you a break from making repayments, but often, they will because sending you into debt is not beneficial to either party.

Sometimes, these relief periods are included in contracts, and you are entitled to use them if you need to. 

payment break plan on credit score
Source: MSE Forum.

At the height of the COVID-19 pandemic, all registered and legal lenders – i.e, those regulated by the Financial Conduct Authority – were asked to grant payment deferrals for up to six months.

However, consumers were only entitled to it during these trying times and the date to take advantage of it has now passed.

Note that an “agreed” payment break does not hurt your credit rating as the “missed payments” are not reported.

Can I take a break from credit card payments?

It is possible to get a payment break from your credit card company.

If you are struggling to repay your credit cards and are accumulating too much credit card debt, you should consider speaking with your lender.

A break on repayments is one possible option, or they could offer to reduce your repayments so you only repay what you can currently afford. 

Another option is a credit card balance transfer, which we discuss in our free Clear Credit Card Debt Loophole guide. 

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

When else can a payment break plan be used?

Customers might be able to get a repayment break plan from financial lenders offering other types of credit.

Payday loan providers and even mortgage lenders are known to offer repayment breaks for customers who are struggling in the short term.

You may even be able to get a break from your bank if you are paying ongoing bank account overdraft fees. But remember, there is nothing forcing them to agree.

To ask them for a repayment break, you should contact the lender over the phone or write them a letter with details of how your current budget cannot meet the current repayments without causing financial difficulty. 

How long does a payment break plan last?

Because a break in payments is at your creditor’s discretion, there is no fixed amount of time you can be granted the break.

However, most breaks given by credit card and loan providers last between a couple of weeks and six months. 

It is unusual to be offered a break beyond this timeframe, such as the 2+ years in the PBP scheme mentioned at the start of this article.

It’s also harder to be given a second break with the same lender if the consumer has used this service before. 

Tip: Use the payment break period to create a prioritised budget to stabilise your financial situation. Also, seek alternative income sources and explore assistance programs from debt charities.

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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Is a payment break the same as a payment holiday?

Some people like to use the term payment holiday or repayment holidays instead of payment break. In most instances, these mean exactly the same thing – a period of time where you don’t have to repay your creditors.

In all instances, the interest still needs to be repaid. You should clarify this before agreeing to the payment holiday. 

How many times can you have a payment holiday?

Most creditors will only grant one payment holiday. Still, it is not impossible to be given more, especially if a significant period of time has passed between these repayment holidays or the last one was proven to be effective for everyone. 

In a nutshell, just like how there is no fixed period you can be given a holiday for, there is no fixed number of times you can get one.

Responsible lending requires lenders to recognise when the consumer is better off using another debt solution, so you may be rejected for a second repayment holiday and asked to consider your other options.

You might be disgruntled by the decision, but it could benefit you over the long term. 

My request was rejected, what now?

If your request for a repayment break plan has been rejected, you can try again, stressing why it would help you.

If you didn’t provide evidence of your budget, it might be worth doing so with a budget and statements on your next attempt. 

Another option is to ask for all interest payments to be taken off your account for an extended duration.

The Credit Association encourages lenders to agree to this, even though they do not have to abide.

Again, you can make this request in a letter, and we’ve made it easy with our free freeze interest letter template. 

Click the link here to access this letter now! Every credit customer can ask for interest to be frozen with these letters!

You can use my free interest calculator to get an estimate of how interest affects your monthly payments towards your debts. You might be able to use this as evidence for your creditor that an interest freeze will help.

Simple Interest Calculator

£

This is a guidance tool only and not an assessment. For accurate interest calculations, contact the company issuing the credit. Do not rely solely on this calculator’s results.

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.

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The authors
Scott Nelson Profile Picture
Author
MoneyNerd’s founder, Scott Nelson, has a decade of financial industry experience, including 6 years in FCA regulated loan and credit card companies. Troubled by a lack of conscience in the industry, he founded MoneyNerd to give genuine advice to those in debt and struggling financially.
Janine Marsh Profile Picture
Debt Expert
Janine Marsh is an award-winning presenter and a valuable member of the MoneyNerd team. With a wealth of experience as a financial expert, she's been featured on BBC Radio 4, BBC Local Radio, and BBC Five Live, and is a regular on Co-op Radio.