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Catalogue Debt

Whether you’re looking to update your wardrobe or invest in new home furnishings, you might be considering shopping from a catalogue. While there are many benefits to shopping from the comfort of your own home, catalogue debt can cause issues. Many catalogue companies offer a form of finance that allows you to spread the cost of your purchases. This can help expensive purchases feel more affordable, but it could also lead to problem debt.

Catalogue debt is one of the most accessible types of debt and can be especially tempting if you’re a regular catalogue shopper, are offered a joining incentive, or have historically been someone who can pay off your full balance each month. If you do choose to take out finance and don’t clear the full amount, you’ll likely be charged interest on the outstanding balance. If you’re only able to cover the minimum payment and are offered high interest rates, catalogue finance can be very expensive way to borrow. It’s also a debt type that can easily get out of control as making several small purchases adds up over time.

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How does catalogue debt work?

If you’ve been browsing your favourite catalogue and found the perfect outfit for your sister’s wedding or a chair that will be perfect addition to your living room, there will usually be a range of payment options available to you. While you might choose to buy the item outright, you may also be able to make your purchase on finance. This payment method will allow you to spread the cost of your shopping over a set period.

Most catalogue finance deals offer a monthly payment schedule, and you’ll pay off the balance in instalments. Depending on the terms you’re offered, you might be able to clear the full amount without being charged any interest. However, if you can only make the minimum payment or take longer than expected to repay the debt, you could face mounting interest and charges.

What happens if I can’t pay my catalogue debt?

If you can’t pay your catalogue debt, for whatever reason, you’ll likely receive a letter from the catalogue company requesting that you make up any missed payments. In this case, you might be able to speak to the company directly and set up a payment plan that works with your budget. If you can’t find a way forward and your account remains in arrears, it will eventually default, and further action could be taken against you. Your catalogue account will also normally be closed so that you can’t make any more orders on credit.

What should I do if I fall behind with my catalogue debt?

Whether you’ve accidentally spent more than you can afford to repay in one go or your circumstances have changed and you’re struggling to find the disposal income to deal with your catalogue debts, consider seeking expert debt advice. An impartial professional will be able to approach your situation without judgement, listen to your concerns, and help you find the right debt management solution to suit you and your circumstances.

What is persistent debt?

You can find yourself facing persistent debt if the amount of money you’ve paid in catalogue debt interest and charges is higher than your original purchase amount. This is often a possibility if you can only make the minimum payment towards your debt each month.

If you’re at risk of entering persistent debt, you’ll receive a warning letter from the catalogue company after 18 months. This is typically the point when the scales tip and your interest payments will start to outweigh your original debt. You’ll receive another letter after 27 months if you continue to only make the minimum payment each month. If you remain in debt for 36 months, the company should offer you an affordable payment plan or propose another way for you to clear the debt.

Will catalogue debt affect my credit score?

Catalogue finance is a type of credit agreement and so will have an impact on your credit score. Depending on the amount you borrow, it could affect your debt-to-income ratio, and a hard credit search will be left on your report each time you apply for a new catalogue finance account. If you can manage your spending and pay the full balance off each month, your catalogue debt could help you demonstrate to other lenders that you’re a reliable borrower. But on the other hand, if you fall behind with your payments or open several different accounts in a short time, your credit score could be negatively impacted.

Can I cancel my catalogue purchases?

When you buy an item that you’ve only seen in a catalogue and not in person, you’ll be protected by distance selling rules. This means that if you change your mind or experience buyer’s remorse, you have up to 14 days to get your money back. You’ll need to make sure that you send the goods back to the retailer and you might also have to pay for the postage. While a trip to the post office might not be ideal, paying for postage will be cheaper than paying for goods that you don’t want, need, or can easily afford. After the initial 14-day period has expired, you’ll usually only be able to return a catalogue purchase if it’s faulty.

Where can I get catalogue debt advice and more information?

If you’ve built up catalogue debt and are worried about the implications this might have on your finances, don’t worry.

Speaking to an experienced debt solution provider such as My Debt Plan has its benefits. We have a team of friendly advisors who offer debt help every day to UK residents.

We can talk through your options and support you to find the right debt management solution for you.

For free advice about your finances and the debt solutions available that can help you pay off your catalogue debts, call us on 0161 826 0585.

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Credit Score

Credit Score Pop Up Wording : An Individual Voluntary Arrangement (IVA) is a formal agreement with creditors to repay a portion of your debts over time, but it does have an impact on your credit score and it will be difficult to obtain further credit whilst on an IVA. Once an IVA is approved, it is recorded on your credit report and will typically remain there for six years from the date it starts.
However, it’s important to note this is the case for most debt solutions and your credit score will likely already have been affected by being in debt in the first place.
Once your IVA is complete you will get a fresh start to begin rebuilding your credit rating.

Fees

IVA costs are charged for the preparation of your proposal and the administration of the arrangement for the full term (usually 5 years) these costs are charged from the monthly contributions you make into the IVA and are not in addition. Costs will only be recovered on approval of your arrangement and once you commence making payments to it. The fees for preparation of the proposal to creditors and calling the meeting for creditors to vote on its approval are called nominees fees, the fees for running the arrangement once approved are called supervisors fees. There are also some expenses incurred in the running of the arrangement such as the registration fee and the statutory insurance that needs to be taken by law, these are called disbursements. For our arrangements, the total of all of these is £3,650 although this may be adjusted by creditors when they vote on whether to accept. No matter what the end total of costs come to, you can be rest assured that these will be taken from the monthly payment we agree with you.