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    Should you be wary of ‘buy now, pay later’ schemes?

    By Mr Bankruptcy

    30th March 2021

    The popularity of ‘buy now, pay later’ schemes has soared during lockdown, with 5 million people in the UK taking on this kind of financial commitment last year. Two questions arise in my mind: Why have they become so much more popular and – more importantly – what do borrowers need to watch out for?

    The idea behind ‘buy now, pay later’ later schemes is simple; you pay for items that you purchase in instalments, over a number of weeks, in order to spread the cost. If you can maintain your repayments, then there’s nothing intrinsically wrong with these schemes. There are no fees for using these services and they are interest free – a cheap form of credit. You can access these services online and in-store, so they are easily accessible.

    With so many people sitting at home, bored and with access to online shopping, it’s not surprising that the popularity of these schemes has taken off during the pandemic. Last year saw ‘buy now, pay later’ services account for £2.7 billion in sales.

    Why are these schemes raising concerns?

    But with an estimated £4 in every £100 currently being spent in the UK on ‘buy now, pay later’ schemes, concern is mounting that this type of loan is too easy a way to build up debts unawares. In addition, one in ten people who use these services are already in debt arrears. The very ease of their use can distract borrowers from the consequences of these schemes:

    • Fees are incurred for late or missed payments, which quickly add up.
    • Your credit file may reflect any poor payment history caused by these schemes.
    • If your case is passed to a debt collection agency, bailiffs may become involved.
    • Different schemes have different fee structures, and you must use the scheme offered by the vendor. This makes understanding fee risks potentially more confusing.

    Changes is on the horizon

    The concern over the rising popularity of these schemes and their potential for leading people into unmanageable debt has forced HM Treasury to announce that ‘buy now, pay later’ schemes will become regulated, which in my view is great news for consumers:

    • ‘Buy now, pay later’ lenders must now conduct affordability checks before lending to you.
    • Customers need to be treated fairly if they struggle to repay their loan.
    • Customers will now have the right to complain to the Financial Ombudsman Service.

    These regulations are to be welcomed but they are also a clear reminder that unless you have a plan to repay any kind of loan, then it can always put your financial situation in peril.

    James Rosa Associates

    We are a firm of debt advisors and debt adjustors. With a supportive and friendly approach, we offer a full range of advice and professional services to both individuals and business owners/directors facing unmanageable debt or who are involved in civil or commercial disputes. Our services include:

    • Insolvency support
    • Negotiated settlements
    • Personal assisted bankruptcy
    • Mediation

    We are authorised and regulated by the Financial Conduct Authority (FRN665061) to work with clients to produce bespoke solutions to fit their specific circumstances.

    Find out if you qualify for a free consultation

    If your debt problem is growing or has become unmanageable, we can help you to deal with your debt, or bring a dispute to a swift and cost-effective resolution.

    Contact James Rosa Associates, ring 0845 6807217 or email enquiries@jamesrosa.co.uk to find out whether you qualify for a free consultation.

    How can the Government’s business support packages help your business?

    By Mr Bankruptcy

    23rd March 2021

    According to the Chancellor of the Exchequer, the aim of his 2021 budget was to ensure that it “meets the moment”. For the Government, this means a budget that supports jobs and businesses as the restrictions around the pandemic lift and we return to a more normal way of life.

    Key budget announcements

    The business support schemes which were announced are for a limited time only, so businesses should act quickly if they want to benefit from such schemes as:

    • Extended Furlough Scheme: This has now been extended to 30 September 2021, with employers’ contributions towards this scheme set to change in July and August.
    • Self-employment Income Support Scheme: A fifth grant will cover June, July and Augustand has now been extended to cover people who are newly self-employed, as long as they have submitted a 2019-20 tax return.
    • Business rates holiday: Extended to the end of June 2021, after which business rates will be discounted.
    • VAT cuts: The 5% level for hospitality and tourism will remain until September before increasing to 12.5% in October and then 20% in April 2022.
    • Restart Grant: This £5 billion grant is to help the high street reopen after lockdown with gyms, cafes, shops, salons, restaurants, etc. all eligible to claim.
    • Recovery Loan Scheme: Launching on 6 April, this will give businesses of any size access to loans and finance of up to £10 million per business to support recovery from the pandemic.  

    Business debt

    The Government’s financial support for Covid-19 totals over £407 billion – an eye-watering amount. But the financial impact of the pandemic on businesses is no less staggering. It’s estimated that UK business debt comes to over £100 billion. This represents a potentially huge challenge for recovery and is highlighted in a newspaper report which suggests that British businesses have taken on debt worth more than twice the average growth that would have been expected since the crisis began.

    Although understandable given the circumstance, this level of debt worries me and I’m not surprised by the predictions that up to 250,000 businesses may close over the next 12 months. Business owners and directors need a plan for managing and repaying debts and must ensure that if circumstances don’t improve as hoped, they act quickly and seek advice on managing their debts.

    James Rosa Associates

    James Rosa Associates is a firm of debt advisors and debt adjustors. With a supportive, non-judgemental and friendly approach, we offer a full range of advice and professional services to any individuals or business owners/directors who face unmanageable debt or who are involved in civil or commercial disputes. Our services include:

    • Insolvency support
    • Negotiated settlements
    • Personal assisted bankruptcy
    • Mediation

    We are authorised and regulated by the Financial Conduct Authority (FRN665061) to work with clients to produce bespoke solutions to fit their specific circumstances.

    Find out if you qualify for a free consultation

    If you need to deal with an unmanageable debt, or bring a dispute to a swift and cost-effective resolution, contact James Rosa Associates, ring 0845 6807217 or email enquiries@jamesrosa.co.uk to find out whether you qualify for a free consultation.

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