Could a payment holiday help ease your financial situation?

By Mr Bankruptcy

26th November 2020

Lockdown followed by the impact of Covid-19 restrictions have led to many people losing their income or seeing it severely reduced overnight.  Banks and lenders have reacted by introducing short term payment holidays to support their customers while they adjust to their new situation.

The time period for payment holidays has been extended into 2021, so could this be an option for you if you now find yourself struggling with repayments?

When can you take a payment break?

The Financial Conduct Authority (FCA) has established temporary measures for banks and lenders to support customers who are struggling to make payments. These payment holidays cover a broad range of products, which include:

• Mortgages: You can apply for a mortgage payment holiday until 31 March 2021. Initially lasting for three months, you can now apply for a total of six months holiday payment, but all payment deferrals must end by 31 July 2021. However, during your mortgage payment holiday you will still be charged interest.
• Credit cards and loan repayments: This includes car finance, store cards, credit union loans and catalogue credit, to give just a few examples. Again, you can apply until 31 March 2021 for a payment holiday on these types of products. They generally last for three months initially, but they can also be extended to six months, during which time interest will continue to be charged.  
• Payday loans: These are treated slightly differently as only a one-month payment holiday will be given and it can’t be extended, but interest will not be charged during the payment holiday. You have until 31 March 2021 to apply.

If, at the end of your payment holiday, you continue to struggle to make payments, tailored help will be made available to manage ongoing financial challenges.

Seeking advice about payment holidays

The BBC reported in October that 85% of UK adults have at least one loan of one type or another. The fact that 2.5 million people have taken a payment break from their mortgage since the beginning of the pandemic illustrates just how important payment holidays have become and may continue to be.

My main message here is don’t hesitate to speak to your lenders to understand fully how a payment holiday could apply in your particular circumstances and remember the 31 March deadline for applying.

James Rosa Associates

James Rosa associates is 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 individuals and business owners/directors facing unmanageable debt or 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 could qualify for one of our free consultations.

Please be advised that all views expressed in these posts are those of the author and not of James Rosa Associates ltd.