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Coronavirus (COVID-19)

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Personal finance and coronavirus

In this section you'll find information and updates related to coronavirus that are relevant to personal finance issues.

The UK's response to coronavirus is changing regularly and often very quickly. While we'll continue to make every effort to keep this page up to date, there may be short periods where what you read here is not the latest information available. Where possible we've tried to provide links to official sources, so you can check the current situation.

Continued support for consumers of financial products

The Financial Conduct Authority (FCA) regulates financial services firms and consumer credit firms who in turn have to comply with the rules of the FCA.

The measures introduced by the FCA (e.g. payment freezes) to help with short-term payment problems caused by the pandemic, were due to end on 31 October but have been extended.

Mortgage holidays

The mortgage holiday scheme has been extended to 31 March 2021, but all payment holidays must end by 31 July 2021. See the Financial Conduct Authority (FCA) website for full details.

If you've made use of the initial mortgage payment holiday, you will be able to get another 3-month break. If you've not previously made use of it, you will be able to get 2 payment holidays of up to 3 months each. You can't have payment holidays exceeding 6 months in total.

These mortgage holidays won't be recorded on your credit file and will therefore not affect your credit score.

Until 31 January 2021, your lender should also not actually repossess your home, even if they have already got a repossession order. If they don't yet have a repossession order, they should only start repossession action to get a repossession order if all reasonable attempts to find a solution to help you pay your arrears have failed.

Other payment deferrals

Help is available for payments in respect of long-term loans such as credit cards, personal loans, car finance, buy-now-pay-later schemes, rent-to-own deals, motor finance, your pawned goods, etc.

You can make use of this help if you find that as a result of the 2nd national lockdown in England (starting on 5 November 2020), you won't be able to keep up with your payments.

If you've made use of the previous payment holiday scheme, you will now be able to apply for a second deferral. If you haven't yet made use of it, you can now get a deferral for up to 6 months. More details are available on the Financial Conduct Authority (FCA) website.

If you have a short-term loan such as a payday loan and can't make your repayments as a result of the coronavirus restrictions, you can also apply for a payment deferral of one month, unless you've already had one.

The organisation you're repaying should tell you about the availability of the above deferral schemes and how you can apply.

Help if you've already had 6 months of payment holidays

As coronavirus-related disruption continues, it's entirely possible that you're still facing problems making payments, even after you've made use of the full maximum 6-month deferral of payments available.

The FCA have said that if you continue to experience financial difficulties, you should speak with your credit firm to arrange a tailored package of support suitable to your specific circumstances.

The FCA has also published guidance for firms that provide credit facilities, aimed at ensuring you're treated fairly and in a way that will help you get back on track if you're experiencing longer-term financial problems.

This guidance points out that consumer credit firms should provide their customers with tailored support where the customer remains in payment difficulties. It is expected that this tailored support will reflect the financial uncertainties and challenges that you might be facing in the coming months in view of the unpredictable effects of COVID-19.

When agreeing with you how to structure your repayments while you're under continued financial pressure, firms should:

  • be lenient and give due consideration to your financial situation;
  • agree arrangements that are sustainable, considering all your other debt and essential living costs;
  • grant you a reasonable time and opportunity to make repayments and not pressure you into agreeing to make payments over a shorter period than is viable;
  • be able to recognise if you are vulnerable and must have adequately trained staff that are able to give you the support you may need; and
  • allow you to consider all your options and give you time to seek debt advice before they require your decision.

Non-investment insurance and premium finance

The FCA has published guidance for insurance and premium finance firms on how to treat customers who are experiencing financial difficulty due to the pandemic. This builds on existing FCA principles that require firms to treat you fairly and with your best interests in mind.

The guidance tells firms that they should aim to reduce the impact of temporary financial distress you're experiencing. They should also make sure that the existing insurance you have still provides you with value for money and meets your needs (given that your needs may have changed due to the pandemic).

The FCA requires firms to not just wait for you to contact them – they should proactively help if you fall behind with payments and fail to contact them (although it is better that you do get in touch if possible).

Firms should not simply cancel insurance products if you fall behind with premiums. They'll be expected to take all reasonable steps to deliver a fair outcome. These steps may include re-assessing your risk profile, which may mean reducing your cover at a reduced cost. For example, if you previously drove to work daily covering thousands of miles annually, but are now not travelling at all, your car insurer could temporarily offer you reduced cover.

Other steps that firms could take include:

  • Offering other suitable but more affordable products
  • Waiving cancellation or amendment fees
  • Offering payment deferrals.

See the FCA for more information.

Government guidance and advice

The UK government has published information for people who are struggling to pay essential bills because of coronavirus.

Court action

If you're in the process of being taken to court over a debt, see this page under 'Court action' for information on how the courts are functioning during the pandemic.

Bankruptcy help (Scotland)

Under both the Coronavirus (Scotland) Act and the Coronavirus (Scotland) (No. 2) Act, you have more flexibility to apply for bankruptcy and more protection from creditors.

The changes will apply until 31 March 2021, and could be further extended to as far as the end of September 2021.

We've listed the main changes below, but see the Accountant in Bankruptcy website for more information on both the first act and the second act.

Moratorium extension

A moratorium is the period during which the people you owe money to can't take any formal action against you to recover it. The purpose is to give you time to consider your options and get appropriate advice.

The moratorium starts on the date on which you give the Accountant in Bankruptcy (AiB) notice that you intend to apply for bankruptcy (also known as 'sequestration'). It now ends after 6 months, rather than the usual 6 weeks. You can also now give notice to the AiB even if you have already given a similar notice in the past 12 months.

You must, however, still keep in mind that if a moratorium is approved, your details will be published on the public Register of Insolvencies and this would probably affect your credit score.

Creditor petitions

Creditors can now only apply to court to make you bankrupt (also known as 'sequestration') if you owe them £10,000 or more. The previous limit was £3,000.

Minimal Asset Process (MAP) bankruptcies

MAP bankruptcies are designed to be a simpler process if you're on a low income and have few assets. Previously, you can't make use of MAP if your debt exceeds £17,000, but that threshold has now been raised to £25,000. Any student debt you have is ignored for the purposes of calculating this total. Also, the MAP application fees have reduced from £90 to £50, and have been removed entirely if you receive certain benefit payments.

Social distancing

Meetings of creditors can now take place virtually. All forms (except Form 9) prescribed by the Bankruptcy (Scotland) Regulations 2016 can be signed using an electronic signature.

What is the law guide

The Desktop Lawyer law guide aims to present the law to you in a comprehensive yet jargon-free and easy-to-read format. Our law guide is constantly kept up to date with changes in business and family law by our team of in house solicitors, and includes information across all the legal jurisdictions in the UK.

Our law guide is free to use. Where we provide documents related to this area of law, or where they may help you with any legal issue in this area, they will be listed to the right of this message.