Author Archive Hart Financial Services

Can You go to Jail if you Fail to Pay Your Credit Card Debt?

Credit card debt is one of the most common forms of debt across the UK. In fact, according to a 2019 article in the Guardian, the “average UK household debt now stands at a record £15,400… with UK homes now owing an average of £15,385 to credit card firms, banks and other lenders.” And with money worries being a significant contributing factor towards mental health concerns, it’s no wonder that people worry about the consequences of debt and what happens when you can’t repay the money you owe. This article will aim to shed more light upon the ways in which we use credit cards, how they can help, hinder, and what happens when you struggle to pay.

The main reasons people use credit cards include help with monthly bills, a one-off purchase such as a new item of furniture, a house or appliance repair, or a holiday booking. Credit cards can be a very useful way of paying off larger sums with instalments when you don’t have a bulk sum that covers the initial purchase. Paying the minimum monthly amount can be quite a manageable way to purchase the things you want and need, knowing you can eventually catch up and pay on time every month. However, it can be a slippery slope. Having access to a credit card can make it easier to lose track of our spending, especially if we don’t have a lot of experience with finances or tend to be impulsive.

Credit cards become a problem when we have overspent, or if our circumstances change and we are no longer able to make certain payments or catch up on other bills, leaving the credit card to accrue even more interest. When this does happen, there will be a series of events that follow.

If you fail to make an obligate payment owed on your credit card you will be charged a late fee. This in itself causes even more of a burden on your finances, as you will be playing catch up even more so than before. More than one late payment in a row will see an increase in your interest rate and damage to your credit rating. In certain instances, the creditor may pursue court action. However, this will only happen when certain procedures are followed first. For example, the creditor must send you a notice with regard to a claim if you have not paid back your debt. They should also send you a letter of claim, detailing the claim and what you owe, as well as a claim pack. Bear in mind, however, that these procedures are only in place for agreements that are covered by the Consumer Credit Act. If your agreement is not covered by the act, the creditor does not have to send you a notice.

However, you will not go to jail for non-repayment. If you are sent a claim by your creditor, it is advised that you reply as soon as possible, even if you cannot afford to pay the claim. In the worst-case scenario, you will be taken to court and ordered to pay a certain amount at a certain time.

You should always put actions in place that prevent your credit card debts bringing you to this point. If you are noticing that your debt is stacking up, becoming increasingly unmanageable, you can no longer afford repayments or your financial circumstances have changed, it is essential that you seek professional debt advice. Debt advisors will be able to help you take the next step and avoid having to go to court. If you already have a court summons, they will be able to offer you some guidance as to what you can do next to best deal with the circumstances.

I’m Retiring Abroad, Can I Still Get My UK Pension?

Many Brits, with the pull of the warmer climate and so on, decide to retire abroad. In fact, according to an article in the Independent, the number of people from the UK retiring abroad has increased by 26% in the last decade.

But along with the decision to retire abroad comes questions. One of the main questions is whether or not you can still get your UK pension. If you are deciding to move abroad in your retirement, it is best to plan ahead and to consider how it might affect your finances, if at all. For example, find out whether or not you will be entitled to certain benefits, your State Pension, and what sort of taxations you might be subject to.

It might even be worth looking into specific pension schemes like QROPS, that are designed to pay into an overseas account or is bespoke to Brits hoping to retire in another country. Bear in mind, however, that some schemes of this nature will have restrictions on which countries they pay to without charges. They may charge fees for any overseas accounts, or just some. So, it is worth collating a list of questions or concerns you may have before approaching these providers.

The good news is that moving abroad in your retirement shouldn’t have any effect on your current personal or workplace pension scheme and your future access to it. However, it will serve you well to do the proper research anyway. For example, you should check a few thigs with your pension provider for piece of mind, such as whet­­­­her or not your current pension plan will pay into an overseas account. With a personal pension, this shouldn’t be an issue, but some workplace plans opt for UK only. Check also that you won’t be charged by your provider if you do opt for your pension to be paid into a bank overseas.

With regard to your state pension entitlement, moving abroad to retire should not have any effect. However, it will help to research into what you will be entitled to in terms of yearly increases based on inflation rates depending on the country you choose to retire in. For example, you should still receive the annual increases on your pension if you choose to retire in a country that has certain agreements with the UK, including those in the European Economic Area, such as Spain, Greece, Italy, Germany and so on. There are currently 26 countries in the EEA. However, it is always best to check, as there are still many countries that will see expats losing out on the annual increase, such as Australia and New Zealand.

To be on the safe side, it is worth having more than your state pension to rely on. Paying into a private pension scheme, or opening a savings account that is specifically designed to put money aside for your retirement is a wise choice. But so is choosing a country where you won’t lose out on annual rises in the state pension you are entitles to. So be sure to do the necessary homework before junping the gun and assuming that all countries will allow you the same entitlements.